Black Americans 16x more likely to be in third-generation poverty

A new Brookings report finds that multigenerational poverty is much more likely to affect Black Americans than white Americans. One in five Black Americans are experiencing poverty for the third generation in a row, as opposed to one in 100 white Americans.

Issues of Black-white inequality and racial injustice have taken center stage over the past year to a degree not seen for a generation. These issues cover a wide range of topics, touching on policing and criminal justice, labor market discrimination, gaps in educational opportunity, social capital inequalities, and the racial wealth gap.

Understanding the ways in which these inequalities have been reproduced across generations is an important first step in creating a more equitable society where upward social mobility and economic opportunities are accessible to all. In the new paper, Long Shadows: The Black-White Gap in Multigenerational Poverty, the authors take a multigenerational perspective on economic inequality by race, showing the persistence of unequal economic opportunity for Black Americans across time.

Recent work has highlighted stark disparities in social mobility across two generations for Black and white Americans, but we know relatively little about Black-white gaps in the experience of multigenerational mobility and poverty across more than two generations.

Brookings estimates the Black-white gap in multigenerational poverty across three generations using the Panel Study of Income Dynamics (PSID), which began tracking families in 1968. The PSID allows us to link the incomes of adults today in their 30s with the incomes of their parents and—dating back to the Civil Rights Era—their grandparents. For each generation, we define “poverty” as being in the bottom quintile of the income distribution. Our headline finding is that three-generation poverty is over 16 times higher among Black adults than white adults (21.3 percent and 1.2 percent, respectively). In other words, one in five Black Americans are experiencing poverty for the third generation in a row, compared to just one in a hundred white Americans.
Black families experience higher rates of poverty, less upward mobility, and more downward mobility

There are three mechanisms that could potentially give rise to racial gaps in poverty across multiple generations. First, if the initial poverty rates of earlier generations are sufficiently large, then even if Black and white Americans escape poverty at similar rates, Black poverty would remain more common over time. Second, even if Black Americans did not have higher poverty rates in earlier generations, racial gaps in poverty might persist or widen if Black upward mobility out of poverty is lower than mobility among white Americans. Third, even if Black Americans did not have higher initial poverty rates or less upward mobility, racial gaps might show up if downward mobility rates into poverty are higher for Blacks than for whites. In our analysis, we find that all three factors contribute to today’s income gap; Black Americans experience higher initial poverty rates, less upward mobility, and more downward mobility.

We first observe the income earned by the grandparents of today’s adults around 1970. While only nine percent of today’s white adults in their 30s had a grandparent in the bottom fifth of the income distribution, that was true of 59 percent of today’s Black adults in their 30s. Put another way, of today’s Black and white adults in their 30s, two-thirds (65 percent) of those with a poor grandparent are Black. Clearly, then, initial poverty rates are higher for Black families. If we go back just one generation instead of two and observe the incomes of the parents of today’s adults, we find a similar picture. Among Black adults today, 55 percent had parents in the bottom fifth of the income distribution, compared with just 12 percent of white adults.

But Black families are not only more concentrated at the bottom of the income distribution; they are also less likely to experience upward mobility out of the bottom quintile. Conditional on being raised by a grandparent in the bottom fifth, 66 percent of white parents escaped the bottom fifth as adults. That is only true of 37 percent of Black parents. Among today’s adults in their 30s raised in the bottom fifth, 56 percent of whites and only 42 percent of Blacks have risen out of the bottom.

On top of that, Black adults who were not raised in the bottom fifth are much more likely to fall into poverty than white adults. Among the parents of today’s adults that were raised in the middle fifth of the income distribution, half of Black parents (51 percent) fell into the bottom fifth, compared with just 14 percent of white parents. For today’s adults raised in the middle fifth, a third (33 percent) of Blacks and 13 percent of whites are now in poverty.

Researchers believe this Black-white gap in multigenerational poverty is the result of the relatively low income rates of earlier generations, limited upward economic mobility, and a  downward mobility rate that is higher for Black people than their white counterparts. The findings conclude by indicating that the aforementioned racial gap has increased as time passes on, showing the persistence of economic injustice in the nation today.