A newly published study by researchers at Stanford, Harvard, and the US Census Bureau confirms what many activists and experts on race and class in the United States have argued for some time: Race matters in itself. Focusing solely on class as a source of disparity does not automatically improve outcomes for all racial groups.
The study, by Raj Chetty, Nathaniel Hendren, Maggie Jones, and Sonya Porter, uses Census data and tax records from a cohort of parents and their children to map intergenerational income disparities by race. The most striking finding is the downward mobility across the income spectrum for black men. White children from families in the top fifth of the distribution have a 41 percent chance of staying in that percentile as adults, whereas black children have only an 18 percent chance. This gap persists even when black and white children come from families with the same family structure and educational background. And it shows that income mobility looks very different for black men and white men. Black men are less upwardly mobile than white men no matter what part of the income distribution they grew up in. Black men born in the 75th income percentile end up 12 percentiles lower in the distribution than white men of similar situations. (This difference does not appear to exist to the same degree between black women and white women, but it is important to note that this does not mean the wage gap between white and black women has been closed.)
What makes this study so important is the size of the data set used. The authors have unrivaled access to tax records, allowing them to marry individual and family characteristics to income. They can therefore compare a parent’s income to that of the child they claimed on their tax forms, allowing for an intergenerational study. Because income earned from wages, marital status of parents, and educational-attainment records give us a limited window into a family’s true economic situation, the researchers use the American Community Survey data and other Census data to generate a proxy for wealth when studying intergenerational racial disparities in income. This included sources of wealth like homeownership, home value, and vehicle ownership.
But that’s only the beginning of how families accrue wealth—and it’s important to understand how families accrue it, given that some families’ sources of wealth provide them with economic and political influence that in turn impacts families all along the distribution. Other sources of wealth like inheritances, business equity, and retirement accounts also vary by race. The study also does not account for grandparents’ income, which would add useful context to their analysis of one generational cohort. These limitations mean that the researchers’ measures of wealth don’t fully capture the racial differences in kinds of wealth and income at the top of the distribution. As the study notes, there is more intergenerational persistence at the top of the distribution. In other words, being incredibly well-off keeps you incredibly well-off at a higher rate than just being moderately well-off. And, notably, the very top of the income distribution is mostly white.