Not all Americans are able to pull themselves up by their bootstraps.
Children raised in low-income American families will likely also have very low incomes as adults, while children raised in high-income families can anticipate a much bigger jump in income, according to a report — “Economic Mobility in the United States” — released Thursday by researchers at Stanford University. It was funded by The Pew Charitable Trusts, a nonprofit public policy organization based in Washington, D.C., and the Russell Sage Foundation, a nonprofit research center in New York City that focuses on social sciences.
And the wage gap for people from different backgrounds is significant: The expected income of people raised in well-off families in the 90th percentile — that is, the top 90% of the national median household income — is about 200% larger than the expected income of children raised in poor families (in the 10th percentile) and about 75% larger than that of children raised in middle-class families (in the 50th percentile). What’s more, people raised in middle-class families will earn close to double what children from lower-income families earn in adulthood.
“We have this notion in America of equality of opportunity and where you start shouldn’t influence on where you end up,” says Erin Currier, director of Pew’s financial security and mobility project. “This data shows that that does not translate to reality. A family’s economic circumstances play an exceptionally large part in determining a child’s economic prospects later in life. Families and kids raised at the bottom are least likely to attend preschool, high school, and attend and complete college, or have any savings to help their children. They get into this vicious cycle.”
Chart: Poor children remain poor, rich children get even richer
Expected total earnings by gender based on parents’ income
Previous research shows that economic segregation and neighborhoods also plays a role in preventing multiple generations of lower income Americans from achieving the American dream, which generally consists of doing significantly better than the previous generation. Inequality between the wealthiest and poorest American neighborhoods grew most substantially in the largest commuting zones — where people live next to large urban centers — between 1990 and 2010, according to a recent report by the nonprofit Urban Institute. Some areas have effectively created gated communities through public zoning, it said.
“Concentrated areas of wealth and poverty leads to less economic mobility,” Currier says. School quality will typically be poorer in areas with less resources, for instance, and have higher rates of crime and lower rates of labor participation, she says. “It’s the role of lawmakers and public policy to level the playing field,” Currier says. “Families that have very little slack in their budgets don’t have the same kind of leg up even to purchase a car to get themselves to get to their job or even have support from their parents for a down payment to buy a home.”
There was one curious difference among men and women. Although women are still paid less on the dollar than men, they’re likely to earn slightly more than their men from families with the same income bracket. “When women are raised in high-income families, they marry more frequently and marry more higher-earning spouses than men,” Currier says. (Women also account for 60% of annual university graduates, 70% of high school valedictorians, 60% of master’s degrees and 52% of doctorates being awarded in the U.S.)
Chart: Wealthier households produce more brides
Women raised in higher income families are more likely to marry in their 30’s