Study finds black-white income gap in US narrows between Generation X and Millennials

The income gap between white and black young adults was narrower for millennials than for Generation X, and the gap between white people born into wealthy families and those born into poor families widened across the generations, a brand new study finds.

By age 27, black Americans born in 1978 to poor families earned nearly $13,000 a yr lower than white Americans born in poor families. That gap narrowed to about $9,500 for those born in 1992, in line with a study released last week by researchers at Harvard University and the U.S. Census Bureau.

The study found that the narrowing racial gap was attributable to greater income mobility for poor black children and a decline in the mobility of low-income white children, in addition to the undeniable fact that there was no major change in the earnings of other racial and ethnic groups over the identical period.

A key factor was employment rates in the communities where people lived as children. Mobility improved for blacks, where employment rates for black parents rose. In communities where employment rates for fogeys fell, mobility fell for whites, the study found.

“Outcomes improve … for children who grow up in communities with rising parental employment rates, with larger effects seen for children who move to such communities at younger ages,” found the researchers, who used census and tax return data to trace changes.

By contrast, the category gap widened amongst white people between generations — Generation X, born between 1965 and 1980, and Generation Y, born between 1981 and 1996.

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White Americans born into poor families in 1978 earned about $10,300 lower than white Americans born into wealthy families. For those born in 1992, the category gap widened to about $13,200 due to declining mobility for those born into low-income households and rising mobility for those born into high-income households, the study reported.

There was little change in the category divide between African Americans born into each low- and high-income families, as all saw similar improvements in income.

The narrowing racial gap and growing class gap amongst white people were also reflected in educational attainment, standardized test scores, marriage rates and mortality, the researchers said.

There were also regional differences.

Black people from low-income families saw the best economic mobility in the Southeast and industrial Midwest. Economic mobility declined probably the 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 mentoring programs when a community experiences economic shocks, reminiscent of a plant closing, and by increasing connections between different racial and economic groups by changing zoning restrictions or school district boundaries.

“Importantly, social communities are shaped not only by where people live, but also by the race and class within a neighborhood,” the researchers said. “One way to increase opportunity is to increase connections between communities.”