Bad news on race, class, and social mobility

An important new study by Harvard’s Raj Chetty and his colleagues at Opportunity Insights suggests that, on issues relating to social mobility, there is a great deal of work still to be done. In fact, according to the study, which looked at life outcomes at age 27 for 57 million children born between 1978 and 1992, circumstances may actually be getting worse.

At first glance, there are positive signs. For instance, the black-white income gap is shrinking among low-income Americans, down 28 percent since 1978. In part, this is progress for African Americans. Adult earnings increased for black children at all parental income levels. Notably, a black child born to low-income parents in 1992 earned $1,400 more annually at age 27 (after adjusting for inflation) than one born in 1978. That’s progress, though the country should be doing so much better.  

However, the biggest reason for the shrinking income gap is that the bottom has fallen out for low-income white Americans. While earnings for children from high-income white families increased, income for a white child born into a low-income family fell by $2,000 from 2005 to 2019 (that is, for children born from 1978 to 1992). This “class gap” between poor and wealthy white children grew by 27 percent, while remaining stable for non-whites. 

Similar results can be seen with other metrics. For example, the racial infant mortality gap declined by 77 percent between 1978 and 1992, while the gap between rich and poor whites more than doubled. The same trends hold for educational attainment, standardized test scores, and mortality rates, among other metrics, small improvements for African-American children accompanied by worsening results for poor whites. Class is slowly overtaking race as a key determinant of economic mobility, but this is hardly the type of equality to cheer for. 

Unfortunately, race continues to matter. I’ve written about the government-imposed barriers that African Americans face in trying to escape poverty, and Chetty’s work shows that these barriers continue to have an effect. On average, a white child born in 1978 earned $9,500 more at age 27 than a black child born the same year. Not only do African Amercans still have a hard time climbing out of poverty, they are more likely to fall into poverty. White children born into the middle quintile of incomes had a 16 percent chance of falling into the bottom fifth of incomes, but middle class black children had a 25 percent chance of doing so. Poor black children still have only a three percent chance of rising into the top income quintile. Poor white children have seen their chances of rising to the top fall from 14 percent to 12 percent, bad in itself, but still far better than for African Americans. 

Moreover, as Richard Reeves and Scott Winship have pointed out, black children remain much more likely to start out in poverty. Roughly 12 percent of white children born in 1992 were born into poor families, a slight improvement from 1978 when it was 14 percent. For black children, that number was 51 percent, unchanged from 1978. According to a joint study by the American Enterprise Institute and the Brookings Institution, fully 20 percent of poor African Americans adults are part of a third generation of poverty, compared to just one percent of white adults. Given these trends, racial disparities are likely to continue to demand our attention for some time to come. 

At the same time, as Chetty’s work points out, we cannot ignore the deteriorating problems for low-income white families. It is all the more important, therefore, that policymakers pursue racially neutral reforms that will benefit both poor black and poor white Americans. These reforms include eliminating exclusionary zoning and other barriers to affordable housing and geographic mobility, reforming the criminal justice system and reducing mass incarceration, giving parents greater choice and control over their schools and the money that funds them, and encouraging entrepreneurship and job creation.