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Same family income, same street, but the black boy still grows up to earn less

Job seekers fill out applications during a career fair in Louisville, Ky., in 2016. (Luke Sharrett/Bloomberg News)

Virtually nowhere in the United States do black boys grow up to earn incomes equivalent to white boys raised in the same neighborhoods by parents with comparable wealth and education levels, according to a study released Monday that followed millions of children now in their late 30s or turning 40. 

The disparity holds true even for black boys raised in the wealthiest of families, who grew up on the same block in the same affluent community and attended the same school as their white counterparts. The findings shows that race -- not just parental income or neighborhood opportunities -- factors into the yawning wealth gap between blacks and whites in America.

In addition to income, black boys were more likely to be incarcerated and less likely to attend college than their white counterparts from families of similar income level.

“Race matters,” said Nathaniel Hendren, a Harvard economist who co-authored the paper with Raj Chetty at Stanford and two researchers with the U.S. Census Bureau. “Parent income and neighborhoods cannot explain the entirety of the black-white gap. Even when your parents get rich, the gaps don’t go away.”

The gap actually increased at the upper end of the income spectrum, a finding that surprised the researchers. In 99 percent of U.S. Census tracts, white boys grew up to earn more than black boys. The average gap for individual wages was about $9,000 for men from low-income families, Hendren said. That gap widened to an average of roughly $11,000 for men from affluent families.

Among the wealthiest families, black sons of millionaires typically earned an individual annual income of between $40,000 and $45,000 at age 35, while white sons of millionaires earned between $50,000 and $55,000, Hendren said. The household income gap was wider and was largely explained by the higher marriage rates among whites, he said.

“The racial divide is something that permeates the backyards of every community in America, in both affluent and poorer neighborhoods,” Hendren said. “In fact, the gap is even larger in affluent neighborhoods with better schools.”

The income disparity was driven entirely by men, researchers found -- with the gap virtually erased for women raised by parents of similar income levels. Black and white women with comparable family backgrounds grew up to attend college at near identical levels, worked similar hours, and earned closely equivalent wages. Both black and white daughters of millionaires earned an average of around $38,500 a year at age 35.

Boys born into high-income black families were much more likely to experience downward economic mobility than similarly situated whites across generations, the study said. A black child born to parents in the top 20th percentile of the income distribution was as likely to fall to the bottom quintile as he was to remain in the top. But white boys were nearly five times as likely to remain in the top quintile as they were to fall to the bottom.

As for what accounts for the disparities in upward mobility, the researchers do not have a clear answer. Social scientists and policy makers have suggested better educational opportunities, even marriage, as the key. But neither explains the intergenerational income gap between black and white children from similar backgrounds.

In the neighborhoods with low poverty rates where the gap is smallest, researchers identified two common traits: black fathers were more likely to be present in the communities and racial bias among whites, as measured by online psychological tests, was lower.

The presence of black fathers predicted the outcome of black boys regardless of whether a boy’s own father was present. But less than 5 percent of black children grow up in low-poverty environments with more than half of black fathers present, the study found, whereas 63 percent of white children are raised in communities with a high presence of white fathers.

Researchers suggested several policy considerations to close the intergenerational gap, including moving black families to better neighborhoods or replicating those conditions across the country with mentoring programs for black boys and efforts to reduce racial bias among whites.

The study relied upon newly available longitudinal Census data covering nearly the entire U.S. population between 1989 and 2015 as well as federal tax returns. Researchers followed a cohort of 20 million children born in the U.S. between 1978 and 1983 or legal immigrants who came to the country as children.