SHRM Report: Racial Inequity Persists, Costs American Workplaces Billions Annually

New research from SHRM shows racial inequity in our workplaces creates more stress, anxiety, and loss in productivity

ALEXANDRIA, Va.–(BUSINESS WIRE)–Employee turnover due to racial inequity in the workplace has cost U.S. organizations up to $172 billion over the past five years, according to new research by SHRM (Society for Human Resource Management). A new report, The Cost of Racial Injustice, released today along with SHRM’s Blue Ribbon Commission Report on Racial Equity, found one-third of Black employees faced unfair treatment at work based on race and ethnicity in the past year, and over 2 in 5 Black workers say they have experienced this in the past five years.

(Read the full BRC report here.)

“SHRM has consistently challenged leaders in the workplace to have open and honest conversations with their peers and teams about bias, discrimination and racial inequity, and then turn those conversations into concrete action,” said SHRM President and CEO Johnny C. Taylor, Jr., SHRM-SCP. “The path to equity is shared, and it will take the collective efforts of HR professionals, C-suite executives, People Managers, and employees to create workplaces where inclusivity, empathy, and respect are the cornerstone of culture.”

Key findings from the new SHRM research include:

  • Over 2 in 5 Black workers (42 percent) feel they faced race- or ethnicity-based unfair treatment at work in the past five years.
  • Over the same period, 26 percent of Asians, and 21 percent of Hispanics or Latinos, have experienced unfair treatment in the workplace due to their race or ethnicity.
  • Turnover due to racial inequity in the workplace may have cost U.S. organizations up to $172 billion over the past five years.
  • Absenteeism due to anxiety, worry, stress, or frustration stemming from experiencing or witnessing unfair treatment based on race or ethnicity in the workplace may have cost U.S. businesses up to $54 billion in the past year.
  • Lost productivity was even more costly, carrying a nearly $59 billion price tag in the last year.

In the summer of 2020, SHRM launched Together Forward @Work, a call to action for the HR profession and business community to drive racial inequity out of U.S. workplaces. Today’s report aims to help businesses respond to that call by taking specific actions and deploying immediate and tangible tools to create more equitable and inclusive workplaces.

Informed by the Blue Ribbon Commission’s recommendations, SHRM has also created the DE&I Action-to-Change Toolbox for organizations to spur real, lasting change, including resource guides, conversation starter cards, and a step-by-step guide to support inclusivity, reduce bias in hiring, and create safe spaces at work.

The report also previews SHRM’s new Empathy Index—a resource that will help organizations identify empathy gaps in their workplaces and create cultures where inclusion and equity are consistently at the forefront.

Promoting diversity, equity and inclusion in the workplace is impossible without a strong focus on empathy. Of workers who expressed an opinion, 92 percent said if they were seeking a job, they would specifically look for a company that demonstrates empathy, according to another new SHRM research report released today, Empathy: DE&I’s Missing Piece.

The findings make a strong business case for empathetic workplaces: The majority of workers (78 percent) who expressed an opinion say employees who demonstrate empathy at their organization are viewed as better overall performers. Employees who score their organization high in empathy are also 3.25 times more likely to recommend family, friends or colleagues do business with their organization.

Methodology for the Cost of Racial Injustice: A sample of 1,313 American workers, which included an oversample of Black, Hispanic/Latino, and Asian respondents, was surveyed using the AmeriSpeak Omnibus, NORC at the University of Chicago’s probability-based panel. The survey was administered Thursday, August 27 to Wednesday, September 3, 2020. Data was weighted to reflect the U.S. adult population. Cost estimates were calculated using a combination of data from SHRM’s 2021 Cost of Racial Injustice survey and BLS data.

Methodology for Empathy: DE&I’s Missing Piece: A sample of 2,496 American workers was surveyed online from March 10, 2021 to April 5, 2021. Respondents were sourced from Lucid. Data was collected using quota sampling on gender, age, race, education, census region and industry and was weighted to be representative of the American working population. Data is reported for those expressing an opinion (agree/strongly agree, disagree/strongly disagree as applicable).

About SHRM

SHRM, the Society for Human Resource Management, creates better workplaces where employers and employees thrive together. As the voice of all things work, workers, and the workplace, SHRM is the foremost expert, convener and thought leader on issues impacting today’s evolving workplaces. With 300,000+ HR and business executive members in 165 countries, SHRM impacts the lives of more than 115 million workers and families globally. Learn more at SHRM.org and on Twitter @SHRM.

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