Trouble for younger generations
The American Dream depends on future generations being better off than those that preceded them, but new data released by the Equality of Opportunity Project suggests that idea may have faded away years ago. While some are praising this new finding as eye-opening and revolutionary, it wasn’t hard to see the data coming.
The study comes from a team of sociologists and economists at Stanford, the University of California, Berkeley, and Harvard. It suggests that only one half of American 30-year-olds will earn more money than their parents did at the same age. “It’s basically a coin flip as to whether you’ll do better than your parents,” said Stanford economics professor Raj Chetty in a news release.
A gradual decline
The study also found there has been a gradual decline in the likelihood that a child will outearn their parents by age 30. This dropped from around 90 percent of children born in the 1940s to just about 50 percent for children born in 1985. While this trend is national, Chetty explained the largest drops occurred in the eastern Midwest, especially in industrial states like Michigan and Illinois. All these statistics, while disappointing, should not come as a surprise.
A slowdown in GDP growth is a partially blamed for this trend, but the concentration of wealth increase among the rich is a more significant factor. While some pockets of America may be getting richer, the middle class is not benefiting from economic growth.
Today, the top 1 percent of America earns 81 times more than the bottom 50 percent, compared to 27 times more in the 1980s.
Traditional GDP growth simply does not have the same impact it once did.
The decline of the American Dream
David Leonhardt of the New York Times called the Equality of Opportunity Project’s findings “deeply alarming,” and others have echoed his sentiment. But for young Americans like me, this report simply serves as more evidence of something we grew up knowing. A coincidentally parallel statistic came about in 2015, when the Harvard University Institute of Politics found that 48 percent of 18 to 29-year-olds felt the American Dream was already dead. In the end, the Equality of Opportunity Project ended up reinforcing something we already knew about our country, our education system, and the future of younger generations.
Ultimately, working to curb the declining possibility of income mobility will come from focusing on policy actions that will lead to widespread economic growth. For many young Americans, it’s no surprise that the keys to financial success are access to good schools, from early childhood education to college. Equal investment from the government in the wealthy and poor alike is also a key factor.
As high-paying jobs move to the globalized, high-tech economy, a good first step is to help more young people acquire the skills that will help them qualify for these jobs.
President Obama passed incentives like the Computer Science for All initiative to address these issues. Introduced in his 2016 State of the Union Address, the initiative would lead to “offering every student the hands-on computer science and math classes that make them job-ready on day one.” This went along with other initiatives, pushing for the importance of improving all schools and working to reduce student debt following college. Now, following the election, it seems like there may be less incentive to make change.
The murky road forward
While President-elect Trump campaigned as a fighter for the people, I think his plans for economic growth that may work to help propel younger generations are few and dubious. Still, the study concludes that “cities with high levels of upward mobility tend to have five characteristics: lower levels of residential segregation, a larger middle class, stronger families, greater social capital, and higher quality public schools.” At least the study has laid out some sort of plan of what may help.
Ultimately though, the Equality of Opportunity Project research may be most helpful in helping young Americans realize that the notion that every generation should earn more than the previous is fundamentally flawed. The idea that we need to make more than those before us, or even those around us, is likely what got us in this mess in the first place, and what may at least temporarily keep us moving in the wrong direction.