Children’s inheritance from their parents includes so much more than just a monetary bequest in a will. It can also encompass the gift of a college education, support starting a business or buying a home, financial know-how or a family business.

That inheritance starts at birth. Black families, which on average accumulate less wealth in the U.S. than white families, often have less to pass down to the next generation.

In January 2019, the Institute for Policy Studies reported that the median Black family in America owns $3,600, about 2% of the $147,000 owned by the median white family. After adjusting for inflation, “the median Black family saw their wealth drop by more than half” from 1983 to 2016, while the median white family’s wealth accumulation increased by a third, according to the study.

A September 2017 survey of consumer finances from the Federal Reserve Board pegs median wealth a little higher, but the inequality remains: $171,000 was the median white family net worth, but Black families’ median net worth was only $17,600.

“When you think about how wealth is built over time, typically the way wealth has been built is through property ownership,” REV Birmingham Director of Recruitment and Business Growth Taylor Clark Jacobson said. “That is a ladder to privilege and access.”

That wealth translates to opportunities from the earliest days of a child’s life.

The amount of a family’s income can open — or close — doors to better schools and extracurricular participation, which in turn helps kids qualify for colleges and scholarships. Paying for college itself becomes an impossibility, or at least requires a heavy loan burden, without sufficient income and assets.

College graduation correlates with higher income across all races. The 2017 survey of consumer finances found median Black net worth was $11,600 without a bachelor’s degree and $68,200 with a bachelor’s or higher.

However, it’s important to note that college doesn’t erase the wealth gap. The survey showed that the median white net worth without a college degree, which was $98,100, still far outpaced the net worth of degree-holding Blacks.

From Parent to Child

In adulthood, parental wealth continues to play a role. It becomes easier to weather economic difficulties or take large financial risks, like starting a business or buying a home, with a financial safety net provided by the previous generation. The survey of consumer finances found that 71% of white respondents could borrow $3,000 from a family member or friend in an emergency, but only 43% of Black respondents could do the same.

Parental attitudes and behaviors toward money are also likely to get passed down from one generation to the next, amplifying the consequences of smart or poor financial decisions across decades. “If you don’t have multiple generations of wealth that are teaching the up-and-coming generation about how to manage your wealth … then you’re already at a disadvantage,” Jacobson said.

Damian Carson, regional vice president of Operation Hope, a national nonprofit centered on economic education, said many low-income families never have the opportunity to learn about managing their credit scores or other financial management skills, making homeownership, entrepreneurship and wealth accumulation far more difficult.

Operation Hope focuses on credit and financial coaching in Birmingham, but nationwide it also has programs for youth on financial literacy and entrepreneurship, connecting classroom learning with future career options. Carson said working across generations makes it more likely that these skills will be passed down.

“With people understanding the consequences behind (credit) and having someone there to walk them through, it’s like a lightbulb goes off,” he said.

The survey of consumer finances found that just more than 25% of white survey respondents received some sort of inheritance, compared to only 8% of Black respondents. Though far outweighed by the impact of earlier investments of money and time, an inheritance of money or property also continues to boost the next generation, and even the generation after.

That’s part of why Urban Impact, an organization that supports the 4th Avenue and Civil Rights business districts, puts such an emphasis on sustainable Black businesses and Black commercial property ownership.

Darryl Washington, Urban Impact chief operations officer and director of programs, said he worked for AT&T for 20 years before his nonprofit career.

“I couldn’t just give that to my son when I left, but if I own the building, that’s real property I can give to him,” Washington said.

Creating and supporting those generational businesses are “a very key dynamic to how this (commercial) district has survived,” he said.

Children Don’t Always Surpass Their Parents

With the disparity in available wealth and opportunities over a lifetime, it’s no surprise that from one generation to the next, Black families are less likely to have upward social mobility. A 2018 National Bureau of Economic Research paper found that, from 1989 to 2015, “black boys have lower incomes in adulthood than white boys in 99% of Census tracts,” even if their parents had the same income levels. There was not an income gap between Black and white women.

Even among high-income Black families, the report states that their children are far more likely than white children to move downward in income levels.

“Both black and white boys have significantly higher incomes if they grow up in ‘good’ neighborhoods — e.g., those with low poverty rates, high test scores, or a large fraction of college graduates,” the NBER paper reports. However, white children still benefited the most. The study found that growing up in those “good” areas was likely to lead to higher incomes for white children than for Black children in the same areas.

Another 2019 study on intergenerational wealth agreed: “Black children both have less wealthy parents on average and are far more likely to be downwardly mobile in household wealth.”

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See an interactive visualization of these intergenerational wealth changes, published by the Inequality Lab

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The study, written by a Harvard University sociology professor, found that for children whose parents are in the middle 20% of income levels, 39% of Black children would fall to the bottom income level, compared to 16% of white children.

All of these factors put together mean that the wealth gap is unlikely to decrease over time without specific efforts to improve wealth equity.

A 2016 report by the Institute for Policy Studies and CFED, which since has been rebranded as Prosperity Now, put it this way: “If average Black family wealth continues to grow at the same pace it has over the past three decades, it would take Black families 228 years to amass the same amount of wealth White families have today. That’s just 17 years shorter than the 245-year span of slavery in this country.”