Business

Study: Climbing income ladder hasn't grown harder

Posted January 23
Updated January 24

— Young Americans from low-income families are as likely to move into the ranks of the affluent today as those born in the 1970s, according to a report by several top academic experts on inequality.

The study, published this week by the National Bureau of Economic Research, runs counter to the widespread belief that a widening gap between rich and poor has made it harder to climb the economic ladder.

Democratic and Republican lawmakers alike have expressed alarm over what had been seen as diminishing opportunities for economic advancement through hard work and ingenuity.

Instead, the study found that 9 percent of children born in 1986 to the poorest 20 percent of households were likely to climb into the top 20 percent — little-changed from 8.4 percent for such children born in 1971.

"Absolutely, we were surprised" by the results, says Harvard University economist Nathaniel Hendren. He is one of the report's authors along with Harvard's Raj Chetty, Emmanuel Saez and Patrick Kline of the University of California, Berkeley, and Nicholas Turner of the Treasury Department.

The Southeast was the hardest place for people to climb the income ladder, however, with Georgia, North and South Carolina, Mississippi and Virginia posting the highest number of counties where children earned the same as their parents.

Charlotte ranked worst in the nation for upward mobility among the top 50 metro areas, and Raleigh wasn't much better, coming in at No. 48. Salt Lake City, Pittsburgh and San Jose, Calif., topped the charts for economic mobility.

Worries have been growing across the political spectrum about an expanding divide between America's rich and the rest: The top 1 percent of Americans accounted for 22.5 percent of income earned in the United States in 2012. That is one of the highest figures since the Roaring '20s and up from a low 8.9 percent in 1976, according to a database maintained by Saez.

But the fact the top 1 percent are pulling away has had little effect on the ability of those in the bottom fifth to rise to the top fifth, the study found.

The findings are open to different interpretations: They could suggest that government programs to help the poor have made little headway in increasing economic opportunity. Or they could suggest that economic advancement would have become harder without such programs.

"My concern is that there may be less mobility in the future," former White House economic adviser Alan Krueger said by email. The cost of a college education, for instance, is increasingly difficult for low- and middle-income families to afford.

Hendren emphasizes that it's still harder to move from poverty to affluence in the United States than in most other wealthy countries. In a 2012 study of 22 countries, economist Miles Corak of the University of Ottawa found that the United States ranked 15th for social mobility. Among wealthy countries. Only Italy and the Britain ranked lower.

"In some sense, how could it have gotten worse?" Hendren said. "It's not like we're losing the American Dream. We never really had it."

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  • Mon Account Jan 24, 5:47 p.m.

    "So you libs can continue your dismantling of the economy?" -ncprr

    The economy has been growing... View More

    — Posted by Inside The Beltline

    37.2% unemployment...nuf said.

    — Posted by ncprr1

    That number was from David John Marotta, a Wall Street adviser, in a memo to his clients. Not quite a peer-reviewed paper, there.

    Incidentally, that very questionable number doesn't counter that the economy has been growing.

  • ncprr1 Jan 24, 5:27 p.m.

    "So you libs can continue your dismantling of the economy?" -ncprr

    The economy has been growing... View More

    — Posted by Inside The Beltline

    37.2% unemployment...nuf said.

  • Inside The Beltline Jan 24, 3:23 p.m.

    "So you libs can continue your dismantling of the economy?" -ncprr

    The economy has been growing positively every year since 2009. If you're thinking McCrory is going to make it any better by that account, you should question him for leading the standing ovation at Obama's visit last week.

  • Gary_too Jan 24, 2:55 p.m.

    The south will rise again! ... and by that I mean McCrory and his GA cohorts will be out of... View More

    — Posted by davido

    Dream on my friend. Hagen and Obama and their ilk are on their way to the trash heap of history. Everywhere their brand of Communism, er Liberalism, or Progressivism (the new title) has been tried it has failed.

  • ncprr1 Jan 24, 2:52 p.m.

    The south will rise again! ... and by that I mean McCrory and his GA cohorts will be out of... View More

    — Posted by davido

    So you libs can continue your dismantling of the economy?

  • davido Jan 24, 2:32 p.m.

    The south will rise again! ... and by that I mean McCrory and his GA cohorts will be out of office in 2014 and 2016.

  • MitziGaynor Jan 24, 2:20 p.m.

    Also have a mass amount of ILLEGALS here, does not help the economy. While they are able to take advantage of government handouts, while paying no substantial amounts of FEDERAL tax, getting dependent credits for children not even living in the states. It's no wonder why the state cannot support or help the legal citizens.

    I know some, I've lived by some. They do not hide in the shadows, they do not "sufferer". They walk around with their EBT cards and rolls of cash.

    Our schools are overrun, we are also having to cater to the non-English speaking students. That in turn, takes resources for LEGAL CITIZENS.

    ILLEGALS have increased the cost of auto insurance, degraded our educations system financially, brought crime and gangs. And if you don't believe that, do some research on crime, rape, vehicular homicide.

  • MitziGaynor Jan 24, 2:13 p.m.

    Oh my you elitists are so narrow minded. I came from the northeast, I am educated, I am self made, I am quite capable of independent/critical thinking. Yet, you all seem to think you are above anyone else who does not follow your trend of thinking. I feel I am NO BETTER than any other human, whereas you all try to personify that you are.

    I've also worked with some genius people. Very good at what they do, not so much with people skills though. I put being good, fair citizen above someones degree.
    If one doesn't follow the collectivism mentality, you degrade anyone who does not think as such.

    I've seen what progressives have done to places like Michigan, NYC and California. I've seen what GOP Governors have done for places like Wisconsin (heading towards a 1 billion dollar tax cut), Texas following the same path to success, and seeing NC digging out of the distress that Perdue created.

    How above everyone do you deem yourselves to be?

  • admin39 Jan 24, 2:09 p.m.

    " A degree is just a piece of paper." -Justaconservativeguy

    I couldn't disagree more. That piece of paper has value, and depending on where you received that piece of paper, it has even more value. Those that have College of Engineering from NC State are going to be quite valuable and in-demand. Unfortunately, many people don't see that. Look at the states with awful upward mobility- Mississippi South Carolina? I certainly like to think we're not that bad, but in 2 years we're making a lot of progress to be like them.

  • kikinc Jan 24, 2:02 p.m.

    I love how all three of you that have posted assume that if you live here your are uneducated... View More

    — Posted by justaconservativeguy

    I don't think it is assumed that living here makes you uneducated and close minded, and I don't think that's what the posters meant. It's no secret that in recent years, areas such as RTP have taken a bit of a downturn and aren't the bustling area they once were. If we continue at the status quo, it's not going to help build up the area, it will continue to bring it down. All areas, not just NC, need to keep up with the changing times in order to keep the local economies strong.

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