Fairmount InSights
Adela Smith

The Pew Charitable Trusts recently released Pursuing the American Dream: Economic Mobility Across Generations, a publication of their Economic Mobility Project. A key finding: we may be making more money than our parents did, but we aren’t necessarily ascending the economic ladder.

Eighty-four percent of Americans are making more money than their parents did at the same age. And 93% of Americans raised in the bottom income quintile surpass their parents’ income as adults. At the same time, 43% percent of Americans raised in the bottom income quintile stay there and 70% don’t make it to the middle as adults. The stats are similar for folks at or near the top of the ladder.

Why are some of us stuck if we’re making more money than our parents did? It’s about absolute versus relative mobility. Absolute mobility is the measure of whether we have more or less income or wealth than our parents did. When it comes to absolute mobility Americans are doing very well. Relative mobility measures our position on the ladder compared to that of our parents, and this is where we aren’t moving. An ever-growing income gap between the top and the bottom rungs accounts, in part, for this lack of relative mobility—what Pew calls “stickiness at the ends” of the economic ladder.

Perhaps all of this confirms what you’ve already gathered through observation or reading the paper, but other findings stand out:

  • Race continues to play a factor in the accessibility of the American Dream. Blacks are less likely than whites to exceed their parents’ income or wealth. Blacks are also more likely to be raised at the bottom of the economic ladder, a finding that has serious implications when one considers the “stickiness” phenomenon.
  • For middle-class Americans, economic mobility is a pretty solid reality, though it’s not always in the upward direction. Their chances of moving anywhere in the income distribution are about equal. That is, if you were raised in the middle, you’re just as likely to rise to the top as drop to the bottom (or rise to the second) quintile.
  • An education can put the next rung on the ladder within our grasp. Nearly half of those raised at the bottom are stuck there if they don’t have a college degree, compared to just 10 percent of those who do. Americans who were raised in the bottom income quintile and have a college degree are three times more likely to rise to the top.

As Pew notes in the report, these findings are but a fraction of the picture of economic mobility in America. Effective organizations focused on assuring that everyone has an equal chance at living an economic reality better than that of the preceding generation know that income and wealth, poverty, racial disparities and education must be addressed together.

What does the Pew report mean for your organization and clients? How are you working to make the American Dream more accessible to your communities?