Why Didn’t Higher Education Protect Hispanic & Black Wealth?

Why Didn’t Higher Education Protect Hispanic & Black Wealth?

September 7, 2019 0 By Ronny Jaskolski


You might have picked up from Clint’s remarks. I’m glad he looked forward to see who was speaking after him today
because a lot of what it is we’re looking at was based upon ideas that,
that it’s people behind the money. It’s not just money that actually matters. Money by itself doesn’t matter. It’s the people behind the money. And, one
day I was working out at the ARC, as I tend to do when I get up in the morning. Probably because I can’t sleep after
five o’clock in the morning. And, I was listening to National Public Radio and I
was trying to think of a theme for this particular year’s symposium and, low and
behold, NPR had a little report from the US Economist, at the St. Louis Federal
Reserve Bank, by the name of William Emmons. And, I looked into it and asked
to see if he could come down and and speak with it. I think the topic that
he’s talking about has a lot to do with what, with the
individual differences that exist within our society. Okay, and I think that’s one of
the things we certainly need to focus more on, in terms of making a real
difference. I just put it simply. You know, I was, I graduated high school
in 1970 and during the 60’s the Civil Rights movement. I thought we’d be a
whole lot farther down the road then we are in the year 2015. And, I think most of
you will agree with me that we’ve still got a long ways to go. And, I think it’s a
very important thing for us to be talking about, and to work with, and
actually talk to each other, in order to make some differences in that. To do that,
or to help us start thinking about some of the differences that do exist. Bill Emmons is next on our program.
Bill is Assistant Vice President Economist at the Federal Reserve Bank in
in St. Louis. He’s, he speaks frequently on topics, including the economy, housing,
mortgage markets, banking, financial markets, household financial conditions,
which is certainly what today’s topic is, in fact, about. He joined the St. Louis
Fed back in 1995 and he also serves as an Adjunct Professor of Finance at the
John M. Olin Business School at Washington University in St. Louis. We all know that in Missouri, as far as that goes. Prior to being at the St. Louis Fed, he
was on the faculty at the Amos Tuck School of Business at Dartmouth College,
back in New Hampshire. He received his PhD in finance from the Kellogg School
at Northwestern University and is an alumni from the University of Illinois. Part of that. So please join me in welcoming Bill Emmons to the podium. Thank you Rob. All right, thank you very much! Yes, I want
to echo Rob’s comments. Treasurer Zweifel, I think, is an unusual
public servant. Very engaged, very intelligent, very forward-looking. And, I
want to emphasize a couple of the themes that he mentioned. Just how important
service is. Not just if you’re in the public service, but in the private sector
to. We all have to be concerned about the issues Rob highlighted – what I want to
talk about. And so, I want to challenge you as we go through this, I’m going to
speak primarily about the financial experiences of Latino and black families. I don’t care what color your skin is, it matters for everyone. And, you all are
in a position to make a difference. So I want to speak to this question, why
didn’t higher education protect Hispanic and black wealth? And, I’ll show you the
numbers. I’ll provide some interpretations, very tentative. This is ongoing research
and I’d be very interested in any insights you might have. So, I’ll approach
this in three main steps. First, talk about the links between education and
wealth. This may sound naive. Does college make you rich? But if you look at the
numbers, that’s at least the the first impression. That is going to jump off
these these charts that I show you. Going to college may not be the only way to
accumulate wealth but it certainly seems to be the best way. There are very, very
strong links between education and wealth. And, as I’ll show you, they’re actually
getting stronger over time. So then, I want to dig down a little bit and really,
I guess, critique what I’m going to call the Silver Bullet theory of Education. The idea that there’s something, to overstate the idea, there’s something
almost magic about getting a college degree. That that alone is going to
provide these great outcomes that we see in the data. The second step then is to get to
the real topic of this discussion. And that is to really look at, what I
would call, the broken link between Hispanic and black college degrees and
wealth. Now I was not aware of these numbers until recently, this year, when
someone called this to my attention. That the experiences of black and Hispanic
college graduates has been different. It has not been the same over the last few
years and, when we did dig into the numbers, it’s very clear, very striking. So,
I want to point out just the the raw numbers and then a little bit more, sort
of, what I’m gonna call the College Wealth Multiplier. Comparisons between
college graduates and those without college degrees. And, I want to, I should
have said this at the top, I should say this repeatedly as I go through with this, I’m not saying that college is not a good idea. I’m not
saying that it’s not something to aspire to but, what i’m saying is, the numbers
are sobering. That somehow it’s not working in exactly the way that we hoped
that it would across the entire population. So, then I’m going to throw
out some explanations. These are tentative, this is work in progress,
very interested in all of your thoughts. I’ll bet Willie has some ideas. You can help me
get some new ideas going in trying to look into this. So, I’m gonna
break this down into two categories of explanations. So first, what I’ll call
proximate explanations or, if you will, sort of, what was the, how did this
actually happen? What are the things that you can point to directly without
knowing exactly what’s behind it but just, how did this happen? And, what
appears to be the case ,is that there are some differences in job market
experiences, labor earnings. Particularly, if we look at the longer term experience.
