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The American Dream – Economic Mobility Across Generations – There is stickiness at the ends of the wealth ladder

Pursuing the American Dream uses the most current available data to measure mobility by family income and wealth, and personal earnings to reveal how closely tied a person’s place on the economic ladder is to that of his or her parents’.

Some of the highlights of the research include:

  1. Eighty-four percent of Americans have higher family incomes than their parents did.
  2. Those born at the top and bottom of the income ladder are likely to stay there as adults. More than 40 percent of Americans raised in the bottom quintile of the family income ladder remain stuck there as adults, and 70 percent remain below the middle.
  3. African Americans are more likely to be stuck at the bottom and fall from the middle of the economic ladder across a generation.
  4. A four-year college degree promotes upward mobility from the bottom and prevents downward mobility from the middle and the top.

Family income

The vast majority of Americans have higher family incomes than their parents did.

■ Eighty-four percent of Americans have higher family incomes than their parents had   at the same age, and across all levels of the income distribution, this generation is
doing better than the one that came before it.

■ Ninety-three percent of Americans whose parents were in the bottom fifth of the income ladder and 88 percent of those whose parents were in the middle quintile exceed their parents’ family income as adults.

Americans raised at the bottom and top of the family income ladder are likely to remain there as adults, a phenomenon known as “stickiness at the ends.”

■ While a majority of Americans exceed their parents’ family incomes, the extent of that increase is not always enough to move them to a different rung of the family income ladder.

■ Forty-three percent of Americans raised in the bottom quintile remain 70 percent remain below the middle.

Forty percent raised in the top quintile remain at the top as adults, and 63 percent remain above the middle.

■ Only 4 percent of those raised in the bottom quintile make it all the way to the top as adults, confirming that the “rags-to-riches” story is more often found in Hollywood than in reality. Similarly, just 8 percent of those raised in the top quintile fall
all the way to the bottom.

Family wealth

Half of Americans surpass their parents in terms of family wealth.

■ Fifty percent of Americans have greater wealth than their parents did at the same age.

■ Seventy-two percent of Americans whose parents were in the bottom fifth of the wealth ladder and 55 percent of those whose parents were in the middle quintile exceed their parents’ family wealth as adults.

There is stickiness at the ends of the wealth ladder.

■ Sixty-six percent of those raised in the bottom of the wealth ladder remain on the bottom two rungs themselves, and 66 percent of those raised in the top of the wealth ladder remain on the top two rungs.

Mobility by race 

Blacks have a harder time exceeding the family income and wealth of their
parents than do whites.

■ Sixty-six percent of blacks raised in the second quintile surpass their parents’ family income compared with 89 percent of whites.

■ Only 23 percent of blacks raised in the middle surpass their parents’ family wealth compared with over half (56 percent) of whites.

Blacks are more likely to be stuck in the bottom and fall from the middle than are whites.

■ Over half of blacks (53 percent) raised in the bottom of the family income ladder remain stuck in the bottom as adults, compared with only a third (33 percent) of whites. Half of blacks (56 percent) raised in the middle of the family income ladder fall to the bottom two rungs as adults compared with just under a third of whites (32 percent).

■ Half of blacks (50 percent) raised in the bottom of the family wealth ladder remain stuck in the bottom as adults, compared with only a third (33 percent) of whites. More than two-thirds of blacks (68 percent) raised in the middle fall to the bottom two rungs of the ladder as adults compared with just under a third of whites (30 percent).

Mobility by education

A four-year college degree promotes upward mobility from the bottom and prevents downward mobility from the middle and top.

■ Almost one-half (47 percent) of those raised in the bottom quintile of the family income ladder who do not earn a college degree are stuck there as adults, compared with 10 percent who do earn a college degree. Similarly, 45 percent without a college degree are stuck in the bottom of the family wealth ladder compared with 20 percent with a degree.

■ Having a college degree makes a person more than three times more likely to rise from the bottom of the family income ladder all the way to the top, and makes a person more than four times more likely to rise from the bottom of the family wealth
ladder to the top.

■ Thirty-nine percent raised in the middle of the family income ladder who do not get a college degree fall from the middle, compared with less than a quarter (22 percent) of those with a degree. Similarly, 39 percent raised in the middle of the family wealth ladder who do not earn a degree fall down the wealth ladder, compared with 19 percent with a degree.

via Pursuing the American Dream: Economic Mobility Across Generations « Full Text Reports….

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