Adraint Bereal was preparing for his end-of-semester thesis showcase a few months ago, gearing up for a summer internship at an ad agency in New York. A 22-year-old recent graduate of the University of Texas at Austin, Bereal is the first in his family to attend college, and he was intending to use his design degree to start a career in photography and design.
Then he got an email saying his internship had been rescinded due to Covid-19. Around the same time, he learned that his program department had made the decision to move his senior exhibition, which he’d been working on for more than two years, completely online. The project, called “The Black Yearbook,” documents the lives of Black Texan college students, who make up less than 5% of the student body at UT Austin.
“You spend your four years building up to this one moment where you get to finally announce who you are and what type of designer you want to be,” he said. “It was a big shocker. I was depending on that internship to help me transition to being in New York full-time.”
Bereal now faces what he describes as a “burning question mark” in his life regarding what he’ll do next and where he will go. His hours at his part-time job have been reduced since the pandemic, a lease he shares with four roommates ends in July, and he worries about how he’ll pay off the roughly $10,000 he owes in student loans.
“If I stay in Texas, how long am I staying for? Am I going to be able to afford where I’m going? Am I going to be able to have money to support myself? These are all things that are kind of running around in my mind,” he said.
Prior to the pandemic, Generation Z had offered the prospect that inequality in America might finally narrow, at least by some measures. Now, with economists expecting that youth will suffer the greatest coronavirus-related economic setbacks among America’s workers, those hopes are dimming.
Made up of people born after 1996, Gen Z is more diverse and “on track to be the most well-educated generation yet,” according to the Pew Research Center.
Before the pandemic hit, the strong economy offered more pathways for youth to start their careers. Their earnings potential was promising. And the tight labor market meant employers had to widen their net when considering diverse job applicants.
Tatjana Meschede, a senior scientist and associate director for the Institute on Assets and Social Policy at Brandeis University, said there had been “room to hope” that, although longstanding economic disparities would not completely disappear, at least they might shrink among today’s young people.
“The pandemic cut that all short,” she said.
Now, just like the millennials who entered the labor force after the 2008 financial crisis, members of Generation Z will likely experience permanent declines in earnings. But those setbacks aren’t evenly distributed. Among young workers, Black youth will likely bear one of the largest burdens.
Black youth suffer from higher levels of unemployment and often earn lower wages than their White peers with the same levels of education. They’re also less likely to come from families that have the wealth to provide substantial financial support during a downturn. And among those who go to college, Black students, on average, carry higher levels of student debt than their White peers.
These challenges can also be true for other minority groups — but for Black youth, these economic setbacks can be particularly difficult to overcome, experts say. A weak job market now, coupled with family financial strains, can force young workers to make tough sacrifices early on. Those decisions can change the course of their career paths, impacting their health and wellbeing, as well as big lifetime decisions like homeownership, marriage and having children further down the road.
“It would be a mistake to just see it as just a money thing, just thinking about how some communities have wealth and some communities don’t. It is a whole ecosystem of opportunities,” said Mehrsa Baradaran, a law professor at the University of California, Irvine, and author of “The Color of Money: Black Banks and the Racial Wealth Gap.”
The scarring effects of a recession
Four months ago, Gen Z was enjoying the strongest labor market in 50 years. After the coronavirus hit, that disappeared within weeks.
The United States is now grappling with massive unemployment and a tough economy amid a health crisis and widespread unrest. What was once the best job market is now the worst since the Great Depression, with the unemployment rate at 11.1% for the country overall, and at 20.7% for workers in their teens and early twenties.
Racial inequality starts early, just as people are first entering the work force: 19.6% of Whites ages 16 to 24 were unemployed in June, according to the Bureau of Labor Statistics, but the unemployment rate for Blacks of the same age was 27.7%. A year ago, before the pandemic, it had been 8.2% for White youth and 14.9% for Black youth.
Young people of any ethnicity graduating into an economic crisis suffer from sustained higher unemployment rates, persistent earnings losses and increases in poverty that can last for 10 to 15 years after they leave school. They also suffer from increases in mortality and lower socio-status later in life, according to a report by UCLA economist Till von Wachter.
But in addition to hurting the population broadly, economic crises exacerbate preexisting inequalities. That’s because in weak job markets, employers tend to be more selective, elevating discrimination and biases against certain groups. And among workers, those who have the weakest financial safety nets often don’t have the luxury to pursue personal aspirations but are instead forced to make decisions based on economic necessity.
“Every time we don’t deal with the structural inequality, we essentially are put in a position where it’s harder to recover,” said Andre Perry, a fellow at the Brookings Institution and author of “Know Your Price: Valuing Black Lives and Property in America’s Black Cities.” He further cites that’s because inequalities typically compound once a new crisis hits.
