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Is the American Dream Still a Reality? Exploring Upward Economic Mobility

By Mark Wolf  |  August 4, 2021

The idea of the American dream, that hard work can overcome humble beginnings, is increasingly illusory for a swath of Americans, a policy expert and researcher told a session at NCSL Base Camp 2021 on Tuesday.

The chance of a child born into a low-income family, the lower 20% of income distribution, becoming a high-income adult, among the top 20% of wage earners, is just 7.5%, said David A. Williams, citing Internal Revenue Service data.

That compares to 9% in the United Kingdom, 12% in Denmark, 13.5% in Canada and 15.7% in Sweden.

“The concept that if you work hard, you’ll be able to rise up the income ladder, no matter where you started, seems much more alive just across the border in Canada,” said Williams, director of policy outreach at Opportunity Insights, a Harvard-based research and public policy lab, during the session “Moving on Up: Economic Mobility in the United States.”

The concept that if you work hard, you’ll be able to rise up the income ladder, no matter where you started, seems much more alive just across the border in Canada." —David A. Williams, director of policy research, Opportunity Insights

Moreover, he said, the idea of guaranteed prosperity has been fading dramatically over the past 50 years, citing data about children growing up to earn more than their parents.

“For people born in the 1940s that message of upward mobility was almost a guarantee. Over 90% of individuals born in 1940 grew up to earn more than their parents,” he said. However, people in the workforce today who were born in the 1980s have only a 50-50 shot of growing up to earn more than their parents.

“We think that’s at the core of a lot of the cultural and political frustration that we see today throughout our community,” he said.

Sharp differences in racial opportunity occur regionally, Williamsn said, citing a tool that measures economic opportunity using IRS data to track the outcomes of 20 million kids growing up in the 1990s across the country.

“We know where they were growing up and we can track their outcomes and earnings into adulthood,” he said. “We can make an average for every census tract in the country. Opportunity does vary greatly depending on where you grew up.”

If you grow up in a low-income family, Williams said, you’re almost destined to grow up to be a low-income adult.

Looking at a metric like job growth, he added, is not very associated with our measure of opportunity. He cited Atlanta and Charlotte, areas that have new jobs flowing in and that, on the surface, appear to be very prosperous. “But it seems like the kids who grow up there, especially in lower- and middle-income families, aren’t able to tap into all the resources in those communities,” Williams said.

Oftentimes, he said, people are moving to those places to take those jobs, but children who grew up in the area aren’t able to rise up the income ladder and be part of all the prosperity taking place there.

Race is a very big driver of opportunity in almost every community in the country, he added.

“The best places for Black men are still worse than the worst places for white men,” he said. “Black men and white men who grew up in the same community, even in the same neighborhood, still have very different outcomes.

“Whether it’s discipline in schools, discrimination in schools, the criminal justice system—what are ways that different policies are impacting different groups in different ways? The same range of outcomes we see across the country, we also see within communities as well.”

He cited some of the characteristics of places that have higher upward mobility: low poverty rates, high-quality schools that support students from low-income backgrounds, stable family structures and two-parent households.

“One factor I found really staggering is in communities that have more Black fathers, all the young Black men in that community, regardless of their own family circumstances, have higher rates of upward mobility,” Williams said.

He cited a number of policy areas that could help close the upward-mobility gap, including education and taking the long view.

“Investing in youth always pays off,” Williams said. “When you invest in kindergarten, you might not be in office in 20 years when that kid is doing better.”

Mark Wolf is editor of the NCSL Blog. 

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