Americans Make More Money Than Parents But Have A Tough Time With Upward Mobility

While Americans are working hard enough or landing jobs to the point where we’re earning more money than our parents did, we’re still struggling with the upward mobility part of the equation, says a new study. Moving beyond the income class you’re born into has proved to be a difficult step for many in the country.

The study from the Economic Mobility Project at the nonpartisan Pew Charitable Trusts found that 84% of Americans earn more than their parents did, while a third also moved up between income classes in the last four decades. Another 16% of Americans dropped from the income level of their parents.

Other results in the study showed that African Americans and those without a college degree had a harder time with upward mobility.

“While most Americans have more income earnings or wealth than their parents, it may not be enough to move them to a higher rung of the economic ladder,” said the project’s research manager, according to the Washington Post.

For those dreaming of one day being rich, it’s tough — the chances of moving from the very bottom of the income spectrum to the tippity top is only 4%.

Most Americans earn more than parents, but only a third rise in income class, study says [Washington Post]

 

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  1. Extended-Warranty says:

    Is this really the true problem? Or is it because we are bigger spenders than our parents were, and make horrible decisions.

    Now we have more expensive TV service, cell phone, internet, and cars that we pay for on a monthly basis.

    • Loias supports harsher punishments against corporations says:

      What does that really have to do with your income CLASS.

      If you make 3x what your parents make, but save half what they do, that doesn’t change the fact you make more.

      • Extended-Warranty says:

        Because class is irrelevant to this story. This story is baited as a comparison to previous generations which states we made more. There is no comparison shown to different in class mobility.

        All in all, this just proves that we are in a downward spiral of entitlement and horrible spending. Everyone bitches about their wages, but they make more. THAT is the real story here.

        Does everything cost the same as it did for our parents? Absolutely not. There’s more choices out there. You are entitled to nothing unless you earn it.

        • Jaynor says:

          Because we like to pretend that class doesn’t exist in the U.S. The idea that being born to poverty probably means you’re stuck there, even if you work hard and apply yourself, doesn’t feel good to the Bourgeois and the Bourgeois-aspirers. It’s important to stroke their egos. The truth is that the United Sates has nearly the worst Social Mobility of Western Nations (the UK is worse, France, Germany, Sweden, Canada, Finland, Norway and Denmark are all significantly better). Also important to note is that the “make more money than their parents” bit is largely due to the fact that the study is using household income, not individual. Household incomes are larger today than in the 70s because of the rate of addition of women to the workforce. On a whole individual real income has dropped in that period… so there’s actually something to complain about. On the “You are entitled to nothing unless you earn it” schtick… I’m curious about your thoughts on estate tax then. Should the worthless descendants of someone who had ambition to earn extra be entitled to that cash when the earner kicks it? Living in an area where average income trends very high I find that there are a large number of worthless people out there who have never had to work a day in their life.

        • exconsumer says:

          Sounds like you kind of missed the point of the article. It was not that we made less money, the article clearly states the opposite. But it does show, and seems to show conclusively, that this generation has a harder time moving from one percentile bracket to the next.

          So the story goes like this: When the country had a stronger safety net and stronger government regulations and stronger unions, upward mobility was possible. But now that we have weakened our safety net, deregulated many things, and have dismantled most labor protections, it is less easy to do so.

    • mikedt says:

      Housing payments are probably the biggest hindrance. My parents bought their home in 1969 and their mortgage payment was less than any car payment I’ve ever had.

      Double digit housing cost growth combined with single digit (if you’re lucky) salary growth does not lead to fast upward mobility.

  2. Cat says:

    One word: INFLATION.

    • Loias supports harsher punishments against corporations says:

      According to the source (according to Bsamm09 below) it was adjusted for inflation.

      • Coffee says:

        Ah, but does it account for the grocery shrink ray?

        • Loias supports harsher punishments against corporations says:

          In all serious, I do wonder if “inflation adjusted” adjusted for goods and services that have inflated more than the overall inflation of the value of money. For example, labors costs and gasoline costs have risen faster than the value of the money used to pay for them, whereas electronics costs have generally trended down.

          • NeverLetMeDown2 says:

            They do adjust for these things (or at least try to). Some of the biggest debates in the field are around “hedonic” adjustments, to account for the quality of something getting better. So, if a Dell laptop is $500 today, and was $500 five years ago, how do we adjust for the fact that today’s $500 laptop is a much better device?

      • coffee100 says:

        Then it’s wrong. Adjusted for inflation, Americans make less now than they did in 1973. Source: Bureau of Labor Statistics.

