Economic Mobility in America: Is the American Dream Alive and Well?

[FayeforCure]

Economic Mobility in America: Is the American Dream Alive and Well?

For more than two centuries, economic opportunity and the prospect of upward mobility have formed the bedrock upon which the American story has been anchored - inspiring people in distant lands to seek our shores and sustaining the unwavering optimism of Americans at home. From the hopes of the earliest settlers to the aspirations of today's diverse population, the American Dream unites us in a common quest for individual and national success. But new data suggest that this once solid ground may well be shifting. This raises provocative questions about the continuing ability of all Americans to move up the economic ladder and calls into question whether the American economic meritocracy is still alive and well.

(FEBRUARY 2008)

Between 1974 and 2004 the following chart ( don't know how to show a pdf format on MJ), shows that men in their thirties have 12% less personal income than their Father's generation:

http://www.economicmobility.org/assets/pdfs/EMP_American_Dream_F4.pdf

[Overstreet]

The American dream was that you could go as high as your motivation and ability could take you. It does not mean that everybody will be better off than before.

[hooplady]

Between 1974 and 2004 the following chart ( don't know how to show a pdf format on MJ), shows that men in their thirties have 12% less personal income than their Father's generation:

With more women in the workforce, I can see how that could be true.  That does not, however, mean that these men are now 12% less wealthy.  It could merely mean that we are approaching job equity.

[buckethead]

Lower real wages.

Social justice at last!

[FayeforCure]

Between 1974 and 2004 the following chart ( don't know how to show a pdf format on MJ), shows that men in their thirties have 12% less personal income than their Father's generation:

With more women in the workforce, I can see how that could be true.  That does not, however, mean that these men are now 12% less wealthy.  It could merely mean that we are approaching job equity.

So you're saying that downward pressure was put on men's wages from competition with more lower-paid women being part of the work force.

Could be.......But here are factors that are known to be true that have caused upward mobility to decrease. You can pick which one you believe is the greatest factor for the decrease in upward mobility seen in the US today:

I am going to read you some facts about economic mobility in this country. After each one I read, please tell me whether you believe this represents a major problem for this country, a minor problem, not much of a problem or no problem at all.

About 40 percent of Americans who are born to parents at the bottom of the income ladder are still there as adults.

The United States is considered to have low mobility compared to other industrialized nations like Canada and Sweden.

Children of middle-income African Americans are almost 3 times more likely to fall to the bottom of the income ladder as adults than children of middle-income whites.

Almost 50 percent of children of middle income African Americans fall to the bottom of the income ladder as adults.

Women are less likely to move up the income ladder over a generation than men.

Half of Americans who are at the bottom of the income ladder remain there 10 years later.

More than 30 percent of children who are born to parents at the top of the income ladder are still there as adults.

If your parents were rich but you didn't graduate from college, you're more likely to be rich than if your parents were poor and you did graduate from college.

http://www.economicmobility.org/poll2009/tool_1

[buckethead]

To use these undocumented anecdotes one could also surmise:

About 60 percent of Americans who are born to parents at the bottom of the income ladder are no longer there as adults.

The United States is considered to have low mobility compared to other industrialized nations like Canada and Sweden, which is indicative of massive amounts of middle class earners reaching povety in those nations.

Children of middle-income African Americans are almost 3 times more likely to fall to the bottom of the income ladder as adults than children of middle-income whites. Indicating either racism, cultural disparity or some other socio-economic influence.

Women are less likely to move up the income ladder over a generation than men due to time spent away from work to bear and tend to children, as well as the fact that stockholders are clearly uninterested in having the most qualified and productive workers being compensated, rather they prefer inferior males to females who are superior.

Essentially 70 percent of children who are born to parents at the top of the income ladder are no longer there as adults.

If your parents were rich but you didn't graduate from college, you're more likely to be rich than if your parents were poor and you did graduate from college. So don't waste your time going to college.

[FayeforCure]

buckethead, these are serious issues and attempting to get to the botom of the Economic Mobility decline has been the work of very disparate groups that have joined together on this important issue:

Economic Mobility Project Releases Comprehensive Study of Income Mobility in the U.S.
Contact: Jeremy Ratner, 202.552.2137




Washington, DC - 02/20/2008 - A major new look at the trends and issues impacting economic opportunity for Americans was released today by the Economic Mobility Project, an initiative of The Pew Charitable Trusts. “Getting Ahead or Losing Ground: Economic Mobility in America,” is authored by three Brookings Institution scholars, Julia B. Isaacs, Isabel V. Sawhill and Ron Haskins and includes new chapters on education, wealth, international comparisons and trends over time. These, combined with previously released chapters on gender, race, immigration and families, comprise the entire volume.

“As income growth has slowed for the typical family and income inequality has increased since the 1970s, many middle class Americans are anxious about their own and their children’s economic prospects,” said Sawhill. “These insecurities need to be assessed against the backdrop of whether the opportunity to improve one’s lot remains strong.”

