What the linked article says...
"Eighty-four percent of Americans have higher family incomes than their parents did."
...the question is "incomes" just raw income or did they adjust it? Clearly people will have more dollar bills, but that dollar bill doesn't go as far.
I certainly know I'm not better off than my parents, I'm most definitely worse, but I still have a higher number on my paycheck.
From the first link, there are two critically important, overwhelmingly positive notes IMO:
¦ Eighty-four percent of Americans have higher family incomes than their parents had at the same age, and across all levels of the income distribution, this generation is doing better than the one that came before it.
¦ 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.
Not only are the vast majority of people doing better than their parents, this effect is even stronger at the bottom of the distribution. That seems pretty damn good to me.
End notes in the study confirm sensible treatment of the comparisons: Measures of family income are adjusted for family size and inflation. Measures of earnings are adjusted for inflation. Measures of wealth are adjusted for inflation and age.
Interesting read, but supposedly when we're talking about changes in social mobility we really care about the change in the percentage of people that are richer than their parents? Indeed towards the end of the article the author says:
> There is one study of progress over time that follows parents and children that is gloomy and that is “The Fading American Dream: Trends in Absolute Mobility Since 1940” by Raj Chetty, David Grusky, Maximilian Hell, Nathaniel Hendren, Robert Manduca, Jimmy Narang (Chetty et al) They find that if you were born in 1940, you had a 92% chance of surpassing your parents income. But if you were born in 1984, the number is a depressing 50%. Chetty et al control for age — this is for parents and children when they are both 30. This does suggest that the American dream is dead or at least dying — half of the children do better than their parents but half do worse, suggesting no progress over time.
The author then says that we should measure income differently by using a non-standard measure of inflation. But if we had just used that non-standard measure on the wage data of Piketty et al., we would've arrived at the same conclusion anyway?
They are definitely more mobile. One example(adjusted for inflation and family size):
“Eighty-four percent of Americans have higher family incomes than their parents had at the same age, and across all levels of the income distribution, this generation is doing better than the one that came before it.”
Measuring real growth properly is useful for addressing a host of questions. For example, existing studies use measured inflation to calculate the real income of children relative to their parents. Chetty et al. (2017) find that 50% of children born in 1984 achieved higher incomes than their parents at age 30. Adjusting for missing growth would raise the real income of children about 17% relative to their parents, increasing the fraction of those who do better than their parents by a meaningful amount. Thus, to the extent that inflation is overstated due to imputed values, a larger fraction of children appear to be better off economically than their parents. This improvement in economic welfare can shine a bit more positive light on current conditions, despite the gloom of slower productivity growth.
I like your link, but I couldn't find that particular statistic within it. Could you clarify?
Most of the studies I've seen reach the opposite conclusion, that parental lifetime income highly predicts the income of their children. For example, a child of parents in the 90th percentile has an expected income of over $100K, while a child of parents in the 10th percentile has an expected income of less than $40K.
Income isn't wealth, but I'd be surprised if the correlation isn't strong. What percentage of individuals in the US of 90th percent household wealth came from families in the top half versus bottom half growing up? I don't know off hand, but if I had to bet blindly on outcomes I'd strongly favor betting on the individual who started out better off.
The title is a bit misleading, so here is what NPR published:
“Despite these challenges, a majority of adults across the income spectrum say the American Dream is still alive and within reach. The vast majority of parents and grandparents across all income groups also believe future generations will achieve it.
In fact, a majority across all income groups do not believe the gap between the poorest and richest Americans is a very serious problem.
Hard work stands out as a “very important” factor for achieving economic success across all income groups. And while research shows how much social factors like family income, neighborhood and race are tied to economic mobility, fewer than four in ten adults across all income groups believe these play an essential or very important role in economic success in America today.”
As you should see, it's not really that simple to say "39% stay and 61% fall out." While technically correct, falling isn't equally distributed over the other quintiles. The children of the top quintile are only 9% likely to fall in the bottom quintile and the children of the bottom quintile are only 6% likely to rise to the top quintile.
And really, the top comment was trying to claim the parents migrated income brackets. The numbers here are about children inheriting the incomes of their parents. This data strongly suggests the wealth gains over the past decade are in fact concentrated in the already wealthy. Not only that, but it shows the concentration of wealth has momentum that lasts for generations.