But there also seem to be things in the financial lives of families. And, I’ll
show you, just briefly, some data. For example, exposure to the housing market
As the housing market crashed in many, many parts of the country, families of whatever age, race, education
level, who were more exposed to housing, who had a larger share
of their assets in housing, naturally felt that decline more significantly.
Also, on the other side of the balance sheet, families that had more debt were
in a more vulnerable position to declines in
asset values, job loss, or other sorts of interruptions of income. And so, those
two, the housing exposure and the debt, appear to be proximate causes. But
of course that begs the question, why is that? Why would we see these systematic
differences across groups? And, as I’ll mention, we’ve done a lot of work looking
at lots of different demographic factors. So, differences across the life cycle,
differences in when you were born. What I’m gonna talk about today, the
differences in education and differences across race and ethnicity. So they’re,
you see differences in all of these sorts of asset and liability positions
across lots of different demographic dimensions. And then, the other type of
cause, we’re gonna call underlying. So, this is more of the why. Why did we see
these patterns, whether it’s in the job market, in asset and liability? Well, this maybes seems a little bit
technical to to some of you but, for those of us doing the research, it is
very important to step back and say “well are we actually measuring what we think
we’re measuring.” So one potential issue is that when I, especially when I look at
these longer-term comparisons 1989 or 1992, say versus 2013. Are we actually
measuring the same groups? So is the group of college graduates in 1989, are
those comprable in important ways to 2013. So I’ll explore that just a little bit
Then there’s also, again I don’t want to be too technical but the idea that, there are
differences within the pool. So there may be heterogeneity, important differences
due to all sorts of different reasons. And again, so maybe we’re not really
comparing groups that we should be comparing appropriately. So I wanna, I do
want to raise those questions really to say, “these results are
tentative. It could be that there is systematic things that we’re missing. That
somehow we’re not interpreting the numbers correctly.” And then, a few other ideas but I am really shopping
for your insights, and interests, suggestions on what to do. Okay so that’s the overall plan. First
thing, just education and wealth. Is there a connection? Well that’s one of the biggest duh’s you
could come up with. Of course, there, it is enormous. It is
awesome how different the wealth accumulation experiences of families
of different levels of education are. So you can see these pictures. This breaks
down population. And I should say that, all of these data come from the Federal
Reserve’s Survey of Consumer Finances. This is, now we have about a quarter
century of very high quality data on the population. So I’m breaking the
population, or actually the sample, down into four groups. From the bottom of the
char, families headed by someone who did not finish high school. Then families
headed by someone who has a high school diploma or a GED. And, the third line, the
red line, families headed, and these could be single individuals too, families headed
by someone whose highest level of education is a two or four-year college
degree. And then, the highest line, the blue, are families headed by someone with
a post-graduate degree. A law degree, medical degree, PhD, masters, okay? I think you
can see that there’s a big gap and in fact one of the surprises to me when we
got into these numbers is just how these gaps get bigger as you go up to a
successively higher levels of education this chart is shown as relative to the
overall median and these are medians for the groups that is the family that ranks
exactly in the middle so from the bottom you can see that families without high
school diplomas have about half of the income that I’d say well this is income
families whose head is a high school grad or slightly below the median which
is not too surprising because when you rank everybody by education the typical
person bTW in person has a high school diploma that’s the biggest group the
next group to a four-year college has about 50 percent more income than the
median but look at that top line they postgraduate families have almost two
and a half times the income of the median family the typical family right the median is the middle of you rank
everybody think I have another mother charged it would be admitted it changes
over time it’s in the order of 50,000 yes our families are just ranked as the
family unit we have not done that that’s that’s something we would we would do I
would put that down on my list of things you would like to look into differences
in family size for example now for the the story in this picture and then more
generally for the discussion today if those differences are systemic across
race ethnicity or systemic across education groups the numbers are going
to look different but that begs the question why why why are the family
structure is different so you’re right that we have sort of suppress that at
this point and so if you will be the hidden assumption here is that that’s
not an important part of this story that the main thing driving these differences
is in fact education alright so that’s income is income you thought that was
big look at well so here is the breakdown across different levels of
education again expressed relative to the population median which in this I
dunno these numbers a little bit better off and the next 2013 median family
wealth was about $81,000 so they’re less than high school you can see the lowest
line is 20% I remember the exact number twenty thirty percent of the median high
school diploma is significantly below the median college is about twice median
and look at the Postgraduate about six times the median so in fact wealth
accumulation much more than income is skewed toward those with more education
and especially the highest levels of education ok so these are just just numbers just
correlations we haven’t really dug down to think what’s going on here just to
provide you some some framework to think about this and here are the actual
numbers so for example that the highest group there the Postgraduate the median
postgraduate family has about $450,000 net worth at his assets minus
liabilities geez that’s the median half of families
have more at last with an education level and you can see this as I said
