How is US upward mobility doing? 73% are better off than their parents, a new analysis finds

My friend Scott Winship has a new study out on income mobility, conducted for the Archbridge Institute. Very much worth reading. Here a just a few of the many highlights (bold is mine):

— Consistent with past research, the report documents the strong odds that poor children will fare no better relative to their peers than their parents did. Nearly half of children with parents in the bottom fifth of family income end up in the bottom fifth as well. Children who grow up with the richest parents are only somewhat less immobile.

— These estimates are based on averaging family incomes over 9 to 15 years within a window of up to 31 years. If they could be averaged over entire careers, immobility would look even stronger.

— Nevertheless, roughly three in four adults—and the overwhelming majority of poor children—live better off than their parents after taking the rising cost of living into account. This rate is higher than in the headline findings of a recent well-publicized paper by Stanford University economist Raj Chetty and his colleagues. This report shows that Chetty et al.’s results can be replicated with survey data but illustrates why the headline finding paints too dour a picture of mobility

— Contrary to some claims, the American Dream abides. The United States remains among the richest countries in the world, which are collectively the richest societies in world history. Poverty is much lower than it was in the “Golden Age” of the midtwentieth century, to which so many people seem to want to return. The pace of middle-class income growth has slowed, but beyond cyclical downturns, it has not reversed. The productivity growth of the 1940s, 1950s, and 1960s was unusually strong, so its slowdown beginning in the 1970s was bound to produce disappointing income growth. …  Yet it remains the case that roughly three in four adults today are better off than their parents were at the same age. That share is higher among Americans who grew up poor, and it is lower among those who grew up in affluence. Well-off children can end up worse-off than their parents and still be quite comfortable. The typical adult is over 25 percent better off than her parents2. Unadjusted for declining family size, that translates into a $12,300 bump in my analyses, over and above parental income and after accounting for the rise in the cost of living. However, while the ability of the American economy to lift incomes remains strong, our ineffectiveness in helping people to transcend their family origins continues to disappoint. The relative mobility estimates in this study affirm those from past research in finding that poor children are all too likely to remain poor in adulthood. At the same time, the limited downward mobility of children with well-off parents may indicate that our meritocracy tolerates a level of anti-competitiveness that is economically inefficient.

I wrote about the Chetty & Co. paper that Winship mentions. It’s blockbuster finding was that today 51% of American 30-year-olds earn more than their parents did at a similar age vs. 92%, in 1970. So Winship’s research would seem to take the edge off that finding just a bit. Looking forward to future mobility research comparing the US to other rich economies.