Has American Upward Mobility Really Collapsed?

 

It’s a pretty depressing statistic, one I hear commonly repeated by folks trying to prove Americans are worse off today than decades ago: A mere half of Americans born in 1984 grew up to earn more than their parents did at age 30, adjusting for inflation. That’s a drop from 92% of children born in 1940. Those numbers comes from a high-profile study that received considerable media attention when it was released in 2016. It’s a stat with considerable staying power.

But I would be reluctant to cite it without considerable context. Indeed, the finding struck me as odd when I first saw it back then. A 30-year-old born in 1940, after all, was born at the end of the Great Depression. As researcher Scott Winship has pointed out, “Exceeding the income of their parents was relatively easy compared with today. Few of today’s 30-year-olds would trade the higher absolute mobility their 1970 counterparts enjoyed for contemporary living standards.”

Moreover, once you appropriately adjust that 50% stat for changes in family size, a better inflation measure, and increasing employer and federal benefits, Winship concludes, “roughly three in four adults—and the overwhelming majority of poor children—live better off than their parents after taking the rising cost of living into account.”

I think getting the numbers right or at least grappling with the debate about them is important. Also this reminder: Faster economic growth is key too boosting living standards. As I noted the other day, if productivity growth had been as fast over 1973-2016 as it was over 1949-1973 — about twice as high — median and mean compensation would have been around 41% higher.

Published in Economics
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There are 12 comments.

  1. Coolidge

    I think many Americans have sacrificed some income, so that other countries get a lot more. This is part of what makes America the greatest. During American hegemony, we sacrificed internal gain for eliminating more global poverty. We paid for the military that kept global peace, so that billions of people are living better lives today. We certainly don’t have the wage growth we used to, but we are heroes, which is a silver lining.

    • #1
    • November 23, 2018 at 2:20 pm
    • 2 likes
  2. Member

    Today it’s also harder to tell what more you get for having more income. [I’m a fairly wealthy 62 year old, with high income children who are 30 and 33 years old, so I might not be in the best position to comment, but . . .]

    Apart from housing in major metropolitan areas, the difference between what a “modest income” and a “high income” can afford today is not as great as it was in 1970. In 1970, a modest income meant you were driving a crappy car, your housing probably didn’t have air conditioning, your clothing selections were highly limited, and your entertainment choices were limited. 

    Today, a person of “modest income” has access to some pretty nice cars (today’s Hyundai Elantra is nicer than the Mercury Marquis of 1970, and the gap today between a Ford Focus and a Lincoln Continental is much smaller than the gap in 1970 between a Ford Maverick and a Lincoln Town Car), you have a smartphone (maybe not the most up-to-date model, but a relatively new one nonetheless with 90% of the functionality of the most up-to-date model), you probably have air conditioning in your living quarters, and can afford at WalMart or Target clothing that rivals some of the best clothing that was made in 1970, and you have streaming entertainment that is not that different from what Bill Gates or Warren Buffet can get. Oh, and your supermarket food selections at Albertson’s or Kroger are almost as extensive as those available to the richest shoppers at Whole Paycheck Foods or Trader Joe’s. 

    Although I could “afford” much more, I just bought for about $260,000 a brand-new house (on a small lot, but I’m trying to reduce maintenance) that has beautiful wood floors, high quality cabinets, solid surface counters, well insulated windows and doors, central air conditioning and heating, etc. Spending twice as much money was not going to get me twice as good a house. In 1970, the feature differential between a “modest” house and a “high end” house would have been much greater.

     

    • #2
    • November 23, 2018 at 3:33 pm
    • 7 likes
  3. Member

    The odds that a mid-income person will have a decent school in their area was surely higher in 1970; much higher probability today of needing to pay for private school (or a more expensive neighborhood) if you want your kids to actually learn something, or even to be physically safe. Similarly for college costs.

    Basically, things that can be made in factories have gotten relatively cheaper, especially things that can be economically transported in shipping containers. Goods and services outside this model, not so much.

