The racial income gap between Gen X and millennials is starting to shrink

The income gap was revealed in a study by Harvard researchers and the U.S. Census Bureau.

The income gap between white and Black young adults was narrower for millenials than for Generation X, according to a new study that also found the chasm between white people born to wealthy and poor parents widened between the generations.

By age 27, Black Americans born in 1978 to poor parents ended up earning almost $13,000 a year less than white Americans born to poor parents. That gap had narrowed to about $9,500 for those born in 1992, according to the study released last week by researchers at Harvard University and the U.S. Census Bureau.

The shrinking gap between races was due to greater income mobility for poor Black children and drops in mobility for low-income white children, said the study, which showed little change in earnings outcomes for other race and ethnicity groups during this time period.

A key factor was the employment rates of the communities that people lived in as children. Mobility improved for Black individuals where employment rates for Black parents increased. In communities where parental employment rates declined, mobility dropped for white individuals, the study said.

“Outcomes improve … for children who grow up in communities with increasing parental employment rates, with larger effects for children who move to such communities at younger ages,” said researchers, who used census figures and data from income tax returns to track the changes.

In contrast, the class gap widened for white people between the generations — Gen Xers born from 1965 to 1980 and millennials born from 1981 to 1996.

White Americans born to poor parents in 1978 earned about $10,300 less than than white Americans born to wealthy parents. For those born in 1992, that class gap increased to about $13,200 because of declining mobility for people born into low-income households and increasing mobility for those born into high-income households, the study said.

There was little change in the class gap between Black Americans born into both low-income and high-income households since they experienced similar improvements in earnings.

This shrinking gap between the races, and growing class gap among white people, also was documented in educational attainment, standardized test scores, marriage rates and mortality, the researchers said.

There also were regional differences.

Black people from low-income families saw the greatest economic mobility in the southeast and industrial Midwest. Economic mobility declined the most for white people from low-income families in the Great Plains and parts of the coasts.

The researchers suggested that policymakers could encourage mobility by investing in schools or youth mentorship programs when a community is hit with economic shocks such as a plant closure and by increasing connections between different racial and economic groups by changing zoning restrictions or school district boundaries.

“Importantly, social communities are shaped not just by where people live but by race and class within neighborhoods,” the researchers said. “One approach to increasing opportunity is therefore to increase connections between communities.”