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?"
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."