this enormous gap as you go up the education rankings so you know I started
out by saying does college make you rich well maybe does post-graduate education
make you rich these numbers would suggest there’s something there but I’m
gonna argue well it’s it’s more complicated than that you can’t simply
give somebody a college degree and say oh you are now going to fall into this
category and as I said not only are the levels striking the trends over time are
pushing toward greater inequality this is well and so taking those numbers from
the previous chart putting the ball back on a starting point of 100 so we can
trace out then the cumulative percent change across different groups you see
the line it’s going down at the bottom there the Purple Line less than high
school families with less than a high school diploma have 60% less wealth the
typical family today versus a quarter century ago and then at the top of the
chart the blue line postgraduates have something on the order of 25% more
wealth families with that level of education versus a quarter century ago so what
this is saying is those families with the least well a quarter century ago
lost the most and families with the most wealth gained the most so this is a huge
part of the income and wealth inequality discussion we’re having and what annoys
me is that this aspect of it is is not often discussed it’s no mystery in a
sense why we’re seeing these big wealth disparities because the rewards to
education seem to be growing yes ok good question all of the defined
contribution type accounts that pressure it’s wife was talking about all those
are included defined benefit the old traditional
company pension based on some formula is not included Norris Social Security future value of
Social Security included 401k czar in here I raised 529 they’re all here ok and so here are the percent changes
from that previous chart from 1989 to 2013 by education and you can see very
clearly this gradient this this relationship families with the least amount of
education have done very poorly overtime and families with the most education
have done very well comparatively over this quarter century
so that’s a huge part of what’s going on in the nine showing you well you see
some somewhat similar pictures for income so there’s another aspect to this
so I want to show you this is back in 1989 on the left the share of all
families in our sample that had different levels of education so about
half of families highest education was high school quarter-century ago I didn’t realize
this until I looked at these data about a quarter of families back in 1989 we’re
headed by someone without a high school diploma a quarter of families headed by
someone without a high school diploma that’s that’s surprising to me then you
can see the college and post-graduate shares there together making up about 20
28 percent of families then on the right what share of total wealth to those
groups of educated families have and not surprisingly college families have
disproportionately more wealth you saw that from the numbers before and it’s
about 55% of total wealth versus 28 percent share of all families now fast
forward to 2013 same pictures to share of high school grads are still about 50%
of all families the share of people without a high school diploma has shrunk considerably and that’s been a major
accomplishment in many respects now it’s down to only about 11 percent
corresponding we have more college graduates in the population and more
people with post-graduate education and on the right you can see that the share
of wealth owned by college graduates is now 75% so this is my point before that
there seems to be increasingly associated with people with with
education college and yard and they’re actually two things going on here not
only is the number of families with college increasing you saw that but the
average level or medium level of wealth of each college family is increasing so
those two things together are causing this widening disparity across education
levels so all of these numbers of course in and you know a lot of discussion with
kind of end here and say well we’ve got to get everybody to college and of
conversation I’m gonna push back on that a little bit I’ll call that the Silver
Bullet theory of Education the idea that more education especially college might
overcome other disadvantages such as the racial and ethnic income and wealth gaps
that I want to talk about why do people say that well because there are studies
upon studies that show that education higher education is correlated with
things like better outcomes in the job market people earn more income they have
greater financial literacy they have better health they live longer they have
higher socioeconomic status those sort of softer aspect of where you fit in
your community better child outcomes stronger marriages lower criminality
lower chance of being in poverty greater civic involvement what’s not to like
these are the things that we think build strong families and strong communities
and all of these things are strongly related to education case of I hope some
of you are sort of thinking though but is college magic so I would argue educational attainment
is a proxy for many other factors that contribute to a person’s success ok so
heres college and we can associate college with all of these good things
but is that in a sense what you learn in college classes not to downplay that but
is that alone what’s causing all of these good outcomes argue well it’s part
of it but it’s probably not all of it there are what I would call background
factors the role that your parents play in getting you into a position to
succeed in college or beyond the role of your own interests aptitudes non
cognitive skills your ambition your perseverance your grit you didn’t learn
that in college you brought that to college with you and then all of the
networks that your parents may provide for you or your communities may provide
for you religious organizations may provide
there’s a lot of things that make it possible for you as an individual to
succeed in college it’s not simply not to downplay college but it’s not simply
the fact that you spent four years in Columbia Missouri or wherever it might
be that complicates this whole discussion I think but I think we do
need to grapple with it so let me now start digging into the data these are
numbers for 2013 from our sample the top our income numbers and mostly what
people learn from their jobs and the bottom is net worth or welfare assets
minus liabilities so this is broken out into two groups by education and for
