A Racial Change in Economic Opportunity

Lawrence Cain Jr., a Black millennial in Cincinnati, did not have a comfortable upbringing. His family didn’t have much money. They took few vacations. But Mr. Cain did have a strong community — which he said taught him entrepreneurship and showed him he could dream big. His mom took double shifts at nursing homes. She and her father ran their own businesses. Mr. Cain worked at his grandfather’s deli starting at 11 years old.

Mr. Cain, 35, got a two-year degree in business management and first worked as a bank teller and financial adviser. In 2015, he was ready to forge his own path. He started a financial coaching business, Abundance University. Business is booming. Today, Mr. Cain identifies as solidly middle-class. He and his wife, a teacher, can support themselves, their three children and then some. They take holidays around the country. “My kids are spoiled,” he joked.

Mr. Cain in many ways reflects the trends captured by a new Harvard study. It looked at two groups: a Gen X cohort born in 1978 and a millennial cohort born in 1992. The researchers combed through decades of anonymized census and tax records to which the federal government gave them access. The data covered 57 million children, which offered the researchers a more detailed view into recent generations than previous economic studies had. Adjusting for inflation, they then measured these groups’ ability to rise to the middle and upper classes — their economic mobility.

The researchers found that Black millennials born to low-income parents had an easier time rising than the previous Black generation did. At the same time, white millennials born to poor parents had a harder time than their white Gen X counterparts. Black people still, on average, make less money than white people, and the overall income gap remains large. But it has narrowed for Black and white Americans born poor — by about 30 percent.

The community you come from has a huge effect on your economic mobility. For centuries, this meant a tremendous advantage for white Americans, even those born into low-income families. But in a surprising shift, the study suggests that advantage is not as large as it once was.

On the flip side of Mr. Cain is someone like Derek Brown, a white millennial in Cincinnati. His parents were separated, and he was raised in two worlds, one middle class and one poor. His dad worked at a General Electric factory, a steady job that provided a more middle-class life. His mom worked long hours at gas stations, Mr. Brown said, but she struggled. Sometimes, she couldn’t pay the bills, and their power was cut off at home. “It was never the dream,” he said.

Unlike Mr. Cain, Mr. Brown did not have a strong sense of community, as he bounced between his mother, his father and his grandparents. Watching his mother, he came to believe that hard work does not necessarily lead to a better life. He once hoped to become a journalist when he grew up, but he gave up that dream to pursue what he believed would be a more realistic way to pay the bills.

Today, Mr. Brown, 34, feels that he is behind where his father was. He works as a hairstylist at Great Clips. He lives paycheck to paycheck. He currently has a $3,000 medical bill that his insurance didn’t cover, and he doesn’t know how he’ll pay for it. He’s always scared of the next big cost. “I have really bad financial anxiety,” he said. “I don’t even want to drive to places. What if my car breaks down?”

“It’s instilled in your head: Anything is possible if you work hard for it,” Mr. Brown added. “What no one tells you is that for some people there is a glass ceiling, and you just don’t see it until you hit it.”

As the Harvard study shows, the difference in outcomes between Mr. Cain and Mr. Brown is increasingly typical. But the racial differences weren’t the only findings. Over the decade and a half of the study, the opportunity gap between white people born rich and those born poor expanded by roughly 30 percent. One possible interpretation: “Class is becoming more important in America,” while race is becoming less so, Raj Chetty, the study’s lead author, told me.

The data didn’t just show that people’s lives were guided by immutable facts like class and race. It suggested that a person’s community — the availability of work, schooling, social networks and so on — plays a central role.

Imagine a thriving American community. What makes it successful? Jobs are an important factor. So are effective schools, nice parks, low crime rates and a general sense that success is achievable. In a thriving place, people not only get good jobs, but they also know that those jobs can lead to better lives, because they see and feel it all the time. “Our fates are intertwined,” said Stefanie A. DeLuca, a sociologist at Johns Hopkins University who was not part of the Harvard study. “The fortunes of those around you in your community also impact what happens to you.”

On an individual level, Lawrence Cain Jr. benefited from both his mother’s jobs and his family’s support and entrepreneurship. They helped plant the idea that he could work hard and become a business owner. “If your networks are doing well, you may think that you can do well, too,” said David B. Grusky, a sociologist at Stanford who was also not part of the Harvard study.

The inverse is also true. Derek Brown said that his childhood was too chaotic for him to develop strong social roots. Across a community, bad events can cascade and cause things to fall apart. Consider a neighborhood in which crime rises. Businesses move to safer locations. The tax base shrinks, and infrastructure deteriorates along with schools. People flee, and social networks splinter. A sense of despair takes over among the people who remain.

Real-world effects

Why did things get worse for poor white people and their communities, but not for their Black counterparts? One explanation focuses on the availability of jobs. The researchers found that community employment levels are an important predictor of differences in economic mobility.

In the real world, the situation might have played out like this: Over the past few decades, globalization and changes in technology have caused many jobs to go from the United States to China, India and elsewhere. These shifts appear to have pushed white people out of the work force, while Black people found other jobs.

There are several explanations for the racial disparity. White workers might have had more wealth or savings to weather unemployment than their Black counterparts did, but at a cost to their upward mobility. They might also have been less willing to find another job. A steel mill that shut down could have employed not just one worker but his father and grandfather, making it a family occupation. People in that situation might feel that they lost something more than a job — and might not settle for any other work.

The places where Black workers live were generally less affected by job flight than the places where white workers live. And compared with earlier generations, Black workers today are less likely to face racial prejudice in the labor force, making it easier for them to find work. While a white worker might have a generational connection to a steel mill job, a Black worker often does not, because segregation kept his parents and grandparents out.

These trends add up to decades of lost economic progress for low-income white people and the opposite for Black Americans.

The findings do not show that Black opportunity took away from white opportunity. In fact, the study found that white mobility had deteriorated least in the places where Black mobility had improved most.

In some ways, the research might prove politically controversial. Conservatives have long argued that white working-class Americans fell behind, while liberals have emphasized helping minority groups through policies like affirmative action. The left points out that Black and brown people remain far behind their white counterparts and therefore need more help from social programs. The right believes that’s outdated thinking, if it was ever correct. The study provides fodder for both sides.

“The left and the right have very different views on race and class,” said Ralph Richard Banks, a law professor at Stanford who wasn’t involved in the research. “The value of the study is that it brings some unimpeachable evidence to bear on these questions.” He added, “There’s something in it for everyone.”

For their part, the Harvard researchers feel optimistic about one major finding: Economic mobility can change relatively quickly. It improved in Charlotte, N.C., since 2014, after an earlier study by the Harvard group drove the city to make new investments. Local leaders got nonprofits and businesses, including Bank of America, which is based there, to provide job training, education, housing and other services to poorer residents. The researchers hope the results persuade other policymakers around the country to make similar investments.

“It actually is possible for opportunity to change in a serious way, even in a relatively short time frame,” said Benjamin Goldman, one of the Harvard researchers.

These trends don’t apply evenly to every part of the country. Some places had bigger or smaller gains for Black Americans and bigger or smaller losses for white Americans, as this map shows:

Mr. Cain believes his story shows that hard work can make a better life possible. He saw just how much his mother, as a Black woman, needed to do to get by. He faced his own doubts and troubles, including racism and discrimination, growing up. But he always remembered what his mother and grandfather taught him — that he could achieve his version of the American dream.

“I can chase that feeling every day of doing things for me, doing things with people I love and making an impact on the community,” Mr. Cain said. “That’s success for me.”

How common are stories like Mr. Cain’s where you live? You can see how economic mobility has changed in your county through this interactive: