Eighty-four percent of Americans have higher family incomes than their parents did at the same age; those born at the top and bottom of the income ladder are likely to remain there as adults: Pew study

Cindy Allen

WASHINGTON , July 10, 2012 (press release) – Pursuing the American Dream: Economic Mobility Across Generations, the latest research from The Pew Charitable Trusts, shows opportunity is not the same for everyone. While 84 percent of Americans have higher family incomes than their parents did at the same age, those born at the top and bottom of the income ladder are likely to stay there as adults.

"The ideal of the American Dream is complex and we see again that one's ability to achieve it is impacted by race, education, and family background," said Erin Currier, manager of Pew's Economic Mobility Project.

Pursuing the American Dream uses the most current data to measure mobility by family income and family wealth, furthering the project's understanding of how closely tied a person's place on the economic ladder is to that of his or her parents. The research shows that:

African Americans are still less likely to exceed their parents' income and wealth than are whites and they are more likely to be stuck at the bottom of the economic ladder across a generation.
A four-year college degree promotes upward mobility from the bottom and prevents downward mobility from the middle and the top.
Most sons are meeting or exceeding the earnings of their fathers at the same age. However, the sons' earnings represent a smaller proportion of family income than did men's earnings in the fathers' generation.

This report considers both absolute and relative mobility to provide a full picture of what is happening in the United States. Absolute mobility measures whether a person has more or less income or wealth than his or her parents did at the same age. Relative mobility looks at a person's rank on the income or wealth ladder compared to his or her parents' rank at the same age. (For a complete description of these terms, watch the project's brief video, Measuring Economic Mobility.)

Methodology: Analysis for the report was conducted by Leonard Lopoo, associate professor of Public Administration and International Affairs of Syracuse University, and Thomas DeLeire, director of the La Follette School of Public Affairs of the University of Wisconsin-Madison. The data used in this report is from the Panel Study for Income Dynamics (PSID), which was designed in 1968. To compensate for the absence of Latinos and immigrant groups who emigrated to the U.S. after 1968, an additional sample was added in 1990. However, because this report incorporates data from the parent generation in 1968, or before the additional Latino and immigrant samples were added, the sample is too small to explore mobility among Latinos.

By forging a broad and nonpartisan agreement on the facts, figures, and trends related to mobility, the Economic Mobility Project is generating an active policy debate about how best to improve economic opportunity in the United States and to ensure that the American Dream is kept alive for generations that follow. For more information, visit www.economicmobility.org.

The Pew Charitable Trusts is a nonprofit organization that applies a rigorous, analytical approach to improve public policy, inform the public, and stimulate civic life.

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