According to a new study from Opportunity Insights, Black millennials born into low-income families have seen better financial outcomes in early adulthood than Black Gen Xers. On the other hand, White millennials from low-income families have encountered less financial stability during their 20s than White Gen Xers experienced, resulting in a significantly smaller economic gap between low-income Black and White millennials not seen in prior generations.
The study consisted of 40 years of tax and United States Census Bureau data regarding 57 million Americans born in either 1978 (Gen Xers) or 1992 (millennials) to families with total earnings in the 25th percentile or lower. The authors analyzed socioeconomic factors from each individual’s childhood compared to their economic status at age 27.
Adjusting for inflation, the authors found Black Gen Xers had average incomes of $19,420 per year at age 27, compared to $21,030 per year for millennials at the same age. The study also found small economic improvements for Black Americans born to high-income families. For White Americans, Gen Xers born to low-income families had average incomes $27,680 per year at age 27 compared to $26,150 for millennials.
Black millennials were also more likely than Black Gen Xers to move out of poverty by age 27. In the older generation, low-income Black children were 14.7 percent more likely than their White peers to stay in poverty by early adulthood. Among the younger generation, the gap fell to just 4.1 percent.
In a deeper analysis, the authors found moving to a community with increasing rates of parental employment by age 10 was associated with better financial outcomes during adulthood. This was the case for people of all races, suggesting community-level interventions may be the best method for improving economic mobility for future generations.
Housed at Harvard University, Opportunity Insights is an initiative that aims to identify barriers to economic opportunity and empower people to achieve better life outcomes. The initiative’s recent report consisted of authors from Harvard, Cornell University, and the United States Census Bureau.