        This during the largest and most sustained productivity increase in the history of the human race.

        The reason Americans have no “class mobility” is because they are being underpaid for the work they do (if they can keep a job for more than 3-4 days) and overpay for nearly everything they buy.

        • NeverLetMeDown2 says:

          Would love to see the cite for that. Only data I have handy is from 1976-2009, and that has median US household income (inflation-adjusted) rising from $43,483 to $49,445 in 2010.

          http://www.census.gov/hhes/www/income/data/historical/household/index.html

          • coffee100 says:

            Google is your friend, Chunky.

            • AstroPig7 says:

              You made the argument, you support it. We can’t be expected to do your work for you.

            • NeverLetMeDown2 says:

              You made a statement. I provided a source that contradicts it. Unless you’re prepared to come back with support for your claim (an actual cite), there’s no reason to believe it’s valid.

          • Jaynor says:

            Factor in the addition of women to the workforce (increasing household income) and individual income comes out lower. I’ll respond again with a citation when I get home from my place of money earning.

        • huadpe says:

          How are “Americans” defined there?

          Census households, or tax households, or individuals? And mean income or median income? And do you size-adjust for changes in household size? And pre-tax pre-transfer, post-tax, post-transfer, or some other combination?

          What I’m getting at is that these things are very hard to measure. If you want an excellent summary of where the median household has been going the last 30 years, check out this episode of econtalk:

          http://www.econtalk.org/archives/2012/04/burkhauser_on_t.html

      • Applekid says:

        There’s the common inflation rate, and the ULTRA RICH inflation rate.

        The gap between the richest and the poorest is the widest it’s ever been, even if the actual dollar counts are higher.

    • humphrmi says:

      The report was inflation adjusted.

      • mikedt says:

        Doesn’t the government inflation rate (I assume that’s what they’re using) exclude home costs? Before the bubble, home prices were going up drastically while the inflation rate was in single digits.

  3. trswyo says:

    I didn’t RTFA, but, are we really making more factoring in inflation? I make $20,000 more a year than my parents did at the time of my birth, but if you factor in inflation, I make a lot less using the BLS calculator!

  4. Blueskylaw says:

    “Americans Make More Money Than Parents But Have A Tough Time With Upward Mobility”

    Of course, my parents also didn’t have to upgrade their computer every year, spend hundreds of dollars on the latest shiny bauble from Apple, spend over a hundred dollars a month on cable since television was free (that was the point of commercials, they paid for the programming), they didn’t have to pay Bunk of America to use their own money, a refrigerator actually lasted 20 years just like the old rotary phones, a pound of coffee was a pound of coffee and businesses actually cared about you as a human being and didn’t see you as something to be screwed.

    • umbriago says:

      I think you about covered it.

    • Loias supports harsher punishments against corporations says:

      What does that really have to do with your income CLASS.

      If you make 3x what your parents make, but save half what they do, that doesn’t change the fact you make more.

    • lovemypets00 - You'll need to forgive me, my social filter has cracked. says:

      You forgot about one thing. When our parents saved money, the bank paid something called interest, and depending on what account you put your money in, and how long you left it there, the interest rate could be 8%, 10%, or even more. Not 1/10 of 1% like today.

      • Bsamm09 says:

        Interest? Why would you want interest? Unless you are already retired or extremely risk adverse there are good investments that will generate qualified dividends. Tax favorable and can be accessed easier than a CD.

        (stock market risk is there but can be brought down to a tolerable level)

        • exconsumer says:

          Given the rates at which the banks are lending the money out, we should see far more interest on our deposits than we do. Also, lovemypets is right, we don’t have access to a significant revenue stream that our parents (and our parents parents) once had.

        • lovemypets00 - You'll need to forgive me, my social filter has cracked. says:

          Because I am a lower income person who brings home about $500/week. I don’t really have investments because I don’t have enough money to invest, and if I can scrape together a few thousand dollars in my savings account, it would be nice to get some real interest instead of maybe 15 or 20 cents here or there.

    • Jevia says:

      Nor did your/my parents have to pay extra transportation costs to get their kids to school, or buy supplies for the school, or pay thousands of dollars every year for health insurance premiums/co-pays, or contribute money out of their own paycheck to 401ks that go down just as often as they go up, or require both parents work in order maintain a middle class lifestyle requiring other costs for child care.

  5. humphrmi says:

    Cripes folks, all it takes is one click and about 20 seconds of reading to see that it’s inflation adjusted. Sheesh.

