Inherited racial disadvantage, more than poverty, explains why generations of African Americans have not reached economic parity with whites.
It’s 1880. The Civil War ended 15 years ago. Three years ago, federal troops withdrew from the South. Now, children of black and white workers of similar economic standing are able to climb up the economic ladder at the same pace. So by the start of the next decade, the median black worker earns more than around 30 percent of the nation’s labor force.
Of course, that scenario isn’t real. It’s a counterfactual from a new working paper published in the National Bureau for Economic Research, by historian William J. Collins and economist Marianne H. Wanamaker. In reality, black workers reached that 30th percentile milestone a full 100 years later, in 2000.
In the paper, Collins and Wanamaker set out to understand the mechanisms that drive a wedge between the incomes of blacks and whites from one generation to the next. Their big finding is this: Between 1880 and 2010, whites showed much higher rates of upward mobility than blacks—even if their parents started from the same economic position. “There is a specific penalty for black people, which is independent of whatever income their fathers earn,” Wanamaker tells CityLab. “And that has been constant over 100 years.”
History provides some evidence of what happened in this span of time. After the Civil War, the promise of land as compensation to former slaves never panned out. Freed slaves continued to work on farms, primarily in the South, that they did not own and under terrible conditions. Those who did own land often had it taken from them through deception and violence.
In 1870, before the federal troops withdrew, black per capita income was just 28 percent of white income. After Reconstruction, Southern whites retook political control, establishing Jim Crow segregation. Then, in the 20th century, even the African Americans who migrated North faced government-approved barriers to housing and schools in good neighborhoods.
In the decade after the Civil Rights Act was passed, the black-white earnings gap decreased—but the momentum didn’t last. By the 1980s, the gap started to widen again. By 2010, blacks earned just 68 percent of what whites do.
To quantify exactly how all of this drove apart the fortunes of blacks and whites, the researchers focused on economic mobility—the movement up or down the income distribution from one generation to the next. They compiled the occupations of one set of father-son pairs in the 1880 and 1900 Census, and another set in the 1910 and 1930. For the post-1930 period, they used more recent government data. (There’s no single dataset that goes back all the way.) Based on their occupations, the researchers assigned the father-son pairs average incomes. Then, they analyzed what the father’s position in the income distribution meant for the son’s economic future.
The results were striking. In their 1880-1930 datasets, they found that the children from the least well-off white families fared better than those from the richest black families. And this trend continued well into the 20th century. In 1973—10 years after the Civil Rights Act was passed—the white-black mobility gap remained the same as it was in 1900. Via the paper:
Based on these data, we conclude that it was not only, or even primarily, poverty per se that limited the pace of blacks’ economic progress in the historical samples. Rather, our results indicate a sharp disadvantage for black sons relative to whites in the likelihood of escaping the bottom ranks of the income distribution.
According to the researchers, the parents’ education and location mattered, but did not fully explain the divergent mobility of their children. What did have some bearing was the differences in“human capital”—the skills and knowledge that a worker contributes in the labor market. But the source of that disparity leads us back to square one.
“If that’s a big piece of the puzzle … then the next question is, ‘Well, why is it the case that teenagers arrive into adulthood with such different levels of test scores?’,” Collins says. “In the paper, we don’t dig too deeply into that. But as economic historians, it’s not too hard to connect the dots from the prohibition on literacy during slavery, to 100 years of separate and unequal schooling, to high levels of residential segregation.”
What would it take to level the playing field? Improving the incomes of the parents will help, but only so much. So reparations cannot just be a check in the mailbox. What’s needed is comprehensive social, political, and economic effort to make sure that the disadvantages—inherited through slavery, and maintained through successive rounds of legal and under-the-table discrimination—are finally stamped out, and black children are able to advance at the same pace as white ones. “From a policy point of view, you can think of this as an investment in the kids,” Collins says.