A few posts ago I said that I was glad our system was still one where the top levels of income and success were still: “open to anyone who has the will and drive and luck to succeed.” In America, wealth, income, and status are not fixed but are mobile and fluid. Some of the rich become poor, and people can still go from nothing to the heights. At least that’s my story and I’m sticking to it. And I really like it when I’m right. Basically, for those who don’t want to figure out statistical and economic mumbo-jumbo, this study says that if you divide people into 5 groups based on income, about 60% change which group they are in, and that this hasn’t changed in many years. So it’s not that the rich stay rich, the middle class stays middle class, and the poor stay poor. Instead, in America, the “class” you’re in economically and financially changes. It’s not where you start, it’s what you do with your life that matters.
Here’s a summary of a report on economic mobility from the Pew Center’s “Economic Mobility Project.”
We examine trends in U.S. intragenerational income mobility over the past two decades. Specifically, we focus on how the economic positions of 25- to 44-year-olds change over a decade relative to one another, as well as in absolute terms (whether they are doing better or worse at the end of the decade than they were at the start). In addition, we compare intragenerational mobility rates over two periods, 1984 to 1994 and 1994 to 2004.
We find that mobility rates have not changed very much between these two time periods. This finding is somewhat surprising given the changes in the economy in the 1980s and 1990s, such as the ongoing shift from manufacturing to service-sector jobs, rising immigrant populations, and extended periods of growth.
Emphasis added. This study uses data that predates the current recession but that sort of time lag is typical of such studies, which sift through the Panel Survey of Income Dynamics (PSID), a database of households and individuals who are tracked over time. However bad the current economy has been for the past few years, there is no reason to think that we have entered a brave new world in which the basic trends of the past many decades will stop cold in their tracks. From the summary again:
We find that 60.4 percent of all 25- to 44-year-olds moved up or down income quintiles relative to their peers between 1984 and 1994, and 60.5 percent did so between 1994 and 2004. Absolute mobility rates have also been fairly stable over time. Between 1984 and 1994, 61.1 percent of individuals experienced income changes that moved them across their 1984 income quintile boundaries; between 1994 and 2004, absolute income mobility was 62.6 percent.
You might complain that those rates of relative and absolute mobility are not good enough, but you can’t argue that they are smaller than they used to be.