troops by race and ethnicity so you can see the first column of
numbers there these are only families who have a four-year college degree or
more and the second column numbers is everybody else families families headed
by someone who did not finish a four-year college degree and I’ll speak
to that final column in just a minute so in the top table family incomes first
get listed the all families median so this is a
partial response to your earlier question so $87,000 is the median family
income of college families 30 36,500 is the median income for families without
college huge right that’s a big difference in fact the multiple that’s
what the third column is 2.4 times higher for families with college across
the entire population and then broken down white asian hispanic and black you
can see the numbers they are all much higher among college grads then on
college grads within a racial or ethnic group but you can certainly see that
there are differences across racial and ethnic groups within college or within
non-college so these racial and ethnic group differences persist even when you
break down across education levels and then the bottom chart is the same
breakdown for wealth and as you picked up in the earlier pictures if anything
did the differences are larger in terms of wealth compared to income and not
least on that far right-hand column the multiples how much more college
graduates are militant on current college grads is higher for whites and
Asians are called the wealth multiplier seems to be more powerful for whites and
Asians and for Latinos and Blacks ok so this was what rob was talking about a
short article I wrote with a colleague came out in August of this year with the
title that I’ve already used for the talk today why didn’t higher education
protect Hispanic and black wealth there were very large losses I’ll show you
this particularly during the recession of the housing market crash and has been
a very weak recovery and then even when you look at the longer term the
differences are are pretty stark so what we didn’t have any kind of hinted at
this show you some of these numbers we followed eight groups across this
quarter century beta so we’re looking at the for racial
and ethnic identities and these are in fact self-identified by survey
respondents and it’s also the case that an individual may respond with more than
one racial or ethnic identity for him or herself for another member of the family
so this is using the first one mentioned what responded presumably thinks of as
their primary racial or ethnic identity and then also the to education levels do
you have a four-year college degree or not then I will come back to this as I
said already at the top we don’t claim to understand exactly why all of this is
happening and there are even these basic things maybe we’re not even comparing
things that should be compared may be the distance in time is too great or
maybe these breakdowns are too blunt essentially you know saying that all
college graduates should look alike or the differences across racial and ethnic
groups are not important when you break down by education so all those things we
are very much aware we’re thinking about that trying to dig deeper into this and
this is available on our website ok so here’s here at the eight groups
this is median wealth from 1989 through 2013 this survey occurs every three
years the solid lines there are college graduates families the dashed lines are
families without college and you can see the labels the most wealthy group are
white college graduates the next group is Asian and you can already see here
there’s something something of an overlap between the college and the
non-college groups not show you that more clearly in just a second so here
are all the college graduate groups and what was really striking in this is
really kind of what got us interested in this issue is what’s happening in the
2007 10:13 period the period that spans the the great recession and housing
market crash I should say this is a semi logarithmic
chart so the vertical axis is logarithmic and that allows us to
express percentage changes more clearly and so it’s a little bit different from
what you would see with a different kind of charge but the real benefit is we can
interpret the slope of a line as the percentage change so you can see those
two lower lines the green in the purple lines representing Hispanic and black
families had very negative percent changes the slopes of those lines are
very negative whereas for white and Asian families most recently they were
closer to flat so that’s really what what perked up our attention is what’s
going on there why were there such a large losses of wealth among Latino and
black college families this is the point that there’s an overlap and it’s it’s
been both ways over the sample period but it is now back to a situation in
which latino and black college families at the median have lower well then white
families without college doesn’t seem like that that should should be the case
that picture there okay so that’s the the first fact that you had these big
big losses that just jump out for black and Hispanic college grads second fact I
should say these are these are pieces of evidence that the Silver Bullet theory
of Education can’t be right because why would you have seen these big
disparities across racial and ethnic groups among college graduates so the
second piece of evidence against the Silver Bullet theory is that even
comparing black families with college courses no college no families with
college no college it’s the families with college that did worse this is
during the recessionary period seven to thirteen so they these families with
college had more wealth but in percentage terms they
lost more than families without college and you can see that that’s not
generally the case for white and Asian families in this was a tough period for
everybody but among whites for example the losses among college families were
less percentage wise than they were for non-college and even more so Asian
families and the third piece of evidence that the silver bullet there doesn’t
seem to be accurate is over me over longer-term perspective so this is about
two decades now and this is the change in well across twenty plus years for the
eight groups and what I would highlight is college graduates first those orange
bars among whites and Asians college graduate earnings were higher and net
wealth grew significantly almost doubled for the typical white family and typical
Asian family over that period at the same time the typical black and Hispanic
