Researchers in a new study examined earnings mobility, not physical mobility by geographic relocation. America's working poor value the work they do and have high hopes for their children's futures even though most believe it's now easier to fall out of the middle class than to rise into it.
How much would your parent's income matter if you're an American youth today wondering whether you'll move up the career ladder from poverty to wealth? Will you be able to reach a middle class economic level of income, education, and lifestyle or even get to enjoy it before your adult children move in and you spend your retirement savings just to keep family members from being homeless?
In the present generation, will you become richer and more educated than your parents or grandparents? New studies say that if you're growing up in the USA in this generation you are just as likely to climb the ladder of income success as your parents born a generation ago.
Maybe you went to college or technical school to learn a skill in demand in the job market. But you're parents didn't. And maybe your grandparents were able to buy a home and support a family on an elementary school education. After several generations, does it all matter how educated you are or self-taught when it comes to rising from poor to middle class?
You'd have a better chance at riches if you moved from middle-class to upper middle class
The landmark new study, from a group led by Harvard’s Raj Chetty, suggests that any advances in opportunity provided by expanded social programs have been offset by other changes in economic conditions. Increased trade and advanced technology, for instance, have closed off traditional sources of middle-income jobs, according to the January 22, 2014 Washington Post article by Jim Tankersley, "Economic mobility hasn't changed in a half century, economists declare."
Does where you live make a difference whether you'll grow up to be rich or poor? Or is your destiny driven more by whether your parents are poor or middle class? Geography may be a critical factor in the pursuit of the American Dream, says new research that points to the Southeast having more incidences of lower mobility over time than the Mountain West states.
Children growing up in America today are just as likely — no more, no less — to climb the economic ladder as children born more than a half-century ago, a team of economists reported today. Also, in another study, Pew research reveals that 43 percent of adults age 60-plus not working anymore are still helping their grown kids financially.
It seems to look like, according to the latest research that social movements that brought women and minorities into Ivy League schools through Affirmative Action programs or other opportunities that make college accessible to most people aren't making as much impact as the fact that if you're growing up poor, you still have the same odds of being trapped in poverty as your grandparents and great grandparents had in the post WWII generation.
The main reason why that's happening is due to the larger distance to climb to get up the economic ladder of success than your great grandparents had to climb. For example, your great grandparents in 1934 could buy a four-family house in a working class neighborhood and let the rentals pay the mortgage, which in those years was around $32 a month on a brick four-family apartment house, say in Brooklyn in a lower middle-class and working class neighborhood.
Or in 1968, that family's kids who moved to California, could buy a house with $1,800 down on a single family home on a relatively large canyon lot in San Diego in a middle class neighborhood (such as Claremont), with mortgage payments of about $150 a month in 1968-1970. If you were born seven to ten years before the Boomer Generation, you still had the chance to make it from poverty to upper middle class in home and neighborhood or educational and skill levels.
Not so today, and not so today in Sacramento, for example. In 1959, the average file clerk just out of high school earned $36 a week in a first job after graduation working in Manhattan and commuting by subway to his or her parent's home or apartment. What's changed is the difference between the bottom and the top of the economic ladder.
The consequences of mobility
Economic inequality in spite of more mobility affect young people growing up in this generation. Climbing the ladder of income increments still is difficult today. Economic inequality and the American Dream seem to be like Mother Nature and Father Time. You can fool Mother Nature, but Father Time catches up with consequences. There's more mobility today. But the consequences of being more mobile has changed due to the inequality.
Maybe Highway 66 is just a historic memory to reminisce about when people moved to California in the 1960s before the price of homes skyrocketed from $25,000 for a La Jolla home near the beach to close to a million and up with an ocean view. Check out the site, Interactive: How does your county stack up?
It's the inequality that puts a glass ceiling on people born near the bottom in this generation
If you're born into a poor or homeless family today, you're more likely to stay in poverty when you have children and grandchildren unless you remain single and don't have children, instead finding ways to educate yourself in some skill that's in high demand now with the outlook of remaining in high demand for the future of your work life. But one problem is that people tend to get married or reproduce at a young age before they've learned a skill and earned an income in a field that's in high demand where the pay rises to at least a middle-class range.
