The "Myth" of Income Mobility in America

[chomerics]

Here is a VERY LONG research paper done by Brookings on the income mobility in America, and the results of policy changes over the past 30 years. It goes in depth on a variety of issues, here is a quick listing, as well as a synopsis.

I Economic Mobility of Families Across Generations: it was found that generally, children make more then their parents, but it is increasingly difficult for the children to move up the ladder. For example, Children in the top quintile have a 40% chance of remaining in the top, and a 62% chance of remaining in the top 2 quintiles. The other end, children in the bottom quintile have a 42% chance of remaining in the bottom, or a 65% chance in remaining it the bottom 2. In other words, 65% stay within their income bracket or one away from generation to generation. This in effects states that income mobility for 2/3 Americans is pretty non-existent.

II Trends in Intergenerational Mobility: Inconclusive at the time of the paper to determine definitively what the current trends are, but the data points to less mobility for intergenerational males, and higher for females. . .but the females is determined to be because of an increase in the labor market for females.

III International Comparisons of Economic Mobility: The findings from cross-country research challenge the traditional view of the United States as a land with more mobility and opportunity than other countries.

While cross-country comparisons of relative mobility rely on data and methodologies that are far from perfect, a growing number of economic studies have found that the United States stands out as having less, not more, intergenerational mobility than do Canada and several European countries. American children are more likely than other children to end up in the same place on the income distribution as their parents. Moreover, there is emerging evidence that mobility is particularly low for Americans born into families at the bottom of the earnings or income distribution.

IV Wealth and Economic Mobility: The findings include a certain study which I find shows a trend in increasing the income gap, and decreasing the ability for people to be mobile. In 1989, the top 1% of the population owned 30.1% of the wealth, but in 2004 this % increased to 33.5%. Meanwhile, the bottom 90% saw their % of wealth decrease from 32.9% to 30.4% or a 2.5% decrease.

In other words, the rich people in this country are getting richer by a substantial margin (2.3% increase in wealth), while the bottom 90% of Americans are getting poorer (2.5% decrease in wealth). So this means that the average ES poster has lost out on 2.5% of wealth in the past 20 years, while the wealthiest 1% have increased 2.3% in wealth. This relates to the widening of the income gap, and why it is harder for Americans to become upwardly mobile.

V Economic Mobility of Men and Women: It is fairly evident that men are more likely to me upwardly mobile then women because of the lowest quintile bracket. Women born in the lowest 20% are 47% likely to remain there while only 35% of males are. Even worse, 75% of women born in the lowest bracket will either stay the same, or move up one rung to the 20-40% quintile. Compared with males, who stay there at a 57% clip.

VI Economic Mobility of Black and White Families:

A startling 45 percent of black children whose parents were solidly middle income end up falling to the bottom income quintile, while only 16 percent of white children born to parents in the middle make this descent. Similar trends are found in other income groups as well. In another disturbing example, 48 percent of black children and 20 percent of white children descend from the

second-to-bottom income group to the bottom income group. In addition, black children who start at the bottom are more likely to remain there than white children (54 percent compared to 31 percent).

VII Immigration: Wages, Education, and Mobility:

It is a remarkable achievement, considering the low wages immigrants would have made in their own countries, that America offers such rich opportunities for immigrants to improve their income and standard of living. Further, second generation immigrants continue to earn more than first generation immigrants,

though wages of second generation immigrants have been falling relative to those of non-immigrants over the last three generations. Moreover, the economic prospects of second generation immigrants are very much tied to the characteristics of first generation immigrants, most notably to level of educational attainment.

VIII Education and Economic Mobility:

the evidence presented here shows that education can boost the mobility of children from poor and low-income families (and from wealthier families as well), because each additional level of attainment, from a high school degree, to a college degree, to a professional or graduate degree adds substantially to income.

What do you people think about income mobility? Do you think that the trend is a disturbing one, in which future generations have a harder time then their parents to remain upwardly mobile? Do you think it is a problem that our country is not as income mobile as other countries? is there a real American dream, or is it just a facade to make people think if they work hard, they can become mobile? If this is so, does it become a problem, and the result is things like the racial divisiveness expressed by the preacher?

[PleaseBlitz]

Groundbreaking...........

[chiefhogskin48]

Richer and poorer, the way you are (mis)using the terms, are relative and not absolute.

[Prosperity]

income mobility is a reality for my family (via the education path), partly because my brother and I are incredibly intelligent, and partly because my family right now is fairly poor so there is a lot more room to go up than down. But, will my kids get that same relative generational boost? Probably because I could probably afford a lot better education for them when they are young than I got. Will their kids? Not nearly as assured.

For most people though, its a myth, or a hope. I think its easy to get from poor to middle class if you are very intelligent, but it takes quiet a bit of luck and quiet a bit more work for mobility beyond that.

[chomerics]

income mobility is a reality for my family (via the education path), partly because my brother and I are incredibly intelligent, and partly because my family right now is fairly poor so there is a lot more room to go up than down. But, will my kids get that same relative generational boost? Probably because I could probably afford a lot better education for them when they are young than I got. Will their kids? Not nearly as assured.

