New data show significant changes in racial and class mobility gaps in the United States

Past research shows that differences in intergenerational mobility between Black and White Americans have persisted since the 1880s. Current racial economic mobility gaps are rooted in historical discriminatory policies, such as segregation and redlining, and continue to this day even after many of these policies were outlawed. So, what can be done to change these long-term trends, and can shifts occur in a relatively short time horizon?

Important new research from economist Raj Chetty and his team at Harvard University’s Opportunity Insights delves into these two questions. Chetty and his colleagues find that changes in economic mobility from one generation to the next are possible and are driven by differences in children’s social environments at the community level. Most notably, the research shows significant shifts in the Black-White economic mobility gap and in class gaps for White children in the United States.

Looking at changes in economic mobility for U.S. children born between 1978 and 1992, Chetty and his team identify several key findings. First, over the past 15 years, the Black-White economic mobility gap decreased, while the mobility gap between White children from low- and high-income families increased. Average earnings decreased for White children born in 1992 to low-income families, compared to those born in 1978, while incomes went up for White children born to high-income families.

At the same time, the adult incomes of Black children born into households at all income levels went up. This resulted in a 27 percent decrease in the gap between average incomes for White and Black adults who grew up in low-income households from the 1978 cohort to the 1992 cohort—though the gap remains significant because of the large initial divide in the 1978 cohort.

Chetty and the Opportunity Insights team find that variations in the environments where children grow up drives the changes in U.S. economic mobility by race and class. The differences in adult economic outcomes correlate with changes in employment rates in their childhood communities, holding constant their parents’ employment situations. In other words, children raised in thriving communities with low unemployment have better outcomes in adulthood, regardless of their own families’ socioeconomic status.

The team also studies the impact of community-level social interactions on economic mobility, looking at both economic resources and social interactions as potential reasons that living in a community with higher employment leads to better economic outcomes for children in adulthood. Indeed, the researchers find that social interactions are the primary driver of greater economic mobility.

A deeper dive into the changing mobility gaps

One of the most eye-catching findings from the Opportunity Insights research is the decrease in the Black-White mobility gap. That’s partially because previous research from Opportunity Insights, among other studies, pointed to very limited intergenerational upward mobility for Black Americans.

In their new paper, Chetty and his team discuss the evolution of their findings, explaining that in this new research, they were able to disaggregate the data by race and parental income—something they were not able to do in previous studies. Without that dual disaggregation, the increase in income for White adults who grew up in high-income households offset the decline in income for White adults raised in low-income households, which meant the White-Black mobility gap appeared essentially the same over time.

Even with the new approach to the data, there are several important things to keep in mind when considering the decrease in the Black-White mobility gap that Chetty and his team find in this research. Specifically:

Despite a decrease in the racial mobility gap between the 1978 cohort and the 1992 cohort, the average income of White adults from low-income backgrounds in the 1992 cohort is still 41 percent higher than the average income of Black adults raised in low-income households.
The decline in the Black-White mobility gap is not solely driven by improvements in Black adults’ economic outcomes. While the average incomes of Black individuals increased between the 1978 and 1992 cohorts, the mobility gap also declined due to lower average incomes for White adults from low-income households between the 1978 cohort and the 1992 cohort.
The increased mobility of Black children in the 1992 cohort, compared to the 1978 cohort, means that they are less likely to be in poverty. Yet their upward mobility was mainly into the working class or middle class—not into the top income quintile.

As these points show, despite the Black-White mobility gap narrowing, it is still significant.

Conclusion

Overall, Chetty and his team’s recent work shows that economic mobility can change in a relatively short time, and these shifts are driven by changes in the communities and social environments in which children grow up. This finding has encouraging implications for enacting policies to improve mobility.

When communities experience economic shocks, for example, policymakers should focus government support on youth as well as adults, including investing in schools and youth job-training programs. Economic mobility policies also should combine providing financial resources with investments in social supports and increasing connectedness, such as connections with college counselors and housing navigators.

At the same time, looking solely at income misses how important the intergenerational transfer of economic resources is to children’s outcomes. The Black-White wealth divide is significantly larger than the income gap. Even closing the racial income gap will still leave a notable racial wealth divide, as Fenaba Addo of the University of North Carolina at Chapel Hill, Duke University’s William A. Darity Jr., and the University of Minnesota’s Samuel L. Myers Jr. discuss in their recent research. The broader context of this racial wealth gap needs to be considered to give a fuller picture of the policy changes needed to shift long-term outcomes around racial economic equity.

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