family actually experienced losses over the long period so that runs counter to
the idea that education alone might be able to overcome the racial and ethnic
wealth gaps and then the other piece of it that I hinted at before showed you
was that even comparing within black families and Latino families those with
college did worse lost wealth over this twenty-year period so there’s something
that’s not working in the way that we expected the other aspect another way to
think about this is what I called the college wealth multiplier how much
better or higher his wealth among college graduates vs
non-college graduates so I’ll show you two ways this is with comparing the
means to the average wealth across different groups and suppress the Asian
partly because it’s just so noisy but this is and this is actually smooth i’m looking
over three consecutive sample periods but I think this makes it more clear you
first look at the pic and identify the white line which is the blue it’s rising
from a little below 32 about four and a half so this is saying over this quarter
century century period the advantage in terms of how much well families have
among college grads has increased wealth multiplier of college seems to have gone
up for whites over this period for Hispanics going up maybe a little bit
but among black families it’s actually gone down so the relative advantage of
college families vs non-college has gone from a bit over for down to about three
so that’s that’s a little puzzling and then here’s measuring by the medians
comparing the median college family versus the median non-college family
again the right number the blue line there goes up on balance
over the period and for black and Hispanic families this wealth multiplier
is going down so what’s what’s happening so what are the proximate causes a look
at income and I’m gonna actually argue in this 2007 2:13 . it’s not so clear
this this the income trends are kind of all over the board so it’s really hard
to say that that was the main thing it is no no doubt the case that black and
Hispanic unemployment rate spiked more than they did for whites and Asians but
when you see the income numbers it’s it’s it’s a it’s kind of mixed across
the different groups but what does seem to be more clearly correlated and that’s
why I say it’s a proximate cause how did this happen both higher concentrations
in housing among black and Hispanic families including college families and
higher debt ratios now gonna look at the longer term and when you take that
twenty-year perspective it is much more striking I think more compelling to
argue that there are differences in the income experiences the job market
experiences which could be related to discrimination could be related to other
structural factors that there are more clear in the longer term picture ok so
just taking those in turn here’s the sort of not clear what the income
impacts where this is 2007 2:13 so this recession period
across the eight groups and you know first looking at White’s college
educated whites actually did worse than non-college educated whites well in the
earlier pictures you know with wealth college graduates always did better so
this doesn’t really lineup with that it does more so for Asians but then looking
at hispanics and blacks again it’s mixed it’s not clearly the case that college
educated latino and black families did worse in fact for latinos they did
better so this doesn’t seem at least on its face to be entirely persuasive so
that’s the college educated does lineup but then some of these other
comparisons as I said don’t really like that when they’re okay so that probably
contribute something but I don’t think it’s the main thing going on so I’m
going to argue that it has maybe more to do with what’s going on with assets and
liabilities with balance sheets ok so there’s a lot of information here a plan
to go through all of it but this is just a way to depict four different racial
and ethnic groups in the four quadrants african-american Hispanic non-hispanic
whites and Asians and this is now using the full scope of our data breaking out
for different education levels in three different age groups as they are not
going to go into this other than simply to just show you that there’s
heterogeneity their differences across each of these dimensions and the ones
are really highlighting here are the racial and ethnic differences and so
those numbers are in the middle in that box and so this is the average share of
assets invested in housing so how much of a family’s total assets are in
housing and there do appear to be clear differences across racial and ethnic
groups around sixty percent on average of Latino and Black assets are housing
closer to 40 percent among Asians and whites and this was from 2007 which was
close to the peak 2004 2007 probably spans the peak in the in housing prices
across most most of the country so then here’s 2013 and I think you know the
visual impression is wow housing got slammed which is true we do
that again years 2007 and then just look at 2013
and of course you can see particular areas like younger people got hit very
hard especially say african American young people had a huge decline in
housing assets but it was true across many different groups so now the
concentrations are somewhat lower in the mid fifties for black and Hispanic
families somewhere in that 33 T forty-three
percent range for whites and Asians so at least this is this I think does
qualify as a proximate cause for the wealth losses higher concentrations
higher exposures to housing losses among black and Hispanic families on the other
side of the balance sheet years going back to the eight groups to education
levels for racial and ethnic groups measured in terms of debt to income
which is not perfect but it’s a proxy for how much of your cash flow is
dedicated to debt service but also how vulnerable are you two losses and asset
values losses of a job income interruptions of various types and here
not only did well in particular black and Hispanic college grads had higher
debt to income ratios than white and asian college grads and significantly
more than on college grads of all races and ethnicities so they say this these
are proximate causes we don’t know why this is the case but these seem to line
up with the differences that we see across education levels and within race
and ethnicity so let me then step back to the
longer-term perspective that was just the recession period what about the last
twenty years or so and as I mentioned here I think the job market differences
are far more compelling so this is the comparison the change in typical family