  6. matlock expressway says:

    “Americans Make More Money Than Parents”

    It’s true. My American parents… make more money than themselves.

    Or is it that no Americans are parents?

    What an odd headline.

  7. Bsamm09 says:

    “For those dreaming of one day being rich, it’s tough — the chances of moving from the very bottom of the income spectrum to the tippity top is only 4%.”

    I think that is pretty good. I assume they are talking about moving up income tax brackets. That means going from making less than $17k to over $390k. I wouldn’t think it would be that high.

    • Loias supports harsher punishments against corporations says:

      No, but the percentage that go up only 1 bracket is also not much higher.

    • bhr says:

      I would be interested to see the reverse stat. What percentage of people born into the top tier wind up dropping into the bottom rung?

      Or better, drop out of the top tier at all thanks to the upper class safety net (connections, family money, investments, education advantage).

      • Bsamm09 says:

        Went to the Pew website: “Similarly, just 8 percent of those raised in the top quintile fall all the way to the bottom.”

      • Bsamm09 says:

        I was also curious as to what they counted as income since they used “made” a lot. I was assuming earned income but they counted income from dividends and other investments as well as welfare payments.

        I would have left those out because earning $250k/yr from investments on your inheritance while working a job that pays $30k isn’t really earning more than your parents did who left you the money.

        (assuming they made less than $280k/yr and saved a TON of it to leave you enough to earn $250k/yr from investments but you see my point)

  8. Loias supports harsher punishments against corporations says:

    I know this is inflation adjusted, but is it age adjusted? My parents are making the salaried of a person who has been in their industry for 40+ years, whereas my income more reflects a person whose been in my industry 5-10 years. Our parents could be 16-35 years older than us, and that extra time in the work force makes a difference.

    • exconsumer says:

      Not sure if the study is adjusted, but I fear our parents may have benefited from a more dynamic workplace that was far more ready to promote and compensate.

  9. lovemypets00 - You'll need to forgive me, my social filter has cracked. says:

    I’ve more or less given up on any upward mobility. I thought I was doing OK, but then the recession came, and while I was able to hang on to my job, there’s no indication of even a COLA increase (and yes, I’ve asked). Over the last 4 years, my wages have remained about the same, but insurance costs and costs for everything else has gone up significantly. I am looking for a better paying job, but so far no luck.

    Another thing our parents seemed to have (mine did) was pensions from their jobs, and the ability to keep working for the same company for decades. Those things have gone by the wayside too.

    • dolemite says:

      I don’t think I’ll ever get a better paying job than what I have now. I feel the same way though. Raises are few and far-between…insurance and ever-increasing bills eats up everything. We have no kids, and I can’t see having them. My insurance would go up about 5x if I went from myself only to a family plan (my wife has her own insurance). My goal is not upward mobility, but simply paying off all our bills then finding a job I can be at least partially content with, even if it means a huge pay cut. I figure if our mortgage, student loans and credit cards were paid off, with no kids, it would be possible. A long ways away for that though.

    • HogwartsProfessor says:

      Yeah. My work has been combined with other work that I can’t do due to being LD, thanks to the recession. I need to change careers. Lucky I just got into the Vocational Rehab program here. Hopefully they can help.

  10. Scoobatz says:

    While this may be true, there’s no denying the standard of living has greatly improved at all class levels. Technology is a driving force behind this, and many luxuries are affordable to everyone now.

  11. dolemite says:

    This might be adjusted for “inflation”, but I doubt it’s adjusted for things like health insurance eating up 10,30,50% of people’s pay.

    • crispyduck13 says:

      Agree. I’d also bet that cost of housing eats up a larger percentage overall as well. Don’t forget about the larger percentage of parents using daycare, which is ridiculously expensive. Everyone is assuming we’re all fucked because we’re out blowing all our money on stupid crap, but that’s not always the case.

      • Extended-Warranty says:

        Housing doesn’t have to be as expensive as some people make it. There’s a difference between having a place to live, and having your dream house you can’t afford.

        You just can’t deny spending habits are way worse than they used to be.

        • crispyduck13 says:

          What is ‘affordable’ housing these days? I certainly did not buy my dream house – far from it in fact, it’s a 1700 square foot fixer upper in the country. And my mortgage still eats up 36% of my higher than the national average take home pay. I live in central PA and my home purchase price was actually a bit under average for the area.