The United States today still has tremendous opportunity for income mobility compared to many other parts of the world and other parts of history. But these articles are showing a disturbing trend that this may not be sustainable.
This doesn't contradict Roberts. The chart at the top of your linked article shows that even for Gen X, poor people generally out earn their parents, and rich people are far less likely to out earn their parents.
Roberts just elides the fact that historically, an even higher percentage of poor and middle class people would out earn their parents.
So his statistics are not wrong, he just presents them in a certain light.
Getting downvoted here, but see the non-partisan IGM economic survey on this.
"The 9% cumulative increase in real US median household income since 1980 substantially understates how much better off people in the median American household are now economically, compared with 35 years ago."
When asked to agree-disagree, 60% of economists (70% when you weight by confidence) agree with this.
Or, the income rank among "American workers" (which you referred to) and that among "American households" (which the person "correcting" you referred to) is different. Which is not merely plausible, but expected.
I don't believe that's the case. At least not if we're using income as a proxy for wealth. Arranged by income, wealthier households in general tend to be larger households.
It's well established that the "top 20%" by income contains more than 20% of the earners - lots of dual-income couples - and also contains more than 20% of the people; the "bottom 20%" contains less than 20% of the earners and people. Seems to be true for 1% as well. If you want to check, there's a nice table of household size by income here:
That's not contradictory at all. The report says that the number of people making more than twice the median income has increased, not that those in the upper middle class are doing better.
No it also looks at income across generations within quartiles, e.g. "But [incomes of] 93% of the children in the poorest households — those in the bottom 20% — surpassed their parents...Julia Isaacs’s study for the Pew Charitable Trusts looking at the late 1960’s up to 2002 finds that children raised in the poorest families made the largest gains as adults relative to children born into richer families."
If you look at that first report of increased family income, also in the referenced Pew report it says 59% of sons make as much or more then their fathers, which means 41% are doing worse. So 4 of every 10 sons does worse than his father in this time of economic growth.
Two more factors come into play. US working class stagnation started in the early 1970s and got going in the 1980s. The study starts in 1968, which means some of the growth pointed to for the children is actually what is kept from late 1960s and early 1970s growth, not now. If the study had started five years later, the results would look worse.
Also the politically influenced Boskin commission revised historical inflation estimates in the mid 1990s, also making things look rosier. If you believe, as I do, that inflation estimates were correct in 1996 and that Boskin was wrong, then things look bleaker in that light as well.
Although 4 in 10 sons doing worse than their fathers (from the Pew report he cites) is bleak enough.
> That's a myth. There's plenty of data on this. Most American never get anywhere close to the top 10% - not even remotely - regardless of age.
OK, let's take a look, because the GP was arguing about income mobility across different years of a person's life - intra-generational mobility -- not earnings compared to your parents -- inter-generational mobility. That distinction was the key point made. And the GP is basically correct:
From two studies about intragenerational bottom[1] and top[2] income mobility:
* 53.1 percent will have experienced at least one year within the top 10th percentile
* 36.4 percent will have encountered one year within the top 5th percentile
* 11.1 percent will have experienced one year within the top 1st percentile.
* 70% of Americans spend at least 1 year in the top quintile
* 61% of Americans spend at least 1 year in the bottom quintile.
* 42% of Americans experience at least one year in the bottom decile
Summarizing:
"Taken together, these findings indicate that across the American life course there is a large amount of income volatility. Rather than a rigid class structure, the top and bottom ends of the income distribution are fairly porous. This finding provides an interesting and important caveat to the overall story of rising levels of income inequality across the past 40 years." [2]
Note that a key issue when studying mobility is that you need to do it across a few business cycles. If your study is only during an economic expansion, then it's not going to be meaningful, as life changes tend to clustered around contractions and recoveries, and several such episodes are needed. Thus the studies I selected cover 44 year periods. Some of the studies are for 5-10 year periods, and that's really too small.
My point is the 10th percentile household (~$200k income) has more in common with the median (~$70k) income household than they do with the top 1% household (~$530k). Or even the top 0.1%...
I certainly know I'm not better off than my parents, I'm most definitely worse, but I still have a higher number on my paycheck.
UPDATE:Parent comment was deleted, it referred to this... http://www.pewtrusts.org/en/research-and-analysis/reports/00...
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