Is The American Dream A Myth?

via National Journal Magazine – Is The American Dream A Myth?.

In the generation after World War II, the median income roughly doubled, increasing faster for those on the lower rungs of the ladder than for those at the top. Since 1979, the median income has advanced much more slowly overall, and it has grown much faster for the affluent than for those below them. Today, Haskins and Sawhill note, family incomes are higher than in the 1970s almost entirely because women are working, and earning, more than they did then; men in their 30s today earn less than their fathers did at the same age.

In this environment, upward mobility becomes tougher. Analyzing long-term economic studies, the authors found that millions of Americans eventually outearn their parents, no matter where they start out. But the pair’s calculations also show more continuity than our national myths imply.

More than 60 percent of Americans whose parents scaled the top fifth of the income ladder have reached the top two-fifths themselves, Haskins and Sawhill found. By contrast, 65 percent of Americans with parents from the lowest fifth of earners remain stuck in the bottom two-fifths. Though we venerate the American Dream, studies show that children born to low-income parents in the United States are more likely to remain trapped near the bottom than their counterparts in Europe, the authors report.

And this via

But the mobility myth is so widely believed and so deep-seated that it’s not surprising he [Obama] hasn’t tried to confront the problem head on. When the Economic Mobility Project surveyed 2100 adults and ran ten focus groups earlier this year it found that respondents overwhelmingly believe that personal attributes – “like hard work and drive” – are the prime determinants of how economically successful an individual can be. A smaller majority also disagreed with the statement that “In the United States, a child’s chances of achieving financial success is tied to the income of his or her parent.”As the studies show, that statement is true for most children in the United States, and for a higher proportion of American children than in most comparable countries. Among the twelve countries analysed by d’Addio in her 2007 report, Intergenerational Transmission of Disadvantage: Mobility or Immobility across Generations?, the United States was in a group of four – with France, Italy and Britain – where family background plays the greatest role in influencing adult income. Children born into a poor family in any of these countries had a much lower chance of breaking into a higher income group than in any of the other countries in the study. (For historical and data-related reasons, most evidence used in these studies relates to the earnings of sons compared to their fathers.)

Britain came out worst, with around 50 per cent of a person’s income explained by his or her parents’ income. In other words, Britain was halfway between a situation in which there is no statistical relationship between a son’s income and that of his father and a situation in which his income is statistically identical to his father’s income. (The lower the percentage, the greater the mobility.) Italy and the United States weren’t far behind, at around 47 per cent. At the other end of the range were Denmark, Norway, Finland and Canada, where parental income explained less than 20 per cent of the child’s eventual earnings. If these figures are correct – and they’re generally accepted as being broadly accurate – then it’s those four countries, rather than the United States, that come closest to realising the American Dream.

Some studies have found that mobility is not only limited in the United States but has worsened in recent decades. A report for the Future of Children project, a collaboration of the Woodrow Wilson School and the Brookings Institution, found that “occupational mobility” – the measure favoured by sociologists – increased during the 1970s but reverted to the levels of the 1940s–60s during the two subsequent decades.