Somehow, We Make More Money Than Our Parents, But Are Less Upwardly Mobile

According to a new study by the Economic Project, 84 percent of Americans make more than their parents did. However, only a third moved up between income classes in the past 40 years. What gives?

The key factor here is the difference between “absolute mobility” (whether the subject had more or less income than their parents did at their age, adjusted for inflation) and “relative mobility” (the person’s rank on the “wealth ladder” at that age, as compared with their parents’.)

“Forty-three percent of those raised by the bottom level of income earners were likely to be stuck there as adults, while 40 percent of the children from the highest-earning families were likely to remain high earners themselves,” writes Annie Gowen at the Washington Post.

Those numbers are worse for some demographics. Only 23 percent of African Americans who took place in the study earned more than their parents, as opposed to 56 percent of whites. College-educated subjects were three times more likely to ascend the income ladder than those without a degree.

Gowen spoke with Erin Currier, the manager of the Economic Mobility Project, who said that there are a variety of factors in determining whether a person moves up and down the ladder, including education and savings. Geography was also a factor: participants who grew up in poor neighborhoods were more likely to become downwardly mobile, even if their parents were relatively wealthy.

The study was based on data from the University of Michigan’s Panel Study of Income Dynamics, which tracked 2,200 families from 1968 to 2009.

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