     

    • #3
    • November 23, 2018 at 3:45 pm
    • 2 likes
  4. Member

    Full Size Tabby (View Comment):
    and can afford at WalMart or Target clothing that rivals some of the best clothing that was made in 1970

    No. I don’t think so.

    Maybe you should put the qualifier *new* clothing that rivals *old, second-hand* clothing from 70s.

    Wal Mart is not high quality. Its fabrics are cheaper, thinner, and tear more easily.

    Target’s designs do not fit many shapes properly and are overly given to a very slim market of what is considered “current fashion” – skinny jeans, anyone? It was all I could find in the Year of Bieber for holiday and school shopping. As if straight jeans ever go out of fashion?

    So, sure, you can wear current fashions for cheaper, but do you look as good in them and do they last long enough to hand down to a younger sibling (or Salvation Army) as the wealthier class? Nope.

    • #4
    • November 23, 2018 at 8:29 pm
    • 1 like
  5. Thatcher

    Stina (View Comment):

    Full Size Tabby (View Comment):
    and can afford at WalMart or Target clothing that rivals some of the best clothing that was made in 1970

    No. I don’t think so.

    Maybe you should put the qualifier *new* clothing that rivals *old, second-hand* clothing from 70s.

    Wal Mart is not high quality. Its fabrics are cheaper, thinner, and tear more easily.

    Target’s designs do not fit many shapes properly and are overly given to a very slim market of what is considered “current fashion” – skinny jeans, anyone? It was all I could find in the Year of Bieber for holiday and school shopping. As if straight jeans ever go out of fashion?

    So, sure, you can wear current fashions for cheaper, but do you look as good in them and do they last long enough to hand down to a younger sibling (or Salvation Army) as the wealthier class? Nope.

    So, just a quick glance at Target shows these brands (a 30 second click-around):

    Levis
    Champion
    Under Armour
    Umbro

    I wore off-brand clothes throughout my childhood. I definitely wanted Levi jeans, but we couldn’t afford them, so I had whatever off-brands were available.

    These brands listed above are available at stores like Wal-Mart and Target, are high quality, along with cheaper brands, too. I can easily say that the Target stuff rivals the stuff I wore as a kid. If you want to talk stuff that’s cheap and tears easily, I can show you my off-brands from my childhood with their tears and holes in them, too. The stores we used to buy that stuff in no longer exist, including stores like Sears, but a lot of smaller, lesser-known retail shops that died decades ago.

     

     

    • #5
    • November 24, 2018 at 5:15 am
    • 3 likes
  6. Member

    Chris Campion (View Comment):
    These brands listed above are available at stores like Wal-Mart and Target, are high quality

    Walmart and Target name brands are not the same as Macy’s name brands (of same name).

    Don’t believe me? High end Department stores used to be the only place you could find brands like nautica. There was a big deal about Nautica releasing a line to K-Mart. They were half the price of what you could get at the department store.

    Surprised, I picked one up. Discovered it was actually much lower quality. The move actually destroyed Nautica’s brand, gaining a reputation that was so repugnant to the upper classes that they stopped buying it, ultimately wrecking them.

    Name brands don’t just offer the same merch in Macy’s to Target at the same price. Difference in price translates to difference in quality. Target Levis are not Kohl’s Levis are not Macy’s Levis.

    What DID happen is it made this season’s fashions available to the lower classes, but made to be as disposable as those very seasons. Higher quality would end up in consignment and thrift shops, so those who couldn’t afford new clothes would be in last season’s clothes from sales racks and 2nd hand stores. But the quality of the goods still made it a great deal and a non-growing adult could get a couple years out of a well-made garment (if not longer). Clothing doesn’t last that long anymore.

    It’s all about turn-over. That’s what a consumption economy is about – it relies on easily destroyable goods to keep the consumer consuming.

