Diversity, inclusivity key to a growing economy

Diversity and inclusion are economic imperatives, not just moral goals, UC Santa Cruz Professor Chris Benner tells business leaders

Report cover
The report suggests that chambers must play a civic role as well as an economic one if they want to remain relevant to a changing entrepreneurial landscape
Professor Chris Benner

For the American economy to prosper, it must be diverse and inclusive, UC Santa Cruz Professor Chris Benner tells business leaders in a new report written in collaboration with the University of Southern California and the Association of Chamber of Commerce Executives.

“America is changing,” opens Benner in “Diversity and Inclusion for the 21st Century Economy: An Imperative for Chambers of Commerce,” a paper co-authored with longterm collaborator Manuel Pastor, a UCSC alumnus and former UCSC professor now with the University of Southern California.

The face of small business is shifting. From 2007–2012, Latino-owned businesses in the U.S. grew by 34.5 percent and African American-owned enterprises grew by 46.3 percent. A quarter of all new businesses were started by immigrants.

What is now a trend will soon become the norm. As soon as 2040, 49 percent of the U.S. workers will be African American, Latino, Asian Pacific Islander, Native American, and self-identified multiracial. By 2050, America is expected to become majority-minority, a demographic shift driven by natural growth, not immigration.

For business leaders and metropolitan chambers of commerce, a “business as usual” approach is no longer enough, Benner and Pastor say.

Meanwhile, lagging behind demographic change is stark income equality and exclusion. Job growth is sluggish. Wages are stagnant. Education is fragmenting. The nation’s poor are geographically concentrating.

As Benner and Pastor show, it’s hurting business.

“Chambers can no longer think of inclusion as an afterthought,” Benner says, pointing to his previous research that shows cities that foster education and economic equity fare better fiscally.

“They should instead recognize that regions that are more equal and more integrated—across income, race, gender, and place—have better economic performance, on average, than those regions that are more unequal and more divided,” adds Benner, the Dorothy E. Everett Global Information and Social Entrepreneurship Chair and executive director of the Everett Program.

But this is increasingly difficult for business leaders and chambers. As America grows more diverse, people are increasingly sorting themselves by ideological and political beliefs. For example, in 1992, only 20 percent of American voters lived in a county where a presidential candidate won by a landslide. In 2016, it was a staggering 57 percent.

This homogenous sorting is also reflected in the media where information is filtered algorithmically along partisan lines. Communication is now so customized that “unwanted” news gets filtered out without audiences knowing.

Facts—which Benner notes are vital to policy-making—are no longer basic and generally agreed upon.

“Unchallenged by opposing perspectives, we are increasingly drifting apart at exactly the moment in which we need to know and grow together,” Benner says.

But these difficulties also provide opportunities for chambers.

As business leaders, chambers are uniquely positioned to connect community and cultivate collaboration. They are also seasoned at relationship building and have a strong sense of roots in the region.

For example, Benner and Pastor point to Great Reading, PA, where the county chamber created a new initiative where women from diverse backgrounds can network with each other through a leadership series, in a mentorship program, and in regular roundtables that address the challenges faced by female business owners. They also offer a Latina focused meeting as well.

Another example Benner and Pastor offer is in South Carolina where the Greenville Chamber launched the Minority Business Resource Collaborative to support minority businesses upstate. The group’s goal is to leverage the power as a collective by sharing knowledge and skills with the aspiration for economic development, business growth, job creation, and wealth creation.

In sum, chambers must play a civic role as well as an economic one if they are to remain relevant to a changing entrepreneurial landscape.

But diversity work is hard, Benner and Pastor warn.

“This work is not for the faint-of-heart. A bumpy process is to be expected as making changes to accommodate our inevitable demographic and economic shifts is not easy and can involve substantial conflict,” they say.