For most people though, its a myth, or a hope. I think its easy to get from poor to middle class if you are very intelligent, but it takes quiet a bit of luck and quiet a bit more work for mobility beyond that.

That is why I put the words "myth" in quotes, because although there is a lot of data to suggest it is very difficult, the one path people can chose is education.

[chomerics]

Richer and poorer, the way you are (mis)using the terms, are relative and not absolute.

Rich = top 1% (incomes over $200K)

poor = bottom 2 quintiles (people who's incomes are less then $40K)

how is that misusing the terms?

[Prosperity]

That is why I put the words "myth" in quotes, because although there is a lot of data to suggest it is very difficult, the one path people can chose is education.

yeah... education is definitely not a path to "rich" though. Maybe for a few professionals, but overall education is more of a route to the affluent middle class.

Hard work, intelligence, and ingenuity do not guarantee wealth... but then again, they have many rewards other than wealth.

I think as long as the middle class is attainable we are in good shape.

[Brad89]

yeah... education is definitely not a path to "rich" though. Maybe for a few professionals, but overall education is more of a route to the affluent middle class.

Hard work, intelligence, and ingenuity do not guarantee wealth... but then again, they have many rewards other than wealth.

I think as long as the middle class is attainable we are in good shape.

We're in the same boat Liberty. Well, my brother isn't incredibly intelligent, but I like to believe that I'm pretty smart. We should watch some skins games next semester brother.

[gbear]

The American dream is slowly morphing from with hard work and a little ingenuity I can become rich into with a lot of hard work and a little ingenuity I can avoid poverty (with a little luck avoiding such things as medical conditions and the like).

Still, our middle class is a pretty good life with a lot of opportunities that can go beyond just wealth accumulation. Take that from somebody who is living it.

[Enter Apotheosis]

Income mobility a myth? Hell no.

At this rate, I probably won't make more than my parents... who stand no chance in hell of making as much as my grandparents. Its a steady downward spiral for me

[chomerics]

Income mobility a myth? Hell no.

At this rate, I probably won't make more than my parents... who stand no chance in hell of making as much as my grandparents. Its a steady downward spiral for me

Your own anecdotal example does not disagree with the premise at all

[SkinsHokieFan]

Interesting study, when I get time I want to take a long look at this one

Anecdotally, everyone in my family generationally has moved up. A lot of times they have moved up themselves, not just from generation to generation. In general though, immigrants from our part of the world tend to do well, even if a bunch have to be cab drivers or work at Quickie Mart

I can see the point in this however. If you are born poor, more then likely you will remain poor your entire life because of what surrounds you. You will not have the opportunities from a young age to get a proper education and not have to worry about food on the table. The vicious cycle begins

If you are born rich, well its pretty damn hard to go from the penthouse to the poor house in this country unless you are a dope

I think moving from the lower middle class (say 40-65k for a family) to upper middle class (150-199k) in a generation is certainly attainable

[Enter Apotheosis]

Your own anecdotal example does not disagree with the premise at all

I'm aware, I actually read through the post and saw the statistics... still doesn't stop me from using the first anecdote that came to mind when I saw the thread topic

[HOF44]

I think moving from the lower middle class (say 40-65k for a family) to upper middle class (150-199k) in a generation is certainly attainable

Thats pretty much what happened in my family for both my sister and myself. I think jumping more than that is pretty rare though.

[endzone_dave]

Hard work and education can give you a pretty good life in this country. You might not end up rich but you can have some of the nicer things in life.

Not working hard and not educating yourself can make life a lot tougher.

There's my research paper - much shorter.

[PleaseBlitz]

yeah... education is definitely not a path to "rich" though. Maybe for a few professionals, but overall education is more of a route to the affluent middle class.

Hard work, intelligence, and ingenuity do not guarantee wealth... but then again, they have many rewards other than wealth.

I think as long as the middle class is attainable we are in good shape.

Interesting study, when I get time I want to take a long look at this one

Anecdotally, everyone in my family generationally has moved up. A lot of times they have moved up themselves, not just from generation to generation. In general though, immigrants from our part of the world tend to do well, even if a bunch have to be cab drivers or work at Quickie Mart

I can see the point in this however. If you are born poor, more then likely you will remain poor your entire life because of what surrounds you. You will not have the opportunities from a young age to get a proper education and not have to worry about food on the table. The vicious cycle begins

If you are born rich, well its pretty damn hard to go from the penthouse to the poor house in this country unless you are a dope

I think moving from the lower middle class (say 40-65k for a family) to upper middle class (150-199k) in a generation is certainly attainable

I agree with these 2. Education itself isnt going to do it, hard work itself isnt going to do it. Combine the 2, and anyone can vastly improve their situation. But becoming "rich" as i define the term, you probably need to start off in a pretty good situation, for the most part.

This study pretty much just reaffirms that a lot of people arent very smart and most people dont want to work hard to attain bigger goals. Hence my "groundbreaking......" comment.

[PeterMP]

Has this actually changed recently?

They seem to suggest that it has, but they don't seem to provide any stats for the situtation say 30 years ago.