A new study finds that the income gap between white and black young adults is smaller for millennials than for Gen Xers. It also found that the gap between white people born to rich and poor parents is widening across generations.
By age 27, black Americans born in 1978 to poor parents earned nearly $13,000 less a year than white Americans born to poor parents. That gap had shrunk to about $9,500 for those born in 1992, according to the study published last week by researchers from Harvard University and the US Census Bureau.
The shrinking racial gap was driven by greater income mobility for poor black children and a decline in mobility for low-income white children, the study found. There was also little change in income outcomes for other races and ethnic groups over this period.
A key factor was the employment rate of the communities in which people lived as children. Mobility improved for black individuals where the employment rate of black parents increased. In communities where the employment rate of parents decreased, mobility decreased for white individuals, the study found.
“Outcomes improve … for children growing up in communities with increasing parental employment, with larger effects for children who move to such communities at younger ages,” said researchers, who used census figures and data from income tax returns to track the changes.
In contrast, the class gap among white people widened between generations: Generation X born between 1965 and 1980 and millennials born between 1981 and 1996.
White Americans born to poor parents in 1978 earned about $10,300 less than white Americans born to wealthy parents. For those born in 1992, that class gap widened to about $13,200 because of the decreasing mobility of people born into low-income households and the increasing mobility of people born into high-income households, the study found.
There was little change in the class gap between black Americans born into both low- and high-income families, as they experienced similar improvements in earnings.
This shrinking racial gap and growing class divide among white people was also documented in education levels, standardized test scores, marriage rates and death rates, the researchers said.
There were also regional differences.
Black people from low-income families saw the greatest economic mobility in the Southeast and the industrial Midwest. Economic mobility declined most for white people from low-income families in the Great Plains and parts of the coast.
The researchers suggested that policymakers could encourage mobility by investing in schools or youth mentorship programs when a community faces economic downturns, such as the closing of a factory. They could also strengthen ties between different racial and economic groups by adjusting zoning or school district boundaries.
“Importantly, social communities are shaped not only by where people live, but also by race and class within neighborhoods,” the researchers said. “One way to increase opportunity, therefore, is to increase the connections between communities.”
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