Economic mobility differs starkly for white and black Americans, says new report
Black Americans are more likely than whites to be stuck at the bottom of America’s economic ladder or to fall off the middle rungs, according to a study released Monday by Pew researchers.
In general, Americans are doing better than the previous generation, says the report "Pursuing the American Dream: Economic Mobility Across Generations.” A whopping 84 percent of Americans have higher family incomes than their parents did at the same age. On the other hand, more than half of black Americans (53 percent) raised in the bottom of the family income ladder remain there as adults, compared with one-third of whites.
“Our research today reveals a mixed picture of mobility,’’ said Erin Currier, project manager of Pew’s Economic Mobility Project which has been studying the health of the American Dream.
"In absolute terms, most Americans have higher income and wealth than their parents did at the same age and most sons have higher earnings than their fathers, but in terms of rank on the economic ladder as a whole, the data show that parental background has a strong influence on where people end up," Currier said. "Postsecondary education and race are also important factors for mobility.”
Some other findings from the report:
- Americans raised at the bottom and top of the family income ladder are likely to remain there as adults: 43 percent of Americans raised in the bottom quintile remain in the bottom as adults; 40 percent raised in the top quintile remain at the top as adults.
- Blacks have a harder time exceeding the family income and wealth of their parents than do whites: 23 percent of blacks raised in the middle surpass their parents' family wealth compared with 56 percent of whites.
- More than two-thirds of blacks (68 percent) raised in the middle fall to the bottom two rungs of the ladder as adults compared with 30 percent of whites.
Few rags-to-riches stories
The Pew research takes a long economic view, using historical family and economic data from the University of Michigan's Panel Study of Income Dynamics (PSID), compiled between 1968 and 2009. Pew researchers note that they did not include Latinos because the PSID didn’t begin including samples of immigrants and Latinos until the late 1990s.
Currier said the research looks at both absolute and relative mobility. Absolute mobility measures how much better or worse people are doing in absolute dollar terms than their peers, their parents or themselves over time.
“For example, if you have more income in absolute inflation-adjusted dollars than your parents did at the same age, you have experienced upper absolute mobility,’’ she said.
Absolute mobility tends to be a byproduct of broad economic growth. Think of an escalator: As the economy does well, everyone tends to climb upward.
Currier noted that people on the bottom rung of the economic ladder were most likely to exceed their parents’ income.
“However, the magnitude of income gains differs and our data revealed that Americans raised in the bottom quintile who surpassed their parents did so by the smallest amounts,’’ she said.
Relative mobility measures a person’s rank on the income, earnings or wealth ladder compared to his or her parents' rank at the same approximate age.
“When we look at the relative mobility of all Americans, we see that those at the bottom and top are likely to remain there as adults, a phenomenon known as ‘stickiness,’ ’’ Currier said.
“Only 4 percent raised in the bottom make it all the way to the top, showing that the rags-to-riches story is more often found in Hollywood than in reality,’’ she said.