A typical example would be a young woman from a single parent home at the poverty level of income. She has the choice to join a program for women in technology, engineering, math, or science, but may not believe in herself that it takes more hard work than just being born 'smart.' Low self-esteem may keep her from getting into school programs that offer scholarships or other training opportunities. She may end up a single teenage mother in poverty in a long line of generations of poor families.
Is it harder to rise from poverty to upper middle class today?
Or the person, male or female may stay near the bottom because the family and neighborhood, the entire world of that person stays near the bottom. That's what researchers mean when they point to consequences remaining the same as the previous two generations compared to the belief in economic mobility.
It's news when stories are broadcast about immigrants coming to America with a few cents in their pockets and becoming billionaires as real estate developers, franchise owners, and other types of entrepreneurs. But that's the basis of a lot of people's faith in economic mobility.
Is it a myth that if you're born into poverty you can become middle class and then rich?
It's more likely that a kid from a middle-class home becomes rich than a kid from deep poverty living in a poor and hard-scrabble neighborhood with daily violence and crime constant and nearby, or a homeless kid finally put into a motel with his or her family. The problem that makers it harder on these kids is the slow recovery from recession and decades of middle-class stagnation.
It appears in news stories that in the previous generation it was a lot easier for someone to rise from poverty to wealth in a lifetime, at least according to news stories of immigrants arriving almost penniless and within a few years opening businesses from wholesale plumbing supplies to a chain of restaurants or in real estate development and philanthropy.
Why is it so hard to rise from poverty to wealth in this generation?
You see in the news immigrants from a variety of countries achieving this goal. But today, research says that it's more difficult to rise up from poverty to wealth or even to reach the middle class. If you look back to the 1980s, that's when mobility started its fast decline.
In the latest study, researchers from Harvard, the University of California at Berkeley, and the US Treasury Department’s Office of Tax Analysis looked at millions of anonymous earnings records and found that mobility has not changed appreciably since the 1970s.
What do you look for in earnings records that point to lower earnings mobility?
What the researchers examined were records for parents at a set age and for their children once they reached adulthood. For the most recent generation of children, many of whom have not yet started working, they measured college attendance, which correlates with higher earnings, explains the Washington Post article, "Economic mobility hasn't changed in a half century, economists declare."
The researchers also looked at a study that began in the 1950s. Back then social and economic mobility had been stable between 1900 and the 1950s. The immigrant who found himself and his family penniless on Ellis Island in 1902 may have been able to open a wholesale plumbing supplies business in Manhattan by 1925 and afford later to have bought and paid off a spacious apartment overlooking Central Park by 1959, which his children inherited eventually. That person may have passed on millions of dollars to his children.
On the other hand, kids born today to penniless people or rather people living below the poverty line may be stuck because mobility seems to be jammed or wedged and like an Internet connection caught at low bandwidth, remains slow. The result is that a child in the USA born into a poor family has a much harder time to climb into the category of the richest earners compared to a kid born in Canada or in some Scandinavian countries. Geography plays a part.
The question is which parts of the country have lower mobility? Researches found that in the USA, it's the Southeast compared to the Mountain West. Maybe it's still more difficult to rise to riches in some of the Southeastern states than it might be in the state of Washington, for example. After all, Microsoft is in Washington, not that it matters which Mountain West state you're in. Idaho, for example, is growing fast.
The mountain states are the nation's fastest-growing region. You may wish to check out the "USA Today.com article, Mountain West region becomes biggest Republican Bastion."
The mountain West is now the most solidly Republican part of the nation: Does it matter?
In 1992, Republicans held three of the region's eight governorships. Today, they hold all eight. In 1992, the GOP held a 23-17 lead in the region's U.S. Senate and House seats. Today, their lead is 31-9, explains the USA Today article. That's not to say the Democrats and Independents aren't as rich and mobile.
You can check out the article, "History of the Mountain West - American History USA." For some making a career of economic mobility from poverty to wealth has become a state of mind or a goal. And for others the goal is poverty to middle class, even as the middle class shrinks. You may wish to see, the NY Times.com article, "America's Sinking Middle Class," and the The Washington Post article, "Census: Middle class shrinks to an all-time low."