Posted on 04/26/2006 3:47:22 PM PDT by nicollo
America may still think of itself as the land of opportunity, but the chances of living a rags-to-riches life are a lot lower than elsewhere in the world, according to a new study published on Wednesday.
The likelihood that a child born into a poor family will make it into the top five percent is just one percent, according to "Understanding Mobility in America," a study by economist Tom Hertz from American University.
By contrast, a child born rich had a 22 percent chance of being rich as an adult, he said.
"In other words, the chances of getting rich are about 20 times higher if you are born rich than if you are born in a low-income family," he told an audience at the Center for American Progress, a liberal think-tank sponsoring the work.
He also found the United States had one of the lowest levels of inter-generational mobility in the wealthy world, on a par with Britain but way behind most of Europe.
"Consider a rich and poor family in the United States and a similar pair of families in Denmark, and ask how much of the difference in the parents' incomes would be transmitted, on average, to their grandchildren," Hertz said.
"In the United States this would be 22 percent; in Denmark it would be two percent," he said.
The research was based on a panel of over 4,000 children, whose parents' income were observed in 1968, and whose income as adults was reviewed again in 1995, 1996, 1997 and 1999.
The survey did not include immigrants, who were not captured in the original data pool. Millions of immigrants work in the U.S, many illegally, earnings much higher salaries than they could get back home.
Several other experts invited to review his work endorsed the general findings, although they were reticent about accompanying policy recommendations.
"This debunks the myth of America as the land of opportunity, but it doesn't tell us what to do to fix it," said Bhashkar Mazumder, a senior economist at the Federal Reserve Bank of Cleveland who has researched this field.
Recent studies have highlighted growing income inequality in the United States, but Americans remain highly optimistic about the odds for economic improvement in their own lifetime.
A survey for the New York Times last year found that 80 percent of those polled believed that it was possible to start out poor, work hard and become rich, compared with less than 60 percent back in 1983.
This contradiction, implying that while people think they are going to make it, the reality is very different, has been seized by critics of President Bush to pound the White House over tax cuts they say favor the rich.
Hertz examined channels transmitting income across generations and identified education as the single largest factor, explaining 30 percent of the income-correlation, in an argument to boost public access to universities.
Breaking the survey down by race spotlighted this as the next most powerful force to explain why the poor stay poor.
On average, 47 percent of poor families remain poor. But within this, 32 percent of whites stay poor while the figure for blacks is 63 percent.
It works the other way as well, with only 3 percent of blacks making it from the bottom quarter of the income ladder to the top quarter, versus 14 percent of whites.
"Part of the reason mobility is so low in America is that race still makes a difference in economic life," he said.
"Actually the American dream was never about amassing great wealth. It's about earning an honest living, buying a home and raising a family while being left alone."
Well put! (Especially the left alone part)
America may still think of itself as the land of opportunity, but the chances of living a rags-to-riches life are a lot lower than elsewhere in the world, according to a new study published on Wednesday.Then he cites the study author's comparison with the Dutch:
"Consider a rich and poor family in the United States and a similar pair of families in Denmark, and ask how much of the difference in the parents' incomes would be transmitted, on average, to their grandchildren," Hertz said. "In the United States this would be 22 percent; in Denmark it would be two percent," he said.All that proves is that both rich and poor people in the U.S. are better than the Dutch at teaching their children to be like themselves.
Did you notice the authors name. All you have to do is ad certain four letters to his name and it can be appreviated to just two letters and they don't mean Big Smile either
Trust me, this is what I was fed with day in and day out from the local NZ Herlad (owned by the UK Indypednent - yep, the one that has Robert Fisk), until I threw in the towels and stop reading much of its international news.
Good question about the quotation from the Federal Reserve economist. Unfortunatley, they do this type of thing, and they always have. They have to justify themselves, you see... Actually, much of it is useful, although some of it is bunk, such as from this guy. At least he shied away from saying anything about policy.
So, 22 percent of rich kids wind up rich. The class envy folks have been telling us different for decades. Five percent make it to the top one percent. Has it ever been any different? I guess we are all owed the million dollar income as a birth right. This researcher is a leftist clown. Government sponsored poverty and race hustling have kept minorities poorer. Stupid Jerry Springer types keep themselves poor. Some people just have some bad luck, but most people have an opportunity to better themselves. You just have to try.
Feh. And feh again!!!
I was born to immigrants with little education, seven kids and a work ethic.
We all have college degrees, half of us have graduate degrees.
We live just fine, thanks.
I agree - teach them how to act rich, i.e. never buy retail. Don't worry about the plasma tvs and bling - worry about getting homework done, (homemade) meals together and instill values.
This pretty much sums it up. If you are born a kennedy , chances are you wil remain one, be rich from the trust funds and never have to earn a penny.With the exception of estate taxes, our tax code is designed to let people who already have money keep it and keep those who want to make it from getting it.
As I've pointed out on this forum before, the very rich don't pay taxes anywhwere near the rates of the upper-middle and professional classes. Our tax code screws the upperly mobile, and makes it that much harder for them to make it. Amazingly, our fundamental ideals are so strong that the government, try as it will, can't keep these people down.
Hear hear!
Yer darn tootin' - don't let my kids watch more than an hour of supervised tv OR computer (no internet) each night. My optometrist loves us! PS - no fatties here either.
Yepper! In August 1980 I owned exactly one surfboard, a sleeping bag and one joint (the smokable kind). I have no idea what our (my wife and I) net worth is now, but we own a house free and clear, are building a business building at our place and have very, very little debt. The United States is THE LAND OF OPPORTUNITY! I've been around the world and absolutely believe that this is the best and most free place on earth. I believe this so passionately that I have sacrificed to defend her before and I would do so again, in a heartbeat.
Liberal think tank. This is just BS.
They never asked me. I can show them one case where it's true.
78% of rich kids grow up to be not rich??? That seems a little odd.
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