In this essay, we explore how wage and benefits pathways differ between Black, white, and Latino or Hispanic adults who experienced socioeconomic disadvantage in adolescence. We find:
- Upward career mobility leads to higher wages for white adults than for Black and Latino or Hispanic adults. On average, Black and Latino or Hispanic adults in their respective highest-earning trajectory groups earn between 68% to 75% of the average annual earnings of white adults in the highest-earning group. In the second-highest-earning groups, Black and Latino or Hispanic adults also consistently earn less than white adults.
- Higher-earning groups had relatively high rates of military service, particularly among Black and Latino or Hispanic adults.
- Among the lowest earners, Black adults had the highest incarceration rates and white adults had the highest rates of work-limiting health conditions.
In a perfectly equitable society, race or ethnicity would not be systematically associated with advantage or disadvantage. But when we examine how employment pathways vary among Black, Latino or Hispanic, and white adults who experienced socioeconomic disadvantage in their teens, that is not what we find (nor is it what other researchers have found when examining economic mobility).
In fact, in Essay 3 of this series, we found that race and ethnicity play a role in predicting the outcomes experienced by these young people even when controlling for a host of other factors. Simply being white or Latino or Hispanic increases the probability of being in an upwardly mobile trajectory group compared to being Black. And as shown in this essay, the wages of Black and Latino or Hispanic adults in higher-earning trajectories are considerably lower than the wages of white adults in higher-earning trajectories.
Who is in the study population?
To identify adults who experienced socioeconomic disadvantage in adolescence, we assess whether they met any of the following criteria in their teens:
- Lived in a low-income family
- Neither parent had a postsecondary degree
- Mother was aged 19 years old or younger when her first child was born
- Family received public assistance
Anyone who met at least one of the above criteria is included in the analysis.
Early career mobility looks different for white young adults than for Black and Latino or Hispanic young adults
After running separate analyses by race/ethnicity, we find that each population falls into four trajectory groups with similar patterns. They all have one group with very low wages, little wage growth, and few benefits, and they all have three more groups with gradations of higher wages and steeper growth. But wage levels and the rates of growth vary substantially between racial/ethnic populations.
Indeed, economic mobility looks strikingly different depending on race and ethnicity. Among white people, every trajectory group at age 30 has higher earnings than the corresponding trajectory groups among Black and Latino or Hispanic people.
In the lowest-earning group, Group 1, average annual wages are very low for everyone ($5,000 or less) and poverty rates are extremely high at age 30: 78% of Black people in this group live below the poverty line, as do 46% of Latino or Hispanic people and 42% of white people. Very few people of any race/ethnicity receive any employer-related benefits. More than one-quarter of the Black population falls into this group, compared to 19% of the white population and 15% of the Latino or Hispanic population.
Group 2 has relatively low earnings and sluggish growth for all races and ethnicities. At age 30, average annual earnings for White Group 2 are about $20,000, compared to $17,000 for Latino or Hispanic Group 2 and $14,000 for Black Group 2. Benefit levels are fairly low for everyone, but are slightly higher among white people. Among both Black and white young adults, Group 2 is the most common trajectory group, accounting for 34% of the Black population and 38% of the white population.
In the second-highest-earning group, Group 3, white adults also have a substantial advantage. At age 30, their average annual earnings are $46,000, compared to about $30,000 among Black Group 3 and $35,000 among Latino or Hispanic Group 3. White Group 3 has a slightly higher benefits index (2.4) than Black Group 3 (1.9) and Latino or Hispanic Group 3 (2.0). (See Essay 2 for a description of the benefits index scoring.) This is the most populous group among Latino or Hispanic people, accounting for 41% of the population.
Economic mobility is greatest among Group 4 for all races/ethnicities we analyzed. It has the steepest wage growth and the highest earnings by age 30, but average annual earnings among Black Group 4 and Latino or Hispanic Group 4 at age 30 are $65,000 and $70,000 respectively, compared to $108,500 among White Group 4. Benefit levels at age 30 are fairly high for everyone. Relatively small shares of each race/ethnicity fall into this group: 9% of white adults, 11% of Black adults, and 15% of Latino or Hispanic adults.
The trajectories of all three populations reflect common patterns, but also differ in important ways
Despite their differences, the trajectories of the different racial/ethnic groups are all shaped by the same well-established labor market and societal patterns, and thus bear certain resemblances to each other. Indeed, they align with the patterns described in the second essay in this series, which reported on the analysis of the study population as a whole, not disaggregated by race/ethnicity.
We list these similarities below and refer you to Essay 2 for more detail:
- Adults who started with the fewest economic resources in adolescence struggle the most to achieve economic mobility.
- Poverty rates are extremely high for lower-earning trajectory groups.
- Those in higher-earning trajectory groups work more consistently, are more likely to work full time/year-round, and have higher education levels than lower-earning trajectory groups.
- Incarceration, work-limiting health conditions, teen parenthood, and disconnection from school and work are most common among the groups with the flattest earnings trajectories.
- Military experience and working in a job that is covered by a union contract are most common among the groups with the highest upward mobility.
However, beyond these similarities, trajectories for racial/ethnic groups also differ in important ways.
