The Real Opportunity Economy

… Sometimes, the opportunity in the economy finds you.

Every once in awhile research comes along that not only challenges our assumptions, but also provides actionable strategies that position us to boldly innovate. “Changing Opportunity”, a longitudinal study of economic mobility sponsored by the National Bureau of Economic Research (released in July 2024), is an opportunity to rethink our theories of change in regards to disrupting poverty persistence and promoting economic mobility for low income children.

The study examined two cohorts of black and white adults at the age of 27 who were born into low income families to understand the extent to which economic mobility was improving for low income children and if so, why. The first cohort was of adults born in 1978 and the second was born in 1992.

The Headline Findings

The economic mobility of adults born in 1978 was predictable in regards to outcomes and racial disparities.  Economic mobility overall was not significant and Black’s economic mobility lagged considerably behind their White counterparts (15%).

The 1992 cohort was a very different story.  

• Blacks had made dramatic strides in bridging the racial economic mobility gap.  In 1978, White economic mobility was almost 15% higher than Black’s.  By 1992, the gap was 4.1%.

• Black poverty persistence decreased by 6% but increased by 5% for Whites.

Possible Headlines

We cannot ignore how these high level findings could be interpreted.

Both of the above conclusions are incorrect, but not for the reasons you think.

To understand why race still matters, a lot, we must first visit the study’s findings regarding socioeconomic predictors.

Socioeconomic Predictors of Economic Mobility

For as long as any of us can probably remember, there has been this notion of a “stacked deck” with regards to why poverty persistence is intergenerational. Factors like caregiver’s educational attainment, marital status, income, and occupation are all understood to be positively correlated not only with a household’s failure to escape poverty but also the children who grew up in it.

Black children have inherited a “rigged deck”. Chronic deficiencies in Black children’s education, systemic inability to access living wage jobs, and the dissolution of two-caregiver households under the pressure of mass incarceration of Black males has ensured that Black households and the children raised in them rarely tunnel their way out of poverty.

Our theories of the “stacked deck” and the “rigged deck” need to be significantly refined according to the authors of “Changing Opportunity“.

The study found that at the household level, the above socioeconomic factors, did not impact a child’s future economic mobility. Rather, the “socioeconomic health” of their larger environment (a County in the study) was a more accurate predictor of economic mobility for adults born into low income families.

“A Hide Tide Raises All Boats”

Upon initial glance at the data and in alignment with their hypothesis, it seemed that if communities were headed in a positive direction, then all members of that community, regardless of race, benefited. But when they began correlating race, employment rates, and economic mobility, they discovered that it was not a high tide raising boats. Rather, battered boats steered by intrepid Black captains were driving higher tides.

The first challenging data the researchers encountered was White unemployment. 55% of White caregivers were employed compared to 71% of Blacks in the study (16 point differential).

Given that (a) White unemployment was so high and (b) the average American county is 33% White, communities, overall, should have been trending downward economically under the pressure of White unemployment.

Not true. Not even close.

Captains of Their Own Destiny

In one generation, Blacks had closed the race-based economic mobility gap by almost 11% (15% –> 4.1%)

Black caregivers were able to drive economic mobility for their children despite:

• High unemployment rates amongst their White neighbors
• Earning $53,550 less than average Whites in the study

And whatever privilege being White may afford in our economy, low income Black children were acceding to higher income brackets as adults at a rate on par with Whites:

• White children were 29% more likely to experience economic mobility if their caregivers were employed.
• Black children were only marginally less likely (27%) to achieve economic opportunity.

Simply stated, Black families with track records of employment were disproportionately leveraging their economic opportunity to meaningfully advance their children’s futures.

The Deep Story

This study is an invitation to muster a sociological SWAT Team. Using Census & IRS data almost exclusively, the researchers were not able to explore social, cultural, or communal factors to deconstruct their Black economic mobility data. For example, are low income Black children being messaged in their homes, families, schools, churches, and neighborhoods in a manner that is different than White children? Are Black caregivers taking better advantage of resources in their communities? Do Black communities, at this time, have a richer, strong array of community resources than White communities?

The results leave us with a provocative conclusion and a latent opportunity.

With a mean annual income of $38,250 and stable employment, Black families are giving their children wings. What would deeper investments in skilled jobs, higher wages, and education yield? What is uniquely “going right” in Black communities? Why are Black children achieving historic gains in economic mobility? How can we amplify it?

Plan for Velocity

There are 3 critical insights from the “Changing Opportunity” study that we can implement now into our community-based workforce development, economic growth, and case management services:

• Move. Families who moved to markets with better economic opportunities were able to achieve employment persistence and to raise upwardly mobile children. While re-locating families to affluent communities and breaking down the walls of ghettos is a formidable project, supporting workers to access better jobs outside of their communities is doable through community-sponsored rideshare programs and accessible childcare.
• Target Young Families. Children whose caregiver(s) moved to a community with better employment by the time they were 8 were astronomically more likely to experience upward mobility as an adult. We should focus scarce resources on young adults, 18-24, whose early success in the job market will reap huge dividends for their children.
• Employment Persistence. True for both White and Black children, the long term stability of their caregivers’ employment was positively correlated with economic mobility. Because low income families often confront challenges that transform into immovable road blocks that then result in job loss, it is important for programs to invest in long-term engagement strategies and support services that support individuals to maintain employment and to make strategic employment moves that will sustain their forward momentum.

Our final obligation is to uncover the deep backstory behind the numbers. Something is going very right in our nation’s Black communities and it deserves recognition and replication.