Student loan debt can perpetuate existing disparities
Student debt is yet another factor that can limit the kinds of decisions Black students can make concerning their own futures. Often, these sacrifices take the form of accepting low-wage job opportunities with fewer worker protections, picking a less expensive college over their dream school, or having to work multiple jobs to pay the bills.
“The biggest thing for people just graduating now is the issue of debt,” said Olugbenga Ajilore, a senior economist for the Center for American Progress, a left-leaning think-tank.
Black college graduates owe an average of $23,400 in loans when they finish their bachelors’ degrees, versus $16,000 for their White peers, according to a 2016 study by Brookings, a nonpartisan think-tank. Four years after finishing college, Black graduates owe an average of nearly $53,000, mainly due to accrued interest and graduate school borrowing. That’s nearly twice as much as White graduates over the same time frame.
In addition to the job crisis, Black youth and their families struggle with the potential high costs of student loan debt. With less access to generational wealth, taking on student loan debt is often the only choice for many Blacks students to be able to attend college. During the current crisis, however, some Black students are deciding that’s a level of risk they can’t afford to take, and are pivoting their plans as a result.
Nana Prempeh, 17, from Somerset, New Jersey, comes from a family of nurses; it’s a profession she always saw herself pursuing. It was her dream to attend Rutgers University, a public college in New Jersey, and if money wasn’t an issue, she would have gone there. But after weighing the costs of a four-year degree and the weak economy during the pandemic, Prempeh decided to attend community college instead. In a couple years, she’ll reevaluate whether it’s worth it to transfer to a four-year university or a two-year nursing school program, but for now, the lower cost of attending a community college offers a financial cushion in an uncertain economy.
She noted that she sees hardly any of her classmates weighing the same tradeoffs, but she’s confident about the call she’s made for herself.
“I don’t want to have student loans. I’m probably going to look back years from now and be like ‘Wow! This was a really good decision,’” Prempeh said.
There are potential downsides, however. Attending a community college is of course typically cheaper than attending a four-year university, but for most people getting an education beyond the associate’s degree conferred by a two-year school means being more competitive in the job market and earning more over the course of their career.
“In the end, it’s the four-year college degree that sets you up for life,” said Meschede.
And for Prempeh specifically there are added risks. Nursing programs have been a popular choice for students, now and before the pandemic, and if Prempeh does decide to try to go to one after completing a two-year program, it’s possible she could end up waitlisted or denied admission altogether.
Research shows the student debt crisis has impacted Black borrowers more than any other ethnic group. Black students are more likely to borrow at higher rates and take out more student loans.
The percentage of Black students who take out loans to attend college tops 90%, compared to 66% of White students, according to a report by the Student Borrower Protection Center, a consumer advocacy group. Additionally, Black students pay back their debt at an average rate of 4% annually, compared to 10% for White students.
“Student debt is so much larger than it’s ever been before and that also puts constraints on the kind of jobs you can get,” said Ajilore, senior economist for the Center for American Progress. Ajilore adds that if Black youth are faced with the option to take their dream job, it could limit their ability to pay down debt and make other long-term financial decisions. Not to mention, some Black parents of Gen Z children are still recovering from the Great Recession of 2008.
“If they didn’t have to go through the Great Recession, they would have a greater ability to help their kids go through this pandemic,” Ajilore said.
According to the Federal Reserve’s Survey of Consumer Finances, the median net worth of White families in 2016 was $171,000, nearly ten times the net worth of Black families at $17,150.
“Parents and students are in the same boat so to speak, because Black parents have been less likely to have wealth. Particularly after the last housing bubble, it’s very difficult for families to get ahead,” Perry said.
Mamourou Kone, an 18-year-old from the Bronx, is set to attend Nazareth College in Rochester, New York, in the fall.
Kone worked several odd jobs in high school, from retail to babysitting, and he intends to work multiple part-time jobs — on campus, through a work-study program, and off-campus, too — after starting college.
Working while in college is a necessity for Kone, who needs to help his mother with financial expenses back home. But a second wave of Covid-19 could put a damper on his college plans if it means he cannot find a job near campus. It’s a possibility that has him contemplating staying in the Bronx, where he thinks he may have more work opportunities than in Rochester. If he’s unable to find a job while in school, Kone said, he would consider transferring to a college near the Bronx, instead.
