You Have an 85 Percent Chance of Being Poor
But don't worry, you also have a 77 percent chance of being affluent
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As far as intergenerational income mobility is concerned, the U.S. measure is higher than that of most other rich countries. The influence of a father’s income on adult sons' relative earnings is lower than 20 percent in Canada, Denmark, Norway, and Finland, and 30 percent in Germany and Sweden. Intergenerational income mobility comparable to the U.S. is found in France and Britain.
Is it just parental money that accounts for this difference in income mobility between the generations? A 2006 study [PDF] done for the left-leaning Center for American Progress by former American University economist Tom Hertz looked a number of household characteristics that might account for 0.5 intergenerational elasticity figure. Taking into account a large variety of parental variables including race, educational levels, tendency toward fatalism, and religion, Hertz reduces the estimated effect of parental income itself to 0.20. “In other words, about three-fifths of the simple intergenerational elasticity is due to the influence of factors other than parental income,” concludes Hertz.
While most studies in income mobility focus on the fates of those who are at top and the bottom of the income distribution, one should keep in mind that middle-class Americans experience considerable income mobility as well. A 2007 Treasury Department study looking at shifts in income mobility between 1996 and 2005 found that over half of taxpayers moved to a different income quintile over this period. For example, nearly 50 percent of the people in the second quintile moved up to one of the higher three quintiles during that period. And 42 percent of the middle quintile moved up to the two higher ones, while 25 fell into the two lower quintiles.
Overall, Rank’s income data from 1968 to 2009 reveal a lot of churn in the economic fortunes of Americans. How much does this bother Americans? A 2009 Pew Center poll [PDF] found that 71 percent of Americans believe that it was more important to ensure that everyone has a fair chance of improving their economic standing, while only 21 percent think it was more important to reduce inequality. Do Americans have a fair chance to improve their economic lot?
Rank reports data that looks at the distribution of parents’ incomes in the late 1970s compared to the earnings of their adult children in the late 1990s and early 2000s. The percent of adult children exceeding their parents’ household incomes is broken down by income quintiles. Rank finds that 82 percent of kids whose parents were in the bottom 20 percent of the income distribution make more than their parents. The figures for each higher quintile are 74 percent, 68 percent, 67 percent, and 43 percent. Combined, it turns out that 67 percent of kids are making more than their parents did. In absolute terms, most children did improve their economic lot compared to their parents. The rising tide (when it is rising) of the American economy does indeed lift most boats.
Disclosure: I would like to thank the folks at Washington University’s Weidenbaum Center for paying my travel expenses for their excellent media retreat.
Science Correspondent Ronald Bailey is the author of Liberation Biology (Prometheus).
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Why do these studies always measure intergenerational income mobility in terms of income percentile? This is going to make a wealth-redistribution based economy look more "mobile" since the gap between the 20th and the 80th percentile is reduced.
A better measure would be to take fathers with equal incomes and ask what is the likelihood that his son makes 100%, 150%, etc of his income in US vs. other countries.
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When you consider the income mobility of the parents, the whole concept of intergenerational mobility becomes all but meaningless.
My own father experienced years in the bottom quintile and years in the top quintile. As have I.
Do you compare his years at the top to mine at the bottom? Or mine at the top to his at the bottom?
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Just a reminder that tyranny is still whimsical:
http://boston.cbslocal.com/201.....practices/
The EEOC: You nation's free-range HR department.
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So, 21% of us are the 1%?
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Washington University sociologist Mark Rank
Do you mean the University of Washington, Ron? Or Washington State?
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Washington U in St. Louis, my alma mater. Barry Commoner used to spout his horseshit there, much to our shame.
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Ah, I was wondering if it was somewhere else. Calling UW "Washington University" is something of a sin around here.
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Probably Washington University in St. Louis.
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I thought it was always "Wash U."
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If you live here, it's "Warshyoo."
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Ronald Bailey on Your Surprisingly High Chances of Being Both Rich and Poor
Great, so apropos of that tired debate in the 90s, liberals were right. It's all just luck. I guess mine was bad.
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Well I've been dirt poor since I left my parents' house, so this is uplifting news.
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Nearly 77 percent of Americans will have lived in a household earning more than $100,000 for at least one year, and 21 percent will have enjoyed living in households earning $250,000 for at least one year.
