Race, education and family background are key factors in achieving the American Dream, according to a new Pew Charitable Trusts survey.
“Pursuing the American Dream: Economic Mobility Across the Generations” finds “stickiness at the ends” on the family income ladder, a phenomenon by which Americans raised in the poorest and wealthiest households are most likely to remain there as adults. The study found that while a majority of Americans exceed their parents’ family incomes, the extent of that increase is not always enough to move them to a different rung of the ladder.
Forty-three percent of Americans raised in the poorest households remain stuck at that wealth level as adults, and 70 percent remain below the middle of the income ladder. Forty percent raised at the top remain at the top as adults, while 63 percent remain above the middle.
Only 4 percent of those raised in the poorest households make it to the top of the income ladder, confirming, the report states, “that the ‘rags-to-riches’ story is more often found in Hollywood than in reality.”
Overall, the study found, the vast majority (84 percent) of Americans have higher family incomes than their parents had at the same age. This generation, across all wealth levels, is doing better than the one that came before it. The report further found that 93 percent of Americans whose parents were in the bottom fifth of the income ladder and 88 percent of those whose parents were in the middle quintile exceed their parents’ family income as adults.
Half of Americans also surpass their parents in terms of family wealth, the report found, but here, too, the “stickiness” persists. Two-thirds of those raised at the bottom of the wealth ladder remain on the bottom two rungs themselves, and two-thirds of those raised at the top remain on the top two rungs.
Other key findings of the report:
· African-Americans are still less likely to exceed their parents’ income and wealth than are whites and they are more likely to be stuck at the bottom of the economic ladder across a generation.
A four-year college degree promotes upward mobility from the bottom and prevents downward mobility from the middle and the top.
Most sons are meeting or exceeding the earnings of their fathers at the same age. However, the sons’ earnings represent a smaller proportion of family income than did men’s earnings in the fathers’ generation.
“The ideal of the American Dream is complex and we see again that one’s ability to achieve it is impacted by race, education, and family background,” said Erin Currier, manager of Pew’s Economic Mobility Project, in a statement.
A survey conducted by Millionaire Corner in the beginning of the year found nearly-two thirds of respondents defined the American Dream as equal opportunity for all people as well as having sufficient assets to sustain them through retirement.
Mirroring sentiments of the Pew report, more than two-thirds of respondents across all age levels believe that future generations will struggle to achieve the American Dream, with those over the age of 60 being the most pessimistic. At least two-thirds also agree that it is harder to achieve the American Dream today than it was in the past. This bleak assessment also increases with age.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.