An inaugural racial-equity analysis of 40 Minnesota companies shows progress in company diversity, but also shows much more work is needed.

3M, U.S. Bank, Target, Allianz Life Insurance, Allina Health and Best Buy all scored very well on the St. Paul-based Center for Economic Inclusion's first Racial Equity Dividends Index released Tuesday.

The survey of 40 Minnesota firms pointed to needed work to diversify suppliers, create livable wages and actively recruit people of color. The goal of the index is to identify which racial-equity policies are effective and where there is room for improvement.

The death of George Floyd at the hands of police and the civil unrest that followed in 2020 unleashed commitments from Minnesota business leaders to erase racial inequities within both the workplace and society at large. The CEI index is one tool being applied toward that goal, organizers said.

The 40 participating companies, with more than 200,000 workers combined, were evaluated on 36 equity standards and reported outcomes for seven key workplace practices.

The process looks at how the companies dealt with employees, suppliers and customers of color with regard to hiring; culture/retention/advancement; supply procurement; philanthropy/investment; providing products to people of color; leadership; and public policies.

"Until now, there has not been an index like this for race to help companies decide how they are performing," said Tawanna Black, the center's chief executive.

Twenty-eight of the 40 index participants are headquartered in the Twin Cities. Index scores averaged 38 out of a 100. The highest score was 76 and the lowest score six. Well-resourced large firms carried the highest scores.

The majority of firms provided employees with benefits and regularly surveyed their staff about their sense of belonging and racial equity. About 73% also provided a budget to help staffers working on racial-equity matters.

U.S. Bank, 3M and Allianz Life Insurance Company of North America rated very well for having strong racial-equity practices in leadership, retention/advancement, philanthropy and investment.

3M and U.S. Bank also scored high for having diverse product-procurement practices. Other firms noted for regularly buying goods from racially diverse suppliers included Allina Health, Andersen Corp., Fairview Health, Mortenson Construction, Securian Financial, and Target.

Companies reporting solid practices in the areas of hiring, retaining or advancing employees of color included 3M, Allianz, Allina Health, Andersen Corp., Best Buy, Fairview Health Services; Short Elliott Hendrickson Inc., Target Corp., U.S. Bank, Grant Thornton, and the Jennie-O subsidiary West Central Turkeys.

Only 26% of the 40 Minnesota firms reported having minority supplier purchasing efforts or making philanthropic investments in Black, Latino, Native American and Asian-led organizations.

In all, just 44% of firms reported having equity goals for "hiring, retaining and advancing" workers of color and for holding leadership accountable for meeting their goals.

About 30% said they intentionally recruited from colleges and workforce development programs that have high percentages of Black, Indigenous, Hispanic and/or Asian people.

These numbers show "opportunities for growth," Black said.

Wages proved another area that surprised CEI officials.

Only 8% of the surveyed firms paid "family-sustaining" wages and only 5% had leadership representing the demographics of the population.

Half the firms in the index said they measure employee pay by race annually. But only 8% paid workers at least $45,000 a year.

"Particularly in Minnesota, it is important for all employees to not just care about the minimum wage but to care about whether all families are making enough to sustain their families," Black said.

Greg Cunningham, senior vice president of U.S. Bank, said closing the racial wealth gap is critical work and information from the index "can focus our efforts going forward."

3M said in a statement that the racial equity index "is another way we continue to monitor our progress and hold ourselves accountable."

Apart from the index, CEI also released Tuesday findings from its Inclusive Regional Economy Digital Lab. Results were sobering.

CEI's analysis of the state's unemployment data revealed that Black, Somali and Indigenous residents were employed at a rate of 54% compared to more than 80% for Puerto Rican, Korean and Indian residents.

It also found workers of color were often the first laid off and the last to be hired for full employment.

"Racial discrimination in the employment process is also still prevalent, with three in four Black, Indigenous, Hispanic and Hmong residents reporting experiencing racial discrimination when applying for a job," the Digital Lab report said, noting that barriers to meaningful employment still exist for many despite the historic worker shortages.

The CEI index delved beyond employment to find that just 25% of 40 surveyed firms regularly analyzed the impact of their products on consumers and communities of color.

Without diverse marketing teams, some companies are missing sales that could be made in ethnically diverse communities, Black said.

Black noted that closing racial-equity gaps is not just good, but is "good for business." A McKinsey research report noted that the spending power of African American consumers alone is expected to rise from $910 billion in 2019 to $1.7 trillion by 2030.

The index was launched in January by CEI, the St. Paul-based nonprofit whose sponsors include the McKnight Foundation, Target, U.S. Bank, 3M, Thrivent, JPMorgan Chase, Wells Fargo, Mortenson and Best Buy.

Following the May 2020 killing of Floyd, 33% of America's largest corporations — including several in Minnesota — committed to supporting racial-equity efforts and pledged $66 million, according to McKinsey & Co.