“This volume provides a vital fact-base that allows us to further expand the public discussion of economic mobility and opportunity in this country,” said John E. Morton, Pew’s Managing Director of Economic Policy and Director of the Economic Mobility Project. “It comes at a critical time. With economic anxiety mounting among many American families, now is the time for candidates and policy makers to be speaking directly to the challenge of how to ensure that the American Dream remains a reality for all.”

“While much of the focus in this election year has been on the fact that the economy is slowing and gaps between the rich and the poor are wide, the idea that everyone has a fair shot at the American Dream has kept hope alive for many families. The question is whether this hope is consistent with reality,” Sawhill added.

Education and Mobility

Across every income group, Americans are more likely to surpass their parents’ income in absolute terms if they earn a college degree, reinforcing the conventional wisdom that higher education provides a means for opportunity. The report, authored by Ron Haskins and using data from the Panel Study of Income Dynamics, finds that 84 percent of Americans born into the bottom quintile who earn a college degree move up at least one rung on the economic ladderâ€" and 19 percent make it to the top. This compares to only 5 percent of those born into the bottom that make it to the top without a college degree. Yet, family background plays an equally, if not more important, role than education. Of Americans born into the top quintile who earn a college degree, 54 percent remain there as adults; nearly triple the percentage of college graduates born to parents at the bottom that make it to the top of the income distribution. Perhaps more strikingly, 23 percent of those born into the top quintile that do not get a degree stay at the top as adults, a slightly higher percentage than the number of college graduates from the bottom quintile who manage to climb to the top. “The good news is that education matters and provides a robust return to all Americans,” said Haskins. “The more sobering news is that family background still has a big impact on economic success and the nation’s educational system does not do enough to help poor children overcome their family background.”

International Comparisons

“Americans are particularly optimistic about their chances of moving up the economic ladder,” said Isaacs. “However, a growing number of studies show that when compared to other industrialized nations, the United States stands out as having less, not more, economic mobility.” In particular, 42 percent of sons born into the bottom income quintile stay there as adults, compared to 25 percent in Denmark, 28 percent in Norway and 30 percent in the United Kingdom. Moreover, it takes an average of six generations for family economic advantages to disappear in the United States, compared to three generations for Canada, signaling higher mobility in Canada. It is important to note when making such cross-country comparisons, that Americans may have farther to climb to get to the next rung on the ladder than their European counterparts due to increasing levels of inequality in the United States.

Wealth and Mobility

Wealth, which includes investments, real estate holdings, businesses and inheritances, is a fundamental component of economic well-being and can contribute greatly to mobility. Data show that similar to income, there is “stickiness” at the ends of the wealth distribution. Thirtysix percent of children born to parents in the bottom wealth quintile remain in the bottom as adults and 36 percent of children born to parents in the top wealth quintile remain at the top as adults. Although only 7 percent of children born to parents in the bottom wealth quintile make it to the top in adulthood, more than 60 percent move out of the bottom. In addition, there is substantial mobility in the middle quintiles, as children born to parents in the middle wealth quintile have an equal likelihood of moving up or down the distribution.

Trends over Time

In the generation immediately following World War II, strong economic growth in the U.S. spurred a rise in absolute economic mobility. Over the last generation however, the combination of slowing economic growth and rising inequality has increased the importance of relative mobility, or movement between the ranks, in America.

The hope that increased opportunity would offset the effects of slower growth or more unequal incomes is not supported by most of the evidence. Although the research base is limited and the studies do not all agree, taken as a whole, the current literature does not suggest that the rate of relative mobility has changed much since about 1970. If anything, relative mobility may have declined. Comprised of a Principals’ Group of experts from The American Enterprise Institute, The Brookings Institution, The Heritage Foundation and The Urban Institute, the project seeks to investigate the status of economic mobility in America.

The key findings are available here, and the full volume of the report is available below. A comprehensive set of research and additional informational resources on mobility are available at www.economicmobility.org or www.brookings.edu.

About the Project

By forging a broad and nonpartisan agreement on the facts, figures and trends related to mobility, the Economic Mobility Project hopes to focus public attention on this critically important issue and generate an active policy debate about how best to ensure that the American Dream is kept alive for generations that follow.

About Pew

The Pew Charitable Trusts (www.pewtrusts.org) is driven by the power of knowledge to solve today’s most challenging problems. Pew applies a rigorous, analytical approach to improve public policy, inform the public and stimulate civic life. We partner with a diverse range of donors, public and private organizations and concerned citizens who share our commitment to fact-based solutions and goal-driven investments to improve society.



ASSOCIATED REPORT:
Getting Ahead or Losing Ground: Economic Mobility in America

http://www.pewtrusts.org/news_room_detail.aspx?id=35524