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JSTOR
GPO
The World Bank
Inequality, Personal Finance, Taxes
Trends in U.S. Family Income Mobility, 1969-2006
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Research Findings
The American Dream is predicated on the belief that, through hard work and perseverance, people can move up the economic ladder. Annual earnings inequality declined from 1937 until 1953 — the postwar era economic boom often referred to as “the Great Compression” — but has steadily risen ever since, with the rate of inequality significantly increasing between 1980 and 2004. Recent government analysis suggests the problem of income inequality has become acute.
A 2011 paper by the Federal Reserve Bank of Boston, “Trends in U.S. Family Income Mobility, 1969-2006,” used data from the Panel Study of Income Dynamics to analyze trends among U.S. working-aged family heads and their spouses over recent decades.
The paper’s findings include:
- Upward mobility — defined as a family moving up 10% in terms of their income — has been decreasing over the decades: 79% moved up in the 1980s, 77% in the 1990s, and the continuing trend line continues to go downward.
- The mobility of families in the bottom 20% of income has decreased from 50% to 46% over this time. While this change may seem small, even unchanged mobility leads to widening inequality of long-term incomes.
- “Data on those in the top and bottom 20% show lower absolute pre-government income mobility for the poorest Americans and higher absolute pre-government income mobility for the richest.”
- As for policy’s role, the author notes, it “appears that increasingly redistributive U.S. tax and transfer policies may have enhanced family income mobility from the 1970s into the 1980s, but then had decreasing impact as tax rates were reduced after 1981 (and intermittently thereafter). Beyond overall patterns, the data indicate that the typical individual in the poorest one-fifth of the family income distribution is less likely to move up beyond that group’s real dollar ceiling within a decade than it was 15 to 20 years earlier.”
“These facts suggest,” the paper’s author concludes, “that policy remedies for those at the bottom should aim beyond short-term help, as those who are poor at any point in time are now likely to have low long-term incomes.”
Tags: poverty, inequality, financial crisis, economy
Teaching Notes
Note to instructor: The suggested assignments are designed for flexibility. They can be used in whole or part and can be adapted to a particular task -- for example, the newswriting assignments could be applied to the writing of the headline, the lead, the nut graph or the full story. Material from the assignments could also be combined with other material, for example, in the writing of a background, feature or local-angle story.
Analysis assignments
Read the study titled "Trends in U.S. Family Income Mobility, 1969-2006."
- Summarize the study in fewer than 40 words.
- Express the study's key term(s) in language a lay audience can understand.
- Evaluate the study's limitations. (For example: Do the results conflict with those of other reliable studies? Are there weaknesses in the study's data or research design?)
Read the study-related Wall Street Journal article titled "Income Ladder's Sticky Steps."
- Reporter's use of the study: Evaluate what the reporter chose to include and exclude from the study. Would the audience have acquired a clear understanding of the study's findings and limits from this article?
- Reporter's use of other material: Assess the material in the article that is not derived from the study. For example, does the reporter place the study in the context of other research and to what effect? Does the reporter include reactions to the study from other researchers or interested parties (