The US relies on strong pillars to secure its economic growth such as a robust private business sector, a deep-rooted tradition of innovation, promising prospects for increased productivity, and an inclusive economic agenda among many others. Nevertheless, in order to secure sustainability, inclusiveness, and growth, the US, one of the world’s richest nations, faces a number of challenges that need to be properly addressed to ensure that the US economy is on the right track. This conclusion was reached by McKinsey & Company, a strategic management advisory institution founded in 1926.
“As the United States looks beyond the COVID-19 crisis, it has an opportunity to create the conditions for an economy that grows robustly and, at the same time, grows in an inclusive and sustainable way,” states McKinsey & Company.
It identifies that a prosperous economy advances more people, leaves fewer behind, and protects the environment for both this and the next generations.
How is the United States heading for sustainable and inclusive growth? McKinsey & Company states that applying sustainability, inclusiveness, and growth and capitalizing on the connection between these three elements are tasks that require a combination of approaches that the company knows to work including the need to:
- Build a more competitive US manufacturing sector. This could have multiple effects across a wide and diverse geographical area. Manufacturing remains the main economic generator and major employer in about 500 counties across the U.S. Revamping the capital stock in production industries could bring billions of dollars in investment, triggering economic growth in those communities in dire need of it.
- Double and expand the development and retention of the workforce. Technology nowadays requires new higher-level skills, including critical thinking, creativity, and socio-emotional abilities while the front-loading education at an early age will have to give way to lifelong learning. The next task is to expand the most successful learning programs. Using empirical data to track employment outcomes could help channel funding into what really works and allow people to make better-informed choices about their training and careers.
- Revitalize entrepreneurship and the small- and medium-size business (SMB) base. SMBs make up about 48% of the U.S. economy and provide jobs for around 60 million people nationwide although many of these have low financial resilience with have less capital, personnel, and access to technology compared to their larger counterparts. However, the appropriate policies could significantly modernize and build up smaller businesses and producers through financing programs, tax incentives, and business accelerating programs.
- Advance infrastructure and housing. This would help many American cities facing a shortage of affordable housing which in turn slows down economic growth. In addition to addressing consumer needs, an improvement in infrastructure could increase productivity and accelerate job creation. For instance, the U.S. Council of Economic Advisers has estimated that every billion dollars invested in highway and transit infrastructure supports 13.000 direct, indirect, and time-induced jobs for a whole year.
- Invest in healthcare. This is important to improve both people’s lives and the economy. The McKinsey Global Institute (MGI) has estimated that every year premature deaths and the loss of productive potential associated with diseases have a burden on the U.S. economy of about US$3.2 trillion. Prevention is essential in achieving health benefits and much health improvement would follow by simply providing access to preventive consultations such as weight management, quitting smoking, the use of generic preventive drugs, and routine vaccination.
- Address gender and racial gaps. Achieving full gender equality in the near future is unlikely given the obstacles that continue to hinder women’s progress in today’s labor market. MGI found that improving gender parity in the workplace could generate about US$2.1 trillion of incremental GDP in 2025.4 Eliminating racial pay gaps across occupational categories would increase the total wages of Black workers by 30% and would attract about one million Black workers into employment.5 Bringing businesses to underinvested communities could help continuous innovation while also creating new jobs.
- Invest in and address inequalities based on location. Every community, from the most progressive to the most afflicted, is facing economic development problems that need to be dealt with at local and regional levels. For megacities and high-growth centers, the challenges are to connect the disadvantaged populations with new opportunities, including affordable housing and improved transportation. The rural counties do not have the economic activity, investment flows, or people to create new jobs and workforce retraining would not solve the greater challenge caused by a lack of economic activity. Communities that encounter a decline in their economic dynamism should focus on entrepreneurship and skills development.
Even though all these actions could be implemented, the United States would still have to deal with many difficulties to achieve sustainable and inclusive growth. McKinsey & Company concludes it is obvious that all stakeholders – governments, businesses, local communities, and individuals – can play a role in paving the way for sustainable and inclusive growth. Despite all the problems faced by the United States, the country takes the lead in taking advantage of opportunities and has proven many times that it can address challenges that arise.
“In some ways, the holistic goal of sustainable and inclusive growth could be the nation’s post-pandemic moon shot—an ambitious and wide-ranging program that improves the lives of everyone. How the United States embraces this new agenda will mark its future prosperity”.
