American Dream elusive for many, Pew report finds

The American Dream – which promises equal opportunity for all, regardless of economic status at birth – is deeply embedded within America's national consciousness. But recent research from the Economic Mobility Project at the Pew Center on the States reveals that realization of that dream is disturbingly elusive for many Americans.

The project's most recent report, Pursuing the American Dream: Economic Mobility Across Generations, considers both absolute mobility, which measures changes in income over time, and relative mobility, which assesses rank within income distribution as a whole. Using data from the Panel Study of Income Dynamics, a longitudinal data set that has followed families from 1968 to the present, the study looks at changes in family income and wealth during the past generation to examine how an individual's place on the economic ladder is tied to that of his or her parents.

Its conclusion: Although a large majority of Americans have higher family income and wealth than their parents, about two-thirds nonetheless experience static or downward relative mobility, a trend that disproportionately affects blacks and those without a four-year college degree.

Across all levels of income distribution, 84 percent of Americans have higher family income and 50 percent have greater wealth than their parents did at the same age. These increases in absolute mobility, however, are not always reflected in relative mobility. In terms of the income ladder, 43 percent of Americans raised in the lowest quintile and 40 percent raised in the highest quintile remain in those same brackets as adults – a phenomenon known as "stickiness at the ends." Although the past generation has seen economic growth at all levels, extreme growth at the top has stretched the distance between the rungs of the ladder, making it exceedingly difficult to experience upward economic mobility, especially for those at the bottom. Contrary to the popular "rags-to-riches" narrative, only 4 percent of Americans raised in the lowest quintile climb to the highest as adults.

When considering static mobility by race, it becomes alarmingly clear that blacks are disproportionately impacted. On both income and wealth ladders, more than half of blacks raised in the bottom quintile remain there as adults, while the same is true for only a third of whites. Blacks also suffered more downward mobility; 56 percent of blacks raised in the middle of the income ladder fell to the bottom two rungs as adults, compared to 32 percent of whites. It is important to point out that the percentage of whites and blacks raised in the bottom and top income and wealth quintiles differs remarkably – 65 percent of blacks grew up in the bottom income quintile, compared to 11 percent of whites. Furthermore, while median family income for whites is more than $55,000, for blacks it is just over $29,000.

These patterns of mobility are directly related to the Bell's sixth Gateway to Opportunity – access to education and training for adults. A college degree makes an individual three times more likely to rise from the bottom to the top family income bracket, and four times more likely to rise from the bottom of the family wealth ladder to the top. Additionally, 47 percent of adults raised in the bottom quintile of family income distribution who did not earn a college degree remain stuck there, while the same is true for only 10 percent of adults who did earn a college degree. A college education also protects against downward mobility – while only 22 percent of individuals with a degree fell from the middle, 39 percent without a degree suffered the same fate.

These findings are significant in creating a comprehensive evaluation of opportunity in America, as well as highlighting drivers of economic mobility and sites of opportunity gaps – especially in terms of black-white mobility and access to post-secondary education. The study concludes by recommending that "policy makers seeking to promote and protect the American Dream for generations to come" cultivate a better understanding of neighborhood poverty, savings and asset building and access to post-secondary education.

Kathleen Hallgren

 


Article posted on July 19, 2012