    Interestingly, moving to a service environment should bring a rise to such service professions as tailoring and other things that you just can’t get anymore, but the minimum wage, cost of living, and cheapness of (ill-fitting and disposable) clothes does not justify the cost of the profession.

    So our daily fashions will continue to deteriorate and conservatives will continue to whine over the decline of the culture while STILL they cling to policies that helped with the destruction.

    Have a great day.

    • #6
    • November 24, 2018 at 6:35 am
    • Like
  7. Member

    “…children born into the bottom quintile of the income distribution, if their parents are married, they are just about as likely to end up in the top quintile as to remain in the bottom.”

    https://www.theamericanconservative.com/dreher/jonathan-haidt-amy-wax-penn-law/

    I think the problem is that few people in the bottom quintile are married AND stay married.

    • #7
    • November 24, 2018 at 7:46 am
    • 3 likes
  8. Coolidge

    The Cloaked Gaijin (View Comment):
    I think the problem is that few people in the bottom quintile are married AND stay married.

    The time-tested formula for success: (1) get an education; (2) find a life-mate; (3) have babies. It is pretty simple, but successful people don’t discuss it enough. I guess they don’t want to be judgemental.

    • #8
    • November 24, 2018 at 9:18 am
    • 1 like
  9. Member

    Arn’t you all tired of this silly debate. We took it up in the early cold war because the Soviets asserted they would bury us materially. They couldn’t, didn’t and no centrally controlled system ever will, including our own but the debate about material abundance isn’t what we’re all about. Material abundance and upward mobility it brings are side benefits of the thing we seek which is freedom and human flourishing. Moreover, income distribution is always worse in top down systems. Who on earth do people think will benefit from narrow control of economic power everybody but those who control it all?

    • #9
    • November 24, 2018 at 10:14 am
    • 3 likes
  10. Member

    I Walton (View Comment):

    Arn’t you all tired of this silly debate. We took it up in the early cold war because the Soviets asserted they would bury us materially. They couldn’t, didn’t and no centrally controlled system ever will, including our own but the debate about material abundance isn’t what we’re all about. Material abundance and upward mobility it brings are side benefits of the thing we seek which is freedom and human flourishing. Moreover, income distribution is always worse in top down systems. Who on earth do people think will benefit from narrow control of economic power everybody but those who control it all?

    This primarily means destroying the economist’s views that people are primarily interchangeable economic units.

    We aren’t. 

    • #10
    • November 24, 2018 at 11:03 am
    • 2 likes
  11. Member

    Stina (View Comment):

    I Walton (View Comment):

    Arn’t you all tired of this silly debate. We took it up in the early cold war because the Soviets asserted they would bury us materially. They couldn’t, didn’t and no centrally controlled system ever will, including our own but the debate about material abundance isn’t what we’re all about. Material abundance and upward mobility it brings are side benefits of the thing we seek which is freedom and human flourishing. Moreover, income distribution is always worse in top down systems. Who on earth do people think will benefit from narrow control of economic power everybody but those who control it all?

    This primarily means destroying the economist’s views that people are primarily interchangeable economic units.

    We aren’t.

    Politicians view. Without the insights and empiricism or real economists we’re as blind as the mercantilists who they fought against. Economists do not have that view unless they’re marxist or quasi marxists we call progressive economists which includes Keynesians. Real economists, starting with Adam Smith and ending with the Austrians, say protect property rights and let people alone and they’ll figure it all out. It’s precisely the importance of human differences that raise market solutions to doctrine for real economists. 

    • #11
    • November 24, 2018 at 12:26 pm
    • 2 likes
  12. Member

    Shut up, peasants. You’ve never had it so good. You’ll get your serving of food as soon as we’ve eaten ours. There will be plenty left over, and the leftovers from our plates are better than anything your parents had.

    (I think we should be careful not to sound like that. And if anybody does make that case it should be the peasants themselves, rather than the lords of the manor.) 

     

    • #12
    • November 24, 2018 at 10:44 pm
    • 2 likes