He was looking forward to moving to Rochester, in part because it guaranteed new opportunities away from the neighborhood where he grew up. Kone says many of the opportunities he’d get in college in Rochester are either limited back home or don’t exist at all. Going to college away from New York City would also let him expand his network beyond the friends and family he grew up with in the Bronx — something he feels could benefit his career going forward.
“College will completely open my eyes. A lot of people in my community don’t go to college and don’t see themselves going to college,” Kone said. I always saw myself going to college, it’s always been a goal of mine. I’m glad I stuck with it.”
Persistent job discrimination and bias still exist
The racial opportunity gap shows no signs of narrowing. Beyond the vast unemployment numbers are other factors that affect Black youth such as low-wage job opportunities and job discrimination. It’s a reality that recent UT Austin graduate Bereal says he struggles with constantly.
For Bereal, his dream job is a creative one, in photography and graphic design. But now amid uncertain times, he’s considering pivoting towards tech, where more opportunities exist for designers. A career in tech could mean more money for him, but it’s not the career he would have chosen — and it’s the kind of choice that a White student would be less likely to have to make.
“This is one of those moments where you kind of have to do what you have to do to make ends meet,” he said.
But beyond having to make potential sacrifices with his career path, Bereal says he also faces what he considers “a slap in the face” when it comes to job inequities and discrimination within the industry.
“Because there aren’t very many Black men, in particular, that are dominating in the creative space, I feel like I have to work three times as hard to be valued as someone that could be paid equally,” he said.
Black job applicants’ race has pervasive effects on their employment prospects, on average. Black Americans are twice as likely to be unemployed compared to Whites, and when they are employed, those who work full-time earn roughly 21% less than their White peers.
“We know that job discrimination has infected many different markets and that discrimination is the drag that helps maintain wealth disparities,” Perry said.
According to a 2003 study by researchers from the University of Chicago and the Massachusetts Institute of Technology, job applicants with popular “white sounding” names like Greg and Emily resulted in a 50% more likelihood of getting callbacks from employers than applicants with popular “black sounding” names like Lakisha and Jamal.
The biases and discrimination faced by Black job seekers exist in both good and bad economies. But in weak economies, when employers are unable to hire a wider pool of applicants, that bias and discrimination is often amplified. The persistent racial discrimination and bias Black job seekers face in the labor market limits their opportunities to gain better paying jobs and benefits compared to their White counterparts. This ultimately disrupts their job growth trajectory and earnings potential down the line, which experts say, can impose significant costs on Black households and their ability to generate wealth — only exacerbating long-term disparities exposed by the racial wealth gap.
“The racial wealth gap leads to who has more police, who has better school options, who has job offers after graduation, who has family wealth so that they don’t need student loans, who is trusted and criminalized, and who’s resume sounds smarter and not. A lot of these things go back to these wealth gaps,” Baradaran said. “All of this is interrelated.”
Closing the racial wealth gap: ‘It requires stimulus’
The Black-White wealth gap doesn’t just put a significant strain on Black people. It also limits the growth of the US labor market and economy.
That’s what one McKinsey & Company report says. The 2019 report on “The economic impact of closing the racial wealth gap” estimates that US GDP could increase by 4% to 6% if the racial wealth gap were closed by 2028.
Experts say, however, that closing the gap will require strategic policy changes. The same was true before the impact of the coronavirus.
“It requires stimulus,” said Perry. “It will take hundreds of years, even if you remove racism, for this Black-White wealth gap to close. And so, at some point, you need an infusion of stimulus and an infusion of cash.”
Perry proposes policies that eliminate some of the debt of students who come from low net-worth families and create opportunities to help young people generate financial security, such as homeownership.
“Black people, on average, put most of their savings in their home. But the last couple of crises really wiped out the wealth in those homes,” Perry said. “We need other ways to build wealth besides homeownership.”
He adds that other wealth building opportunities such as baby bonds — federally-funded savings account for children started at birth — or reparations can aid in eliminating preexisting gaps.
“If we can figure out ways to eliminate student loan debt, get more homebuyers, and young people in jobs with 401(k) or other retirement plans, we’ll start to see some movement,” Perry said. “But there’s no way around it — at some point you have to eliminate debt and build wealth.”
As for Black graduates like Bereal, he says the only way through these tough times is to keep pushing forward.
While his summer internship was supposed to be the launchpad into his dream career as a photographer and graphic designer, Bereal says The Black Yearbook is still giving him that opportunity. After raising more than $20,000 on GoFundMe, Bereal is working to produce an exhibit and mass produce copies of the yearbook.
“I’ve always just tried to really go out of my way to show up and show out and show people what I’m worth and what the quality of my work is,” Bereal said. “And make it known that I’m growing and I’m going to continue to grow.”