Income Mobility

According to a recent study led by Stanford economist Raj Chetty, when adjusted for inflation, approximately half of Americans born in 1984 earned more at age 30 than their parents did at the same age. This represents a stark decline from earlier generations, as Americans born in 1940 had a 90 percent chance of earning more than their parents. For many, the “American Dream” means climbing the economic ladder and making a better life for themselves and their families. However, over the past 30 years, this goal is becoming increasingly difficult to achieve. Though the study by the Stanford economists does not directly investigate reasons behind the decline in wage growth over the years, here are a few factors to examine that may shed some light on this alarming trend.

Reasons for the decline

Wage growth in the United States has slowed over the past few decades, and the wage growth that our economy has experienced is not being evenly distributed between classes. Approximately 30 years ago, the median net worth of an upper-income family was about 350 percent larger than that of an average middle-income family.

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