84 Percent of Americans Are Richer than Their Parents Were at the Same Age

|

So says a new study just released by the Pew Center's Income Mobility Project, Pursuing the American Dream: Income Mobility Across the Generations. The report further notes that "across all levels of the income distribution, this generation is doing better than the one that came before it."

Other interesting insights from the study:

Ninety-three percent of Americans whose parents were in the bottom fifth of the income ladder and 88 percent of those whose parents were in the middle quintile exceed their parents' family income as adults.

Fifty percent of Americans have greater wealth than their parents did at the same age.

Seventy-two percent of Americans whose parents were in the bottom fifth of the wealth ladder and 55 percent of those whose parents were in the middle quintile exceed their parents' family wealth as adults.

Forty-three percent of Americans raised in the bottom quintile remain stuck in the bottom as adults, and 70 percent remain below the middle. Forty percent raised in the top quintile remain at the top as adults, and 63 percent remain above the middle.

Only 4 percent of those raised in the bottom quintile make it all the way to the top as adults, confirming that the "rags-to-riches" story is more often found in Hollywood than in reality. Similarly, just 8 percent of those raised in the top quintile fall all the way to the bottom.

In my column, You Have an 85 Percent Chance of Being Poor, I noted that Washington University sociologist Mark Rank cited research showing that 67 percent of kids are making more than their parents did. So what's the difference between that number and the new higher Pew research 84 percent figure? Without going into detail, the Pew figure controls for family size whereas the earlier one did not.

The Pew report notes that while kids in general are richer than their parents, lots of them are not moving up to a different rung on the economic ladder. What's going on? 

The rungs of the income ladder have widened during the past generation, reflecting economic growth at all levels, but especially at the top. Median income in the bottom income quintile increased by 74 percent between the two generations, compared with 126 percent in the top income quintile. The difference between the size of the rungs between the two generations means that while the vast majority of Americans exceeded their parents' family incomes, the extent of that increase—particularly at the bottom—was not always enough to move them to a different rung of the income ladder.

OK. so most folks got richer than their parents. What about the future. It's been woe-are-the-kids for at least a generation. Back in 1980, Newsweek reported:

And no longer do Americans share the great expectations of generations past. For the first time, public-opinion polls show that the average U.S. citizen is not at all sure that his children's lot will be better than – or even as good as – his own.

Since 1992, the NBC News/Wall Street Journal poll has been asking: Do you feel confident or not confident that life for our children's generation will be better than it has been for us?" Only once did even a plurality suggest that Americans believe that their children would be better off. That was in December, 2001 with a 49 percent confident and 47 percent not confident.

The latest poll result was from May of this year: 30 percent were confident the kids will be better off and 63 percent were not so confident.

As Thomas Macaulay asked in 1830: "On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?"

Good question.

See Reason TV's terrific interview about income mobility with Brookings Institution scholar Scott Winship. As Winship observes: "You can be concerned that there's not enough [economic] mobility or enough opportunity, but you don't have to also believe that things are getting worse."

Advertisement

NEXT: A. Barton Hinkle on the Wealth of Similarities Between Mitt Romney and Barack Obama

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. I couldn’t find it doing a quick keyword search through the article, but does this control for the number of people working in a household? It seems like that would explain why people are in wealthier household and why they’re in the same relative spot.

    1. From the PDF report

      “””4 “Family income” includes all taxable income (such as earnings, interest, and dividends) and cash transfers (such as Social Security and welfare) of all family members. All mobility metrics on family income are adjusted for inflation and family size.. “””

      So its adjusted for family size, not the number of family earners. Its also adjusted for inflation but I could not find out what inflation numbers they are using but I presume it the governments inflation number which has been manipulated down for decades

      1. Unless you’re adjusting per job per household, it doesn’t say very much. Two people working make more money than one person working.

        1. Not exactly what you’re looking for, but this is from the Census Bureau, showing real median family income by number of earners:

          http://www.census.gov/hhes/www…..R_2010.xls

          You can see the growth over the past 30 years (one generation)…

          Zero earners:
          1980 – $21,570
          2010 – $25,447

          One Earner:
          1980 – $42,107
          2010 – $42,863

          Two Earners:
          1980 – $62,117
          2010 – $83,676

          Three Earners:
          1980 – $80,196
          2010 – $97,518

          Four+ Earners:
          1980 – $99,760
          2010 – $119,793

          That pretty well confirms the trend in Bailey’s study, at the very least.

          1. The one earner one is likely the most apples-to-apple comparison of the two, since it is likely comparing a similar mix of FT workers and PT earners. That’s pretty flat and goes against the thesis.

            If you have two workers in 1980 and one is PT and one is FT, they will make less than two FT workers. The reason I suspect it’s a PT/FT mix for two workers is that the gap is almost the exact same for two, three and four earners per household. If it was the case that earners were making more, you would see the gap grow as there were more earners in a household.

            1. “The reason I suspect it’s a PT/FT mix for two workers is that the gap is almost the exact same for two, three and four earners per household.”

              That doesn’t follow. If it were the case that additional workers are part-time, you’d expect the gap to decrease as you increase workers.

