A new study from Opportunity Insights has revealed significant shifts in economic mobility trends in the United States over the past few decades, highlighting a narrowing economic divide between Black and white Americans and a widening gap between low- and high-income white individuals.
First published by the Harvard Gazette and researched by Raj Chetty, Crystal S. Yang, and Will Dobbie of Harvard University, Benjamin Goldman of Cornell University, and Sonya R. Porter of the U.S. Census Bureau, the study revealed that for white children born between 1978 and 1992, earnings increased for those from high-income families. Still, they decreased for those from low-income families, resulting in a 30% increase in earnings gaps by parental income. Conversely, earnings for Black children increased at all parental income levels, reducing the earnings gap between low-income Black and white children by 30%.
The researchers observed similar trends in non-monetary outcomes such as educational attainment, standardized test scores, and mortality rates. For example, the white class gap in early adulthood mortality more than doubled, while the white-Black race gap in early adulthood mortality decreased by 77%.
Economic mobility fell the most for low-income white families in the Great Plains and coastal areas, regions with relatively high mobility rates for the 1978 birth cohort. By the 1992 cohort, these areas had levels of economic mobility comparable to the Southeast and industrial Midwest, which had low levels of mobility for all cohorts. Meanwhile, economic mobility for low-income Black families increased sharply in the Southeast and the industrial Midwest, with modest changes on the coasts. Despite these improvements, low-income Black families still had significantly lower levels of economic mobility compared to their white counterparts in most regions.
The study attributes these divergent trends to changes in childhood environments, particularly parental employment rates within local communities defined by race, class, and childhood county. Researchers found that outcomes improved across birth cohorts for children who grew up in communities with increasing parental employment rates, with more significant effects for children who moved to such communities at younger ages.
“This is the first big data study to look at recent changes in economic opportunity within the same place over time,” said Goldman, a research affiliate with Opportunity Insights. “And what we see are shrinking race gaps and growing class gaps.”
The findings suggest that community changes in one generation can propagate to the next, generating rapid changes in economic mobility. The outcomes for children were most strongly related to parents’ employment rates within their own birth cohort, indicating the role of social interactions in mediating economic opportunities.
The study also places current trends in the context of historical factors such as slavery, Jim Crow laws, redlining in credit markets, and the migration of Black Americans from the South to the North. These historical influences continue to impact present-day economic mobility.
“This work reinforces the importance of childhood communities for outcomes in adulthood, consistent with our prior findings,” said Chetty, co-founder and director of Opportunity Insights. “But it shows that it is possible for these communities to change rapidly—within a decade — in a way that has significant causal effects on children’s long-term outcomes.”
The analysis, drawn from 40 years of tax and Census records, included 57 million Americans born between 1978 and 1992. The researchers used anonymized records provided by the federal government to compare earnings at age 27 with socioeconomic factors from childhood. The study found that Black millennials fared better than Black Gen Xers, with individuals born in 1978 to low-income families averaging $19,420 per year in early adulthood compared to an inflation-adjusted $21,030 for poorer members of the 1992 cohort.
Meanwhile, white Gen Xers from poorer families averaged $27,680 per year versus $26,150 for their millennial peers. The gap between the poorest and richest white people ballooned by 28% over the same period as those born at the top watched their fortunes climb.
Results varied widely by region, with Black Americans making the most significant strides in the Southeast and Midwest, areas traditionally associated with high rates of Black poverty. For example, in Kalamazoo, Michigan, poor Black children born in 1992 earned $4,700 more at age 27 than those born there in 1978, according to co-author Will Dobbie, a professor of public policy at Harvard Kennedy School.
The researchers also found that moving to areas with solid parental employment was associated with higher earnings in early adulthood, especially for those who moved before age 10. “Growing class gaps and shrinking race gaps did not result from unequal access to a booming economy,” Goldman said. “Instead, what matters is how many years of childhood were spent in a thriving environment.”
By: Stacy M. Brown, NNPA Newswire Senior National Correspondent
