The American
Dream Is Alive And Well
By DICK MORRIS
Published on
DickMorris.com on July 23, 2013
It may seem as if the poor remain poor, the rich stay rich, and the
middle class has nowhere to go. It may appear as if we are not doing as
well as our parents did. But each of these statements is disproven by a
new study issued by Pew University. Instead, Pew found a churning with
the rich moving down and the poor moving up in about equal numbers. It
is as easy to escape the poverty of the bottom fifth as it is to fall
out of the wealth of the top fifth. 57% of the bottom quintile -- the
poor -- move out of poverty after twenty years while 60% of the top
quintile -- the rich -- fall out in the same period.
Pew conducted a twenty year study of upward and downward mobility in our
economy. It traced a sample of Americans from the mid eighties and
early nineties through the end of last decade to measure their ups and
downs in income and wealth. It also compared where they ended up with
where their parents left off in order to determine generational upward
or downward mobility.
The study found that 84% of Americans earn more at this point in their
lives than their parents did in inflation adjusted dollars. And, it
found an incredible amount of upward and downward changes in income over
the twenty year period. Predictably, race and educational levels played
a large part in the results. But the volatility of the upward and
downward movements suggest an economy in flux rather than one stuck
behind European-like class barriers.
The study divided Americans into five income
bands for each 20% of the population. For our purposes, we'll call
the 0 to 20% band the "poor" (even though the actual poverty rate is
only 15%). The next band -- 20% to 40% -- we'll call "almost
poor." The middle band -- 40% to 60% -- we'll call "middle
income." The fourth band -- 60% to 80% -- lets label "near rich"
and above 80% we'll call "rich."
The poor will average below $20,000 in
household income. The almost poor will run from about $20,000 to
$40,000. The middle will have a household income of $40,000 -
$60,000 (median household income is about $50,000). The near rich
will range from $60,000 - $80,000 and the rich will be above $80,000
(although they may not feel rich).
Of those who grew up in poverty, 57% have succeeded in leaving that
condition twenty years later. 43% remain poor. 27% of the
once poor become almost poor. 17% become middle income, 9% rise to
near rich and 4% are truly rags-to-riches going from the bottom to the
top in twenty years.
Mobility is also great for the almost poor. After 20 years, a
quarter (24%) falls backwards into poverty. 20% remain almost
poor. But a healthy 56% move up the ladder, a third into the rich
and near rich categories.
For the rich, staying there is no assured thing. Of those who were
in the top quintile (rich), only 40% stayed there twenty years later.
22% fell back to near rich but 18% fell down to poverty or near poverty.
So, if you are down, there is a better than even chance of going up.
And if you are up, there is a better than even chance of dropping down!
Race had a lot to do with what happens to you. Half of blacks
(53%) as opposed to a third of whites (33%) who were raised in the
bottom of family income stayed there. And 56% of the blacks who
spent their childhood in the middle income range fell back to poverty or
near poverty compared to just 32% of whites.
And education was a key variable. Among those who were poor as
children, 47% remained poor if they had no four year college degree.
But only 10% stayed poor if they had one.
Geographically, the center for upward income mobility shifted away from
the Sunbelt and the west coast to the northeast. The
internationalization of the economy in New York and the surrounding area
has lifted incomes and mobility prospects while the rest of the nation
languished. Eight states -- six in the northeast -- had above
average upward income mobility: New York, New Jersey, Pennsylvania,
Maryland, Massachusetts, Connecticut, Michigan and Utah. The
southeast, once the growth center of the nation, languished behind as
did the west coast.
It's tax-free, and pays 400-500% more
than long-term CDs. Click here for more.
Subscribe to Dick's Newsletter
COPYRIGHT 2013, DICK MORRIS AND EILEEN
MCGANN.
Triangulation Strategies LLC
1801 S. Federal Hwy
Delray Beach, FL 33483
|
|
|
|
http://list.dickmorris.com/t/508773/1277433/4497/8/
|