INSIGHTS ON DIVERSITY, EQUITY, AND INCLUSION

Latinos in the US continue to significantly contribute to the country’s economy, even as they have been more heavily affected by COVID-19 and inflation than other groups. While Latinos play a growing role in US GDP, they are still underrepresented in boardrooms, underserved by brands, and underfunded in private-capital markets. In this issue, we look at how businesses and governing bodies can work together to build a more inclusive economy that supports Latinos. Plus, we offer ways to realize the potential of the chief diversity officer role.

SPOTLIGHT

The Latino population is growing in both its size and its influence on the US economy. But a persistent income gap between Latino and non-Latino White Americans—worth $281 billion, according to a McKinsey analysis of US Census Bureau data—is just one of the many disparities that keep this group from realizing true economic equality. The good news is that this gap is decreasing, as Latinos have increased their share in professional occupations and raised their net worth faster than their non-Latino White counterparts, according to an analysis by McKinsey senior partner Lucy Pérez and coauthors. Still, there is work to be done to improve Latino representation in boardrooms and the C-suite. For example, businesses can set inclusion targets and build a stronger pipeline of Latino talent to create a more inclusive workplace. 

DATA DROP

As long as the share of Latinos in frontline positions is greater than that in senior-management roles, closing the wage gap between Latinos and other ethnic or racial groups in the US will remain elusive.

LISTEN IN

Another path to greater economic mobility for US Latinos is entrepreneurship. Today, only 6 percent of all businesses in the US are Latino owned, despite Latinos accounting for 18 percent of the total US population. Among those businesses, only about a third receive outside funding, says McKinsey partner Bernardo Sichel on this episode of McKinsey’s Future of America podcast. Closing that funding gap would mean opening more than 750,000 new businesses that could create an estimated 6.6 million new jobs and the potential for $2.3 trillion in added revenues to the US economy, Sichel notes. Learn how businesses and policy makers can work together to help boost Latino entrepreneurship.

INSIDE THE C-SUITE

Among Fortune 500 companies, 53 percent have a chief diversity officer (CDO) or equivalent role, after businesses hired for these roles at nearly triple the rate in 2021 as they did in the previous 16 months. But the growth in CDO hiring tells only one side of the story: the CDO role already has the shortest tenure compared with other executive positions. Since 2018, 60 percent of those hired as CDOs or in equivalent roles have left their jobs. That attrition rate may be because hiring executives give CDOs poorly defined responsibilities or little authority to enact real change, according to McKinsey partner Monne Williams and coauthors. Companies can set up a CDO for success by specifying the role’s mission and scope and clearly defining its place within the organizational structure. Find out how else to enable CDO success.

For McKinsey’s latest thinking on diversity, equity, and inclusion, visit our Diversity, Equity & Inclusion collection page.

—Alexandra Mondalek (she/her/hers), editor, New York

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