Once upon a time in America, it was expected that most children would surpass their parents on the income ladder.
However, a new study released on Tuesday by The Pew Charitable Trusts has found that although most Americans are making a bit more than their parents, only a meager one-third of the current generation will surpass their parents in wealth and income and climb to a new rung on the economic ladder.
In fact, according to the study, 16 percent of Americans are downwardly mobile, (which means they earn less than their parents and have a lower wealth) and half of all blacks raised on the middle rung will fall to the bottom two (out of five) rungs.
The study, entitled "Pursuing the American Dream," looks at how families are doing today, compared to how their parents did. PEW’s survey identifies the economic ladder in five income and wealth categories, or "quintiles." Families fall into each quintile in two ways, based on their family income and family wealth.
Americans who started in the top and the bottom of the economic ladder, tend to remain stuck there themselves as adults, said Erin Currier, manager of the Pew Economic Mobility Project.
More surprising figures:
- You can still make more money than your parents and fall downward on the income ladder. Twenty percent of people are experiencing this right now.
- Thirty-five percent of people will achieve both absolute and relative mobility, both making more money than parents and climbing a ladder rung.
- Only four percent of people raised at the bottom quintile will ever make it to the top.
- Only eight percent raised on the top rung will fall to the bottom.
- Having a college degree makes a person more than three times more likely to rise from the bottom of the family income ladder all the way to the top, and makes a person more than four times more likely to rise from the bottom of the family wealth ladder to the top.
- When it comes to mobility there is a huge gap between blacks and whites. Sixty-five percent of blacks were raised on the bottom quintile, whereas 11 percent of whites were. And two percent of blacks were raised at the top rung, while 23 percent of whites were.
- Downward economic mobility is much more likely for African Americans. Half of all blacks raised on the middle rung will fall to the bottom two rungs, whereas 32 percent of whites will.
Click here to download the PDF of "Pursuing the American Dream."