income which is mostly job market outcomes and you can see the white and
asian college grads did well and that conforms with the narrative that we’ve
been hearing that to succeed in the job market increasingly you need college
skills and that is true for white and Asian families compared to their
counterparts with with no college you conceive stagnation of incomes but it
does not conform with experience of black and Hispanic families almost
paradoxically black and Hispanic families without
college had more favorable long-term income trends so that’s a that’s again
pushes the question back so why what’s going on there but I think it gets a
little closer to maybe some things that we could start to identify so let me
revisit this question I think I think every time to revisit this question
maybe were completely missing something here maybe work we’re comparing apples
and oranges in some sense so maybe the 2013 college graduate is just such a
different animal than the 1989 college graduate we shouldn’t even be comparing
them but for that to be an important explanation part of this story I think
would have to be the case that may be something like the incentives to attend
college may have evolved differently across race and ethnicity and that that
is plausible perhaps attitudes have changed or opportunities have changed so
maybe we’re not really comparing like with like across time so I i dont my
intuition is that that’s not the entire story it could be part of it I don’t
know then the second category I would say is just a basic and this just seems
obvious you know but in any research you have to make simplifications this is a
simplification we made we put all college graduates together and
essentially assume well all college graduates are kind of the same but
probably not right but in what sense is that wrong could it be well in fact we can point to
a few things where it’s not quite right for example latino and black college
grads are more likely to be women higher fraction of women who are black and
Latino college grads versus white nation and we know that they’re continuing
barriers in the job market for women so maybe that’s part of what’s going on
it’s not really a black and Hispanic versus white nation maybe two women vs
men issue in terms of how colleges working another possibility latino and
black college grads are likely to graduate less likely to graduate from highly
selective colleges so maybe there’s a difference in people’s aspirations their
job market expectations and other possibility looking one black college
grads are less likely to major in STEM subjects and we know there’s a premium
put on engineering for example so if if there are fewer engineers among
graduating class they’re going to have lower incomes most likely and then the
fourth possibility and there are more of course that you could think about it is
the case that are smaller percent of Latino and black college grads get
post-graduate degrees and I showed you that big premium put on postgraduate
education so that could be part of why we just compare college grads vs college
grads that’s partly what it’s picking up yes so the question is different I think
I got that on the next yeah so that I put it into a category called mismatch
which is kind of a broad term to say either changes in the labor market what
field you go into what employer you get so way to say that is Latino and black
college grads may select or be steered into majors and or colleges that are not
appropriate for them maybe there’s a degree of this match it is not good
maybe it could be that Latino and black college grads are obtaining skills that
are falling out of favor in the job market you know the job market is very dynamic
changing so maybe again that could be partly due to counseling that people are
getting latino and black college grads may not obtain the skills that are
conducive to building wealth personal financial management that could be
systematically differing across groups and again I don’t know that’s why we
need to do more research but my intuition is that these things may
matter but it may not explain everything and then the other explanations that i could think of is it
is in fact the case that black and Hispanic families are students take on
more student debt more likely to take on student loans have higher balances
related to the fact that their families have less wealth so that might in fact
be really influencing what happens after college because black and Hispanic young
graduates are carrying more student debt so it makes it more difficult maybe
hampering wealth accumulation and I think it is absolutely part of the story
that there is continuing discrimination I don’t know exactly how much or which
of these is the most important but in college admissions inside classrooms in
hiring in the workplace in housing markets in credit markets all of these
things and maybe small individually but maybe they accumulate maybe that’s a
part of the story and I think we do need to keep that as part of the part of the
conversation so as I said I think the college degree by itself which really is
as a stand-in it’s a proxy for all of these things that make it possible for
you to succeed and maybe that’s what’s different across racial and ethnic groups may be
the ability of parents to provide that financial support the ability to provide
those early experiences the networks that parents may provider communities
may provide maybe those are less present powerful and so maybe that silver bullet
for a black or Hispanic college graduate is not as powerful which of course I
think leads toward you know that’s means we got a lot of work to do but thinking
more broadly than simply college attendance and even beyond college
graduation but all of those background factors that may differentially make it
possible for someone to succeed so summing it up I showed you many Hispanic and black
college grads have lost large amounts of wealth in recent years I think the
housing exposures and debt burdens are part of that in the short term in the
longer term there appear to be significant some people might say systemic
differences in the job market still across black Hispanic or white asian
college grads and I would submit to you that this is not simply an esoteric
research question but something that matters more broadly in understanding
this broken link between what I would call a broken link between latino and
black college grads and wealth accumulation I think as I said this is a
group that actually does have some I think some ability to have some impact
some influence on on this issue so I’ll just last thing point two we did a three
