THE END OF THE DREAM….Everyone knows that income inequality has been widening dramatically in the past three decades, as the rich get (lots) richer and the working class mostly stagnates. But hey — this is America! At least we still have lots of social mobility, right? People here go from rags to riches all the time, unlike those stagnant European hellholes where…..um….what? Oh:
There is little available evidence that the United States has more relative mobility than other advanced nations. If anything, the data seem to suggest the opposite. Using the relationship between parents’ and children’s incomes as an indicator of relative mobility, data show that a number of countries, including Denmark, Norway, Finland, Canada, Sweden, Germany, and France have more relative mobility than does the United States (see Figure 3).
Well, Horatio Alger died a long time ago, I guess. Still, at least things are getting better. Maybe middle class kids aren’t becoming CEOs, but at least they’re doing better than their fathers. Right?
In a word, no. American kids used to do better than their fathers, but not anymore. The economy might be growing at a healthy clip, but men today actually make less than their dads did in 1974:
The story changes for a younger cohort. Those in their thirties in 2004 had a median income of about $35,000 a year. Men in their fathers’ cohort, those who are now in their sixties, had a median income of about $40,000 when they were the same age in 1974….This suggests the up-escalator that has historically ensured that each generation would do better than the last may not be working very well.
Bummer. No more up-escalator. And it’s not just individuals. If you look at families it turns that they’re doing a smidge better than in the past, but only because more families have two earners these days. However, even that small improvement has gone away in the Bush era. Income used to increase along with productivity growth, but that slowed down starting in 1974 and then disappeared entirely starting in 2001. Just a coincidence, I’m sure.
All these charts come from the Economic Mobility Project, a joint effort of the The American Enterprise Institute, The Brookings Institution, The Heritage Foundation and The Urban Institute. The full report is here.