barely half of 30-year-olds earn more than their parents did at a similar age...
Posted by
x (aka dmuck)
Dec 8 '16, 10:11
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"Barely half of 30-year-olds earn more than their parents did at a similar age, a research team found, an enormous decline from the early 1970s when the incomes of nearly all offspring outpaced their parents. Even rapid economic growth won’t do much to reverse the trend.
Economists and sociologists from Stanford, Harvard and the University of California set out to measure the strength of what they define as the American Dream, and found the dream was fading. They identified the income of 30-year-olds starting in 1970, using tax and census data, and compared it with the earnings of their parents when they were about the same age.
In 1970, 92% of American 30-year-olds earned more than their parents did at a similar age, they found. In 2014, that number fell to 51%."
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"Mr. Chetty, 37, has explored poverty and income mobility in a series of papers that have gained widespread attention across the political spectrum. His research finds that upward mobility depends heavily on government policies, a position common among Democrats, as well as on neighborhood churches and two-parent families, as Republicans often argue.
In his current work, he and his co-authors found that the declining ability of children to outearn their parents is greatest in the Midwest, an industrial region that has been battered by greater import competition, especially from Japan and China, and by technological changes. When looking only at males nationally, the decline is even starker. As of 2014, only 41% of 30-year-old men earned more than their fathers at a similar age.
Reversing the trend will be very difficult, the economists found. If income distribution remains as tilted toward the wealthy as it is now, they calculate, it would take sustained growth of more than 6% a year, adjusted for inflation, to return to an era where nearly all children outearned their parents. Since World War II, the U.S. hasn’t experienced anything near that level of growth for a lengthy period of time.
Even growing at 3.8% annually—about what Donald Trump pledges to produce as president—would only increase the percentage of children able to outearn their parents to 62% from 51%. Many economists are skeptical that the U.S. can grow anywhere near that level and is more likely to grow at around 2% a year."
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