part series looking at three dimensions 3 demographic dimensions of wealth this
most recent work that I was discussing is really kind of combining these
dimensions now trying to put that together and in a little bit more of an
integrative picture but this provides some background information so that prob I didn’t say this earlier but if people
need to get up and go to the restroom whatever you’re free to do that but we
have some time for some questions about has some questions out late last time so
here in my lifetime I’ve noticed a great difference between white people who say
and white people who do not care education is less important than their
savings treat it is also an obvious question for your study at home and make
$75,000 a year and shaves nothing he has no wealth accumulation if a man make
$75,000 and save 25% he is on the road to success I noticed no data provided by
rays and savings rate I would suggest you put a chart showing graduates making
$75,000 by race and their savings this can be affected education can affect
success and it doesn’t blame anybody a man who saves money save money the the issue from a sort of a research
perspective is that saving is the result just like education even more so it’s
the result of a whole bunch of background factors so you’re right that
that that would fit into the proximate cause category it would not be an
ultimate cause because the saving rate itself is coming out of a lot of things
there is some research that suggests if you control for a whole bunch of these
background factors differences across racial and ethnic groups are not very
significant if you look at the raw savings rates obviously educated people
are gonna save a lot more but that’s because of a lot of things that are
contributing to their educational success contributing to higher income
and contributing to saving so in a sense I am sympathetic but I guess I would
classify which i think what you’re driving at and i i i do believe that it
is recognized in this work is that there
are individual differences now I’m not no matter how you cut the population by
age race education hair color of whatever you will get differences across
people and for reasons we don’t fully understand some people save more than
other people for example a perfect example of this is generations one of
the reasons that older people seem to be doing so much better today is they had
high savings rates and there are people who have argued particularly those who
lived through the Great Depression they just they just said you the world
differently and they save a lot more so I think you’re right I think the savings
rate per se is not the right way to attack this that’s that’s sort of the
outcome of a whole bunch of other processes thank you very much for coming here and
speaking with us and giving us this presentation is very insightful quick
question just just simply on you know the laws of supply and demand as far as
college degrees in graduates are concerned I don’t know the exact numbers
and I’m not going to assume that that I dunno but you know being at being as
there’s more college students these days did that just simply be one of those
parts of the problem yes I think you’re right and I kind of
tried to get out the changes in the job market so I was pointing out about the
skills that you learn maybe the job market has moved and a skill you have is
no longer as valuable as it used to be and if there are systematic differences
are you know I mentioned the differences in majoring in engineering courses some
other fields if there is systematic differences that could be part of what’s
going on and I think there are people who are focusing on exactly those things
I would mention and maybe this is part of what you’re getting at there is
research that suggests me i didnt highlighted at all here but there is
historical advantages you know sort of writing the up escalator for education
seem to be slowing down a little bit which is not to say it doesn’t negate
the fact that the gaps between college and non-college are still growing the issue is that the the fate of
individuals with less than college or getting much worse so the college
premium wage premium is still growing even though college wages have flattened
out there not growing as much but but you’re right that within college grads
differences in your skills or whatever it is that employers are looking for certainly would make a difference in you
said over the last quarter of a century wealth accumulation as increased by
white college graduates of the last quarter-century do you think that
another part of the problem might be that you know african-americans and
Latinos may not necessarily have had that generational advance message absolutely because you know now
they have everybody has more incentive to attend college and now they’re being
able to come about the means of attending college may be there a little
late arriving to the party yes and and putting together an earlier comment
about families I was in a program yesterday and someone pointed out that
use this term I hadn’t thought of this before but the density of college
graduates is very different than show those numbers so another aspect another
problem really was not breaking this out more finally by family structure is what
about families that have to college graduates in them and that’s going to be
much more likely among white and Asian families simply because there are just
more college graduates that’s what this gentleman called the density and so that
that would be an argument for even though you know it doesn’t look right
now that the college premium is paying off as much for black and Hispanic
families part of it and maybe should put that on my list of potential causes part
of it is because there are fewer black and Hispanic to college degree families and so maybe there is a sense
in which you know just increasing that density is going to have that effect
plus what you’re talking about the intergenerational which I was pointing
to with the role of the parents in the poll of parent role of the social
network and and making it possible for for young people to get through without
too much student debt so yeah that those prior generations absolutely are part of
what’s going on and that’s really kind of part of the message I’m trying to say
is that it’s it’s not just the individual it’s the whole context from
which an individual comes and it would be you know I think unrealistic to say
everybody’s comes from the same context there are systematic differences across
groups thank you very much my training I’m a sociologist so I’m
utterly fascinated by this press I i learned a lot from sociologists