Just to be clear, this study was done on the data before Barack Obama heavily regulated the financial industry and effectively nationalized the healthcare industry. The fallout from those events is still settling--so there's no guarantee that the Americans of the future will enjoy anywhere near the same opportunities we were afforded back when our economy was allowed to be innovative and resilient.
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i por i not have even fone i send this coment from abacus!
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It is simple demographics. After graduating from high school, most people make very little. As they age they increase their marketable skills and also acquire assets. Many people experience the whole range of income groups over the course of their lives.
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'I been rich and I been poor. I'd rather be rich'
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Rank restricts his analysis to people who are between the ages of 25 and 60, their prime working years. Since they are not yet 25 years old, children brought up under welfare programs are excluded. Let’s look first at Rank’s data on economic misfortune. He finds that by age 60, just under 45 percent of American adults will have relied for at least a year on one or more of the following, food stamps, Temporary Assistance to Needy Families (TANF), Medicaid, or Social Security’s Supplemental Security Income. Not surprisingly, use of such programs rises faster earlier in life since income and job stability tend to be lower when a person starts out. By age 30, just over 27 percent of Americans will have accessed one of the welfare programs. By age 40, nearly 38 percent will have done so. The good news is that by age 60, only a bit over 7 percent of American adults will have used safety programs for 10 or more years.
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Families (TANF), Medicaid, or Social Security’s Supplemental Security Income. Not surprisingly, use of such programs rises faster earlier in life since income and job stability tend to be lower when a person starts out. By age 30, just over 27 percent of Americans will have accessed one of the welfare programs. By age 40, nearly http://www.lunettesporto.com/l.....-3_20.html 38 percent will have done so. The good news is that by age 60, only a bit over 7 percent of American adults will have used safety programs for 10 or more years.
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He finds that by age 60, just under 45 percent of American adults will have relied for at least a year on one or more of the following, food stamps, Temporary Assistance to Needy Families (TANF), Medicaid, or Social Security’s Supplemental Security Income. Not surprisingly, use of such programs rises faster earlier in life since income and job stability tend to be lower when a person starts out. By age 30, just over 27 percent of Americans will have accessed one of the welfare programs. By age 40, nearly 38 percent will have done so. The good news is that by age 60, only a bit over 7 percent of American adults will have used safety programs for 10 or more years.
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I'll wait for the movie:
http://dvd.netflix.com/Movie/The-Jerk/651726 -
I don't know how important this study is. My father owns a small, family owned, business that he has put a ton of his own money into(through second mortgages, etc), and in good years, his income has been 100K+. But for the majority of the company's existence, it's been much lower. When his "income" was so high, much of that income went to paying off loans he took out to grow the company. He is now struggling to get the company to a point where he will come out ahead and my parents will have a place to live in retirement. Luckily, my mom works for the public school district, so the longer she works, the bigger her pension. But, my Dad built the company up to quite nice heights in the late 90s, but now, after investing too much in the 2000s before the crash in the late 2000s, he owes way too much money to the company. It's pretty much a microcosm of the "keep borrowing because the economy will never crash" mindset that has caused the current recession. I look at it, and I will never leverage myself to any fucking degree. Just give me a straight paycheck and if I can afford it, I will buy it. I have no ambition to strike out on my own. It seems too risky to take out any major loans. So yeah, I think I fit the definition of someone who has been rich and poor, but I am not solidly middle class, and I am too scared to try to become "rich" again.
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I have a funny feeling I have a 100% chance of being poor 100% of the time. I blame Obama, because my beer ain't colder yet, and my cigarettes burn faster.
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This is such a funny title peoples of america are changing from rich to poors.
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It just goes to show that, rich or poor, it's good to have a lot of money.
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He finds that by age 60, just under 45 percent of American adults will have relied for at least a year on one or more of the following, food stamps, Temporary Assistance to Needy Families (TANF), Medicaid, or Social Security’s Supplemental Security Income. Not surprisingly, use of such programs rises faster earlier in life since income and job stability tend to be lower when a person starts out. By age 30, just over 27 percent of Americans will have accessed one of the welfare programs. By age 40, nearly 38 percent will have done so. The good news is that by age 60, only a bit over 7 percent of American adults will have used safety programs for 10 or more years.