Executive Summary and Chapter
The dream that one can rise up from humble beginnings and achieve a comfortable middle-class living, if not attain great wealth, transcends racial lines. But is this a reality for black and white families alike?
This report, by Julia Isaacs of The Brookings Institution, reviews overall income trends based on Census Bureau data and provides an intergenerational analysis based on a longitudinal data set that allows a direct match of the family income of parents in the late 1960s to their children’s family income in the late 1990s to early 2000s.1
In brief, trends show that median family incomes have risen for both black and white families, but less so for black families. Moreover, the intergenerational analysis reveals a significant difference in the extent to which parents are able to pass their economic advantages onto their children. Whereas children of white middle-income parents tend to exceed their parents in income, a majority of black children of middle-income parents fall below their parents in income and economic status. These findings are provided in more detail below.
Median family income for both black and white families has increased over the last 30 years, but income gaps still persist.
- Between 1974 and 2004, white and black men in their 30s experienced a decline in income, with the largest decline among black men. However, median family incomes for both racial groups increased, because of large increases in women’s incomes. Income growth was particularly high for white women.
- The lack of income growth for black men combined with low marriage rates in the black population has had a negative impact on trends in family income for black families.
- There was no progress in reducing the gap in family income between blacks and whites. In 2004, median family income of blacks ages 30 to 39 was only 58 percent that of white families in the same age group ($35,000 for blacks compared to $60,000 for whites).
- Black children grow up in families with much lower income than white children.
White children are more likely to surpass parents’ income than black children at a similar point in the income distribution.
- Overall, approximately two out of three blacks (63 percent) exceed their parents’ income after the data are adjusted for inflation, similar to the percentage for whites.
- However, a majority of blacks born to middle-income parents grow up to have less income than their parents. Only 31 percent of black children born to parents in the middle of the income distribution have family income greater than their parents, compared to 68 percent of white children from the same income bracket. Odds of exceeding parental incomes are better for black children from other income groups, but are still substantially lower than those of white children in the same circumstances.2
White children are more likely to move up the ladder while black children are more likely to fall down.
- More than one third (37 percent) of white children born to parents in the middle income group move up to the fourth or fifth quintile, compared to only 17 percent of black children whose parents have approximately the same levels of income.
- Startlingly, almost half (45 percent) of black children whose parents were solidly middle class end up falling to the bottom of the income distribution, compared to only 16 percent of white children. Achieving middle-income status does not appear to protect black children from future economic adversity the same way it protects white children.
- Black children from poor families have poorer prospects than white children from such families. More than half (54 percent) of black children born to parents in the bottom quintile stay in the bottom, compared to 31 percent of white children.
While the literature on intergenerational mobility by race is limited, similar black-white differences are emerging in other studies. However, the literature, like this analysis, is hindered by the small number of minority households in the longitudinal surveys. Analysis of additional data sets, as well as more extensive research on the factors contributing to racial differences, is needed to better understand the differences in mobility experiences uncovered in this analysis.
Markers of well and ill-being, ranging from life satisfaction to stress, are more unequally shared across the rich and the poor in the U.S. than they are in Latin America, a region long known for high levels of inequality.