U.S. Intragenerational Economic Mobility From 1984 to 2004

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Abstract

This report explores how Americans have moved up and down the income ladder over the last two decades, and whether it has been more difficult for Americans to get and stay ahead in the last decade. The report focuses on intragenerational mobility: how individuals change economic positions within their own lifetimes.

U.S. Intragenerational Economic Mobility From 1984 to 2004

By 2004, the richest 20 percent of households earned over half the total household income in the United States, and their share of income continues to grow. Meanwhile, the share of income earned by the poorest 20 percent of U.S. households stands at 3.4 percent of total household income, down 15 percent over two decades. Indeed, despite strong economic growth during the mid- to late-1980s and again during the mid- to late-1990s, income inequality by most every measure is higher today than in 1984.

High and rising income inequality engenders concerns about inequality in opportunity—for example, lower-income households may not have access to the same quality education or health care as higher-income households—and unequal opportunities may exacerbate and perpetuate income inequality.

Income inequality, however, even rising inequality, is not inherently a problem. Inequality in income to some extent reflects inequality in ability and effort; as such, it is a central component of the reward and incentive structure that drives economic growth. In addition, annual measurement has shown that the people at the bottom of the income distribution in one year may be higher up the next year, and people at the top may fall to the bottom. In no small part, economic mobility, the rate at which individuals change positions in the income distribution over time, mitigates inequality.

The crucial question is what has happened to economic mobility. Increasingly, Americans feel that they cannot get ahead, and that it is even hard to keep up. A recent public opinion poll revealed that over half of all Americans believe they have not moved forward, and nearly one-third say they have fallen back.

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