          I remember a man of my parent’s generation telling me to use the 25% rule when looking for a house, only 25% of your take home pay should go to your mortgage. In order to do that I’d either have to buy a complete dump in the city or a shoebox in the burbs. I guess I could have done either, but I’d be extremely unhappy and would have to move in 5 years once kids came into the picture.

          So yeah, maybe spending habits on stupid crap like iPhones are worse than they used to be, but there are a lot of things that are simply unavoidable if you want any happiness out of life. Insurance, decent housing and daycare were just the most immediate to come to mind.

        • who? says:

          No, housing doesn’t have to be Manhattan expensive, and people don’t have to live in McMansions. But if you’re living in one of the parts of the country where there are still good paying jobs, you’re going to pay a much larger percentage of your income for housing than your parents did.

          I made more when I was 26 than my dad made any single year of his life, but the entire time we were growing up, my parents consistently spent about 10% of dad’s income on housing (mom didn’t work), and we lived in a decent 3 bedroom place, very comparable to what I live in with my family now. Now that I’m approaching 50, and my house is nearly paid off, we’re getting to the point where the amount we’re paying on housing is down to 10% of our combined incomes. For all of my 20’s and 30’s, it was closer to 30% of my income. Not for anything special, but just for someplace decent to live, not ridiculously far from work.

          Are spending habits way worse than they used to be? I think that’s arguable.

  12. crispyduck13 says:

    I never even considered the idea of ‘upward mobility’ or whether I was succeeding at it. I’m just focused on getting as much as I can on paper before I have to start popping out kids. Harder for a woman to get a raise once that happens. At 29 I’m already making more than my mom is now, but she’s making much, much less than her father. So I’m still downwardly mobile over 2 generations. Bummer.

  13. mearow says:

    How do they take into account 2-income vs. 1-income families? Seems like a lot of families made it fine on one income in generations past. If “Americans” are making more than their parents is that one “American” salary or does it include two?

  14. coffee100 says:

    Bullshit

  15. Dr. Ned - This underwear is Sofa King Comfortable! says:

    As an Evil Doctor, I have often had to live up to the impossible standards set by my father, Neutral Dr. Ted.

    However, even with my night gig as a farm animal taxidermist it has become increasingly difficult to fund my evil zombie experiments and Laffy Taffy addiction.

    So there’s that.

  16. OMG_BECKY says:

    Surely they’re not referring to people currently in their 20’s. I don’t know anyone my age who’s doing particularly wonderfully–especially compared to our parents!

    • sponica says:

      my mother and I are approximately a generation apart…and at my age I make more money than she did (although it’s not adjusted for inflation, so it’s probably comparable) BUT when she was my age, she had a home because my dad had just had his Army contract bought out, 3 kids, a dog and all the trappings of the middle class life however she did not have student loan debt….
      I live with her because by the time I pay my student loans (Perkins, IBR on Direct Loan, Interest only on Sallie Mae, and Citibank), my cell phone, my auto insurance, and my credit cards (was unemployed 360 days straight Mar 2011 to Mar 2012 and was unemployed for 4 months in 2009) I have no extra money….

      my mother has a career….I have a job.

    • Eridani says:

      I wonder if they take into account education level. A greater percentage of Americans are now college-educated than their parents (for ages 25 & up: in 1968, when the study started, it was 20.1% — according to the 2011 reports, it was 56.9% that had some college education). Source: Census (cps.gov – Educational Attainment).

      I earn more than my mother, but I have a much higher education level than she does (and I only *barely* out-earn her). However, I have the same level of education as my father, and he makes somewhere between double and triple my salary. And education costs have skyrocketed, so we might be better educated and earning more, but we’re also more likely to be carrying student loans (I wonder if we’d actually earn more if the compared “income after paying student loans” between 1968 and now).

  17. dush says:

    So having more just isn’t enough… So who can tell me what’s wrong with society these days?

  18. travel_nut says:

    Yup.

    I have a bachelor’s degree and my husband has a technical certification. He’s been in his job 5 years; I’ve been in mine 4. Our wages are little better than what they would have been 4-5 years into a fast food or retail type job. He was lucky enough to snag a prime job for his field, so while he hates it, almost any new job would pay less. I work for a small business and have spent the past year job searching, but there’s not much out there. Either I’m qualified but overeducated, or properly educated and underqualified. We’d like to buy a bigger house (ours is teeny tiny and we’d like just a little more space) but honestly our outlook 5-10 years from now isn’t promising. It’s unlikely that either of our wages will rise consistently more than $.15/hour (on average) per year, which is just not enough to comfortably afford a bigger house, even in 10 years.