lately data indicate that for-profit colleges hold a huge amount of minority
students and they tend to charge ridiculous amounts of money and have
really really poor job market outcomes do you have a way to divide college
graduates in your sample population between what kind of college they attend
is that a variable that can be analyzed fortunately no that’s one of the reasons
stated that in fact I asked the guy at the federal reserve board in washington
who runs this survey now can we do that and he said now I can’t do that the
other two cents worth pointing out weaknesses the other two I would say big weaknesses
in this data we don’t have any geographic information for privacy
reasons they won’t want tell us where anybody lives particularly for the very
wealthy people they don’t want to be reverse engineered and the other thing
is we don’t have any information on your parents and particularly for this story
that I’m telling and I was thrilled to learn when I talk to this guy in
washington that in the next version of the survey in 2016 they will be asking
about your parents education and that in as I have said if we had that variable I
actually would probably use that one your parents education rather than your
education to get at the idea of this context the background the family not
guarantees anything but that it provides whatever context coming out my question has to do with we
understand first that housing plays a major role if not most significant role
in wealth and the push towards suburban housing the suburbs was was pretty
pretty intense maybe fifteen years ago and now it seems it richard is showing
more people are going towards the city how do you think this factors in as far
as the sole segregation in housing ppl self-select to move here in into the
suburbs is especially when your slides showing non-college graduates wealth and
we will look at the Y-twelve was $80,000 on both sides and then the next down was
25,000 and the dig decrease now since most young individuals are moving
towards the city and the city’s teams that have either very you know cheap
housing or very exclusive housing you know that’s very much of a factor do you
think that comes in also when they buy the housing
absolutely out the timing and that’s why in our generational story people who
were born in about 1970 drew the short straw in the birth lottery that was the
worst time to be born in the second half of the 20th century for sure because of
the timing you were just getting into the housing market just as it was
getting other peak due to your broader question I think that is a net probably
again that could go onto this list of causes there is evidence that black and
Hispanic families housing markets have performed more poorly so it could be a
timing question for some people it could be simply sort of a neighborhood
question and you know that raises a whole host of questions about if we
could have anticipated and I think there is some historical evidence that
neighborhoods that had more black and Hispanic housing maybe were more volatile they
were big increases in the 2000 and then big decreases should we had at that sort
of suits or fits into all of your thinking I think in terms of risk and
return tradeoffs that through no fault of a black or Hispanic homeowner housing
maybe a riskier investment simply because of these neighborhood
characteristics there seems to be a lot more volatility I’m not sure how it
breaks down suburban vs city but but I think that is a 90 people have looked at
that and that certainly is reflected in these numbers depressed housing values
still through 2013 in some neighborhoods may be more likely to be black and
Hispanic families I have a two part question my first
question is does your data lookup mixed-race families like household that
may have hispanic member and then maybe a white member or you know black and
Hispanic and second of all as a Hispanic female graduate what do you think our
outlook would look like do you think there’s gonna be a shift later on or can
we kinda just expect some bleak bleak outlook for young people you know you
have the opportunity that’s the point is to say you know there are challenges and
that’s why I’m saying throwing it out to the whole group it’s not income but only
upon black and Hispanic families everybody needs to be aware and thinking
about how to make a difference so no I don’t think there it’s necessarily a
bleak outlook challenges on the first question again these compromises you
making research we put everybody into one category even if they were mixed
race and that it is the surveyed asks people to identify however asks how they
identify so there is a variety and you know we thought a little bit about maybe
trying to be more nuanced about that again from the research perspective then
you get into small groups of people and it makes it much more difficult to be
confident that you’re picking up real results so you’re right that that is a
weakness in the sense that we we know that not everybody fits neatly into one
of these boxes now I’m at home I’m gonna miss the one
thing that I think could be added is the increasing costs for example the
statistics their college does cause over the cost the cost is triple the last
twenty thirty years so that also affects you know savings of things like that and
that the barriers that minorities face are very real like you mentioned women
are more in school more than man and getting a job after college is kinda
more difficult so as costs go up as kinda harder for generations they go on
that path down so save more money like I said the inflation rate is ridiculously
unparalleled slightly increase in salaries are things of that nature so it
only gets worse and worse and another thing you you you named are these facts
and things like that but the same time I really wanna live with everyday so it’s
nice there you brothers information for more information or other people but at
the same time I do you have any solutions or any advice and I agree with
you this that’s the point is to say you know people need to understand that this
college works differently for different people and that that wealth component I
think actually this is a question for you will see that you know the wealth of
the family and the savings of the family have a huge impact on the child and
there you know increasingly I think researchers and hopefully policymakers
are understanding this is typically a multi-generational you know endeavor and
your family background where it matters a huge amount to anything really that
maybe is something that you want to talk about here