Dear Commons Community,
The payoff from a college degree remains strong, lifting lifelong earnings and protecting many graduates. However, a new report has found that for black and Hispanic college graduates, a college degree fails to protect them from both short-term crises and longstanding challenges. As reported by the New York Times:
“The long-term trend is shockingly clear,” said William R. Emmons, an economist at the Federal Reserve Bank of St. Louis and one of the authors of the report. “White and Asian college grads do much better than their counterparts without college, while college-grad Hispanics and blacks do much worse proportionately.”
A college degree has long been recognized as a great equalizer, a path for minorities to help bridge the economic chasm that separates them from whites. But the report, scheduled to be released today, raises troubling questions about the ability of a college education to narrow the racial and ethnic wealth gap.
“Higher education alone cannot level the playing field,” the report concludes.
The report provides data and draws conclusions on a number of factors including issues of discrimination and the fact that black and Latino college graduates work disproportionately in government positions. But the issue that seemed most important to me was family wealth.
“William A. Darity Jr., director of the Duke Consortium on Social Equity at Duke University, points out that a family headed by a black college graduate has less wealth on average than a family headed by a white high school dropout.
The lack of family wealth is pivotal to understanding the racial economic gap, he argues.
While the researchers from the St. Louis Fed, when asked, played down the importance of financial support from family when explaining their results, Mr. Darity said he believed that family aid helped individuals avoid the type of risky big-ticket borrowing that ensnared so many Hispanic and black graduates.
“Prior family wealth is the key,” Mr. Darity explained in an email, noting that it “shapes both income-generating opportunities and the capacity to allow wealth to grow more wealth.”
This report provides good insights and raises important questions on the racial economic gap and is an important addition to the research literature.