This week, we look at how the wealth gap in the United States is a drag on the overall economy. Plus, the rise of esports marketing and reading picks from executives at some of the world’s biggest organizations. Many of them will surprise you! The Shortlist is taking an end-of-summer hiatus—we’ll see you back here on September 6. |
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Income inequality is hardly new, though it has reemerged as a social and political flash point in recent years, signaling growing public discontent. But what the term actually encompasses, how it’s evolving, and especially how to address it can be harder to articulate. “Inequality: A persisting challenge and its implications,” a new paper from the McKinsey Global Institute (MGI), is a good start. |
The good news is that the world has become more equal at the macro level. Middle-income economies, such as Indonesia and Mexico, have attained greater shares of global wealth. But in many advanced countries, such as the United States, wealth and income inequality have been steadily rising since the 1980s. Put another way: poor countries are getting richer, and rich countries are becoming more unequal. |
Of course, for huge segments of the US population, such as black Americans, the phenomena of wealth and income disparity have long been problems. New research estimates that the racial wealth gap’s dampening effect on consumption and investment will cost the US economy between $1 trillion and $1.5 trillion between 2019 and 2028. |
Factors other than race are also at play in the widening chasm between haves and have-nots in the United States. Take geography. By most metrics, the state of Georgia is thriving economically. It’s the country’s ninth-largest economy, seventh for its share of woman-owned companies, and third for its share of black-owned companies. While much of this vibrancy originates from Atlanta, which now generates 65 percent of state GDP, the benefits stay in the city too. Economic growth in the rest of the state is constrained by low workforce participation and a lack of access to opportunities in high-growth sectors. A new report, Expanding the economic pie in the Peach State, looks at the sustained, long-term efforts and investments necessary to bridge this divide. |
And within cities, inequality is becoming increasingly, distressingly evident. Homelessness in the San Francisco Bay Area has reached crisis proportions. The region has the third-largest homeless population in the country, behind New York City and Los Angeles. Long an engine of growth and prosperity, San Francisco has become marked by unaffordability and abject conditions for its most vulnerable residents. |
The problem is not intractable. The Bay Area is home to intellect, innovation, and substantial resources—as evidenced by the wealth generated there. And it can be home to a solution for this crisis, one that takes a regional, multi-stakeholder approach and holistically supports homeless families across the full journey—from housing insecure to homeless to housed—and integrates resources across the government, not-for-profit, and private sectors. |
The United States can improve outcomes nationwide by connecting displaced workers with new opportunities, equipping people with the skills they need to succeed, revitalizing distressed areas, and supporting workers in transition. Returning to more inclusive growth will require the combined energy and ingenuity of business leaders, policy makers, educators, and not for profits across the country. Check out The future of work in America: People and places, today and tomorrow, another recent MGI report, to learn more. |
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MORE ON MCKINSEY.COM |
Don’t get ‘ganked’ | Got a Fortnite fanatic in your house? You’re not alone. Esports is fast becoming one of the most popular spectator sports for young men in the United States. Here’s how brands should think about this growing audience. |
A disciplined approach to problem solving | The value of having creative, strategic thinkers in an organization has never been higher. In this episode of the Inside the Strategy Room podcast, McKinsey experts discuss how to use them effectively. |
Cybersecurity: The linchpin of digital | As companies digitize businesses and automate operations, cyberrisks proliferate. Here is how your cybersecurity organization can support a secure digital agenda. |
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WHO WE’RE READING |
Log off and dive into these eclectic picks |
It’s always fun to check out what books CEOs and other business leaders are keeping on their shelves or tucking into their suitcases. There’s inspiration aplenty in their selections, which offer compelling insights on topics crucial to business today—be it leadership, the role of capitalism in society, or beyond. Below, a sampling from PayPal’s Dan Schulman, Nextdoor’s Sarah Friar, and Walmart’s Doug McMillon. For more picks, click here. |
Dan Schulman, president and CEO, PayPal |
People, Power, and Profits: Progressive Capitalism for an Age of Discontent—Joseph E. Stiglitz (W. W. Norton, April 2019, nonfiction) |
The Accidental Admiral: A Sailor Takes Command at NATO—James Stavrides (Naval Institute Press, 2014, nonfiction) |
Lexicon—Max Barry (Penguin Books, 2013, fiction) |
The New Rules of War: Victory in the Age of Durable Disorder—Sean McFate (William Morrow, January 2019, nonfiction) |
Sarah Friar, CEO, Nextdoor |
Upheaval: Turning Points for Nations in Crisis—Jared Diamond (Little, Brown and Company, May 2019, nonfiction) |
Biased: Uncovering the Hidden Prejudice That Shapes What We See, Think, and Do—Jennifer L. Eberhardt (Viking, March 2019, nonfiction) |
Midnight in Chernobyl: The Untold Story of the World’s Greatest Nuclear Disaster—Adam Higginbotham (Simon & Schuster, February 2019, nonfiction) |
Say Nothing: A True Story of Murder and Memory in Northern Ireland—Patrick Radden Keefe (Doubleday, 2019, nonfiction) |
Doug McMillon, CEO, Walmart |
The New Jim Crow: Mass Incarceration in the Age of Colorblindness—Michelle Alexander (New Press, 2010, nonfiction) |
Them: Why We Hate Each Other—and How to Heal—Ben Sasse (St. Martin’s Press, 2018, nonfiction) |
The Sixth Man: A Memoir—Andre Iguodala (Blue Rider Press, June 2019, nonfiction) |
Become an Accelerator Leader: Accelerate Yourself, Others, and Your Organization to Maximize Impact—Alvin Rohrs (Gatekeeper Press, May 2019, nonfiction) |
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BACKTALK |
Have feedback or other ideas? We’d love to hear from you. |
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