rich getting richer and poor are

Rich Are Getting Richer, Poor Are Getting Richer

Let's Permanently Dismiss the "Stagnant Wage Myth": ALL income groups

have gotten richer in a generation:

2 of Every 3 Americans Are Better Off Today Than Their Parents, and

More Than 80% of the Bottom Fifth Are Richer Than Their Parents

The charts above are from the study "Economic Mobility of Families

Across Generations" from the Economic Mobility Project, based on a

sample of 2,367 individuals who were between the ages of 0 and 18 in

1968 and have been tracked into adulthood. Here is what the study

shows:

1. Adults who were children in 1968--those who were in their 30s and

40s at the end of the century--have more income than did their

parents' generation.

Median family income rose by 29% between the two generations, from

$55,600 in inflation-adjusted dollars to $71,900. Average family

incomes, grew even more rapidly, from $61,600 to $88,000 (a 43%

increase). Income growth occurred throughout the income distribution

for all five quintiles, as shown in the top chart above (click to

enlarge), although family income in the top quintile grew by 52%,

compared to 18% for the bottom fifth.

2. The average number of individuals per family shrank from 3.1 to 2.3

individuals between 1969 and 1998. Taking into account the smaller

family size as well as the growth in family income, families are

generally better off economically today.

3. More than 2 out of every 3 Americans who were children in 1968 had

higher levels of real family income in 1995-2002 than their parents

had in 1967-1971 (see bottom chart above, click to enlarge). Children

born to parents in the bottom fifth were MORE likely to surpass their

parents' income than children from any other background. More than

four out of five children (82%) born to parents in the bottom quintile

have greater family income than their parents. In contrast, less than

half (43%) of those whose parents are in the top fifth of income

surpass their parents.

4. Economic mobility is measured in this study by tracking only

changes in cash income. Income mobility would be higher at the top

income quintiles with the inclusion of the value of fringe benefits,

since employer contributions to retirement and health insurance

totaled 7% of wages in 1967-1971 (parents' generation) and 13% in

1995-2002 (children's generation).

In other words, contrary to the picture portrayed by the media:

1. Real incomes are NOT stagnant - real median family income has

increased by 29% over the last quarter century, and real incomes have

increased for ALL income groups over the last generation.

2. The middle class has not disappeared, it's gotten richer! Real

income of the middle quintile (middle class) has increased by 29%.

3. Although it's true that income inequality has increased, it doesn't

really matter because the poor have gotten richer AND the rich have

gotten richer. The rich have NOT gotten richer at the expense of the

poor, all groups have gotten richer together.

4. There is significant upward income mobility, especially for the

lowest income group. Children born to parents in the bottom quintile

are more likely to surpass their parents' income (82%) than are

children from any other background.

Bottom Line: It's truly remarkable and extraordinary that more than 2

of every 3 Americans born a generation ago have already surpassed

their parents' income, and more than 4 of every 5 Americans born to

parents in the bottom fifth during the late 1960s and early 1970s are

better off than their parents. Do you think that was ever the case at

any other time in history like the 5th Century, 10th Century or 15th

Century? Not likely. It's probably true that just being alive in the

21st Century, especially being alive in the U.S., you've "won first

prize in the lottery of life."