The racial wealth gap persists, even among those from disadvantaged backgrounds
Among all races/ethnicities, those in the higher-earning trajectories come from families with greater wealth than those in lower-earning trajectories. But wealth levels are higher among the white population at every earnings level. For example, median parental wealth among White Group 4 is approximately $114,000—about four times that of Latino or Hispanic Group 4 ($28,000) and three times of Black Group 4 ($36,000). These disparities apply in the lowest-earning groups as well, with median parental wealth at about $31,000 for White Group 1, $12,000 for Latino or Hispanic Group 1, and $6,000 for Black Group 1.
White and Latino or Hispanic women are disproportionately likely to be low earners compared to white and Latino or Hispanic men
About two-thirds of the members of White Group 1 and Latino or Hispanic Group 1 are women, and females account for decreasing shares of the trajectory groups as earnings rise. Only 17% of White Group 4 and 23% of Latino or Hispanic Group 4 is female. Gender segregation is not nearly as prominent among the Black trajectory groups, as women make up between 43% to 53% of each trajectory group. In fact, women are slightly underrepresented among the lowest Black earners, making up 43% of that group, compared to 49% of the study population as a whole.
Work-limiting health conditions are most common among white low earners
Among all races/ethnicities, work-limiting health conditions are more common among the lowest earners. But rates are highest among White Group 1 members, 28% of whom have a work-limiting health condition at age 27, compared to 18% of Black Group 1 members and 20% of Latino or Hispanic Group 1 members. Since survey respondents define “work-limiting health condition” for themselves, these conditions likely refer to a wide range of situations and problems.
Incarceration rates are high among all low earners, but particularly among Black people
Across races/ethnicities, a history of incarceration is much more common among Group 1 and 2 than the higher-earning groups. But among Black people, rates are very high: More than one-third of Black Group 1 members and 17% of Black Group 2 members have been incarcerated. Rates are lower (although still high) among the other lower-earning groups: More than 20% of both white and Latino Group 1 members have been incarcerated, as have about 15% for white members and 14% for Latino or Hispanic members of Group 2.
Military experience is most common among Black and Latino or Hispanic Group 4 members
The highest-earning groups among both Black and Latino or Hispanic people are disproportionately made up of those with military experience. Twenty percent of Black Group 4 and 17% of Latino or Hispanic Group 4 served in the military, compared to 5% of the Black study population and 7% of the Latino or Hispanic study population. Among Black Group 3 and Latino or Hispanic Group 3, about 8% and 9% percent have military experience, respectively. Among white individuals, about 11% of both Group 3 and 4 served in the military, relative to 7% of the white study population as a whole.
Among the highest earners, white people are more likely than Black and Latino or Hispanic people to work in construction and production occupations
Across all races/ethnicities, members of higher-earning trajectories are more likely to work in management and professional jobs. By age 30, approximately 40% of Black Group 4, white Group 4, and Latino or Hispanic Group 4 are in these roles. White Group 4 also has high shares of workers in construction, production, and transportation at age 30 (39%)—considerably higher than Latino or Hispanic Group 4 (29%) and Black Group 4 (23%). Similarly, members of lower-earning trajectories are much more likely to work in service occupations. Notably, Black Group 1 has substantially higher shares of members in service occupations at age 30 (55%) than other trajectories and other racial/ethnic groups.
Too many young people are falling behind in the transition to adulthood. This is true for every race and ethnicity. But notable differences between groups point to stressors and barriers affecting some more than others.
The high incarceration rates among Black people in our analysis reflect the higher rates of surveillance and racial bias in law enforcement and sentencing that Black communities face. This sets off a deeply negative spiral—damaging future employment prospects for those with a criminal record, disrupting family and community bonds, and increasing the likelihood of future criminal justice involvement.
The prevalence of work-limiting health conditions among the lowest earners (particularly among white people) tracks with other research on the potential causes of declining labor force participation. Most notably, researchers Anne Case and Angus Deaton found an increase in sickness and death among white people with a high school diploma or less. Subsequently, they linked this declining health with the cumulative disadvantages experienced by white people with less than a college degree as the economy and labor market have shifted.
The military, by contrast, appears to play a disproportionately positive role in the economic prospects of Black and Latino or Hispanic individuals. This aligns with the argument that the military provides a path to socioeconomic advancement for people of color and people from low-income backgrounds. Of course, fighting racism in the ranks is an ongoing concern. And others critique the military as a route for social mobility, arguing that its recruitment efforts disproportionately target high schools with student bodies that are predominantly low-income, Black, or Latino or Hispanic—trading on these groups’ more constrained postsecondary opportunities.
Lastly, although this analysis did not address racial discrimination in the labor market, our findings are consistent with research findings on discrimination. For example, job seekers with stereotypically “Black” names on their resume are less likely than those with “white” names to get callbacks from employers, even when they have similar qualifications. Other research makes it clear that Black and Latino or Hispanic workers face undeniable discrimination in the labor market, noting that the “magnitude and consistency of discrimination” in hiring is a “sobering counterpoint” to more optimistic assessments about the declining significance of race. In addition to hiring, racial discrimination manifests itself in the assignments workers are given and the ways their performance is judged and rewarded, which in turn affects career progression. Thus, the lower payoffs people of color experience reflect racism at every stage in the pathway to higher mobility.