              Also, you’d expect the average hours worked per week to have risen significantly, since all those part-timers are now full-timers. Instead, it’s fallen slightly.

              http://4.bp.blogspot.com/_8rpY…../hours.png

            2. Also, FT vs. PT data showing no change in the ratio of FT to PT employment:

              http://wallstreetexaminer.com/…..ndlt82.png

  2. I have an OT question about Facebook.

    I want to click on the “Privacy” and “Developers” links at the bottom of the page.

    I know these links are at the bottom of the page, because when I scroll down to the bottom I can see them.

    But in the time it takes to take the mouse off the down arrow and cross the page to click the link, Facebook’s “Eternal News Scroll” rerenders and extends the news scroll down.

    So it’s impossible to actually reach those links.

    Considering the fact that the Advertising link is down there too, how does anybody sign up to post ads?

    1. Have you tried going to account settings? There shouldnt be any newsfeed there, allowing you to click on privacy and developers.

    2. You don’t have a scroll wheel on your mouse?

      1. I use a laptop.

  3. Problem is that the cost of buying a decent size single family home with a nice yard has gone up so much. So even if you have more money you’re saddled with a collossal mortgage.

    This is what the faux “affordability” of pushing up housing prices while loosening loan terms gets you.

    The real decline in American’s living standards is caused by the giant sucking sound of bloated housing prices and onerous mortgages.

    The housing market needs to crash MORE.

    1. Problem is that the cost of buying a decent size single family home with a nice yard has gone up so much.

      No, it hasnt. The problem is people are buying larger houses and larger yards than their parents did at same age/income/ level.

      1. How many people do you know who have a bigger house with a bigger yard than the one they grew up in?

  4. 84% have higher INCOME than their parents at same age. 50% have greater WEALTH than their parents at same age.

    I think title is a tad bit inaccurate. Actually, a lot inaccurate.

    1. Ronald, did you actually read the fucking report before you wrote that title? Im just starting to skim it and those numbers immediately popped out at me.

      1. Page 2, left column has income numbers, right column has wealth numbers.

        Maybe Ive read too many (two, to be exact) of Thomas Stanley’s books, but fuck income, its wealth that matters.

        Of course, income is the greatest tool to building wealth, if its properly managed, which says something when you have that 84/50 divergence.

        1. They are spending all their income paying for the mortgage on the smaller house on the smaller lot than their parents had.

          Where I live, it sometimes seems as if half of the homes are townhouses. You get a tiny yard and you are wedged in between two other families. Otherwise, the neighborhood is a yuppie hell, generally a subdivision with these townhomes sretch out along a cul-de-sac with community lawn maintainance, a short drive from a faux-pedestrian mall with GAP and Banana Republic and some trendy restaurants.

          To outside appearances, these people are middle-upper class. Except the small fact that they are crammed into a townhouse instead of owning a single family home.

    2. Do sports tickets count as wealth? Because I may have just invested about $2500 in presale NFL tickets…

      1. I think a PSL is, as its an ongoing asset. The tickets themselves are a consumable good.

        1. Hmmm, so perhaps I can still count my $400 deposit for the waiting list…

    3. I took it as a jab back at all those idiots bitching about “income inequality”.

  5. 84 Percent of Americans Are Richer than Their Parents Were at the Same Age And Leftists Want Half of Their Income

    FIFY’d.

  6. As Thomas Macaulay asked in 1830: “On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?”

    Peak everything!

  7. Then again 84% of America’s parents lived in hovels in Mexico.

  8. I am not really surprise d by that dude.

    http://www.Mega-Privacy.tk

  9. I’m in the 15%, but my Pa is way more hardworking and disciplined and ambitious than I am. It’s OK – his goals were different than mine and he had a family to take care of.

  10. My brothers and I are definitely less wealthier than the old man. My doctor brother has a higher income, but a divorce, bad spending habits, etc puts a serious crimp on his wealth-building.

    Of course my dad came from the work 70 hours a week, have no expensive hobbies, live in the same house for 30 years, invest heavily in stocks, etc mentality. On the other hand, most of my free income goes towards my hobbies, moving every few years, and getting another car every 1-2 years. I don’t live “for retirement” since I have no plans of living that long.

  11. I make quite a bit more than my dad did, but I also have enormous student loans that will take a long time to pay off. If you discount those payments, we’re probably about the same. He’s also had a pension from early on, and hasn’t had to commit income for retirement.

  12. My income exceeds the old man’s, but at my age I believe he had more assets.

    I blame the hookers and blow.

    And, of course, Bush.

    1. There you go! A** versus assets.

  13. The problem people have is that they do not care how much wealth they have, they only care about having more wealth than the people around them. Seeing the rich people, they say “That’s not fair!”, never mind they are so much richer than the vast majority of people in human history.

  14. Richer? Does this account for the unbridled inflated dollars that do not buy any more of a commodity. In 1963 I bought a new, well appointed Plymouth
    Belevedere for my mother for $3,000. A similar car today runs about $24,000. Chicken on sale in the markets ran 20-25cents a pound. Today’s chickens run what? My first house costing the original owner $16,000 cost me $24,000 and sold quite a few years ago (by another owner) for $250,000. Do present day people have more money? No! We have inflated fiat money to purchase inflated commodities. I don’t see myself as having much more than my working class father and stay at home mother and cannot build up a good nest egg.

Please to post comments

Comments are closed.