Millions of Americans work hard in hopes their kids will have a better life than they did. But that is becoming increasingly difficult in the United States.
Only 50 percent of those born in 1985 will make more money than their parents did. This is down from 90 percent as World War II was ending in 1945, according to a new study from The Equality Opportunity Project. It shows that regardless of the income distribution, children are making less than Mom and Dad.
“Most of the decline is due to the more unequal distribution of economic growth in recent decades rather than the slowdown in GDP growth,” the study found.
The study examined children’s household incomes at age 30 compared with their parents’ household incomes at the same age, adjusted for inflation.
Although the economy has improved since the 2008 recession and unemployment is currently at its lowest — 4.6 percent — since 2007, economic inequality continues to grow in the U.S. Research published last week by Thomas Piketty of the Paris School of Economics and two colleagues from University of California, Berkeley, confirm that low-income Americans have seen little wage growth while those in the top 1 percent continue to get wealthier. In 1980, the top 1 percent earned an average of 27 times more than the bottom 50 percent of adult earners. Today, they earn 81 times more.
But wages for the bottom 50 percent since 1980 have stayed roughly equal, stagnating around $16,000.
According to the study, income mobility has fallen for the middle class. The rate of children being able to earn more than their parents fell in all 50 states, with the largest hits taken in the industrial Midwest. States like Michigan and Indiana, which President-elect Donald Trump carried in the election by tapping into economic discontent, have some of the lowest rates of children earning more than their parents.
There was a positive sign for the middle class in 2015, according to the U.S. Census Bureau. Figures show that median household income rose 5.2 percent, to $56,516. This is the first increase since 2007.
According to The Equality Opportunity Project, differences in upward mobility are caused by differences in childhood environment. Less residential segregation, a larger middle class, stronger families, more social capital and better public schools all contribute positively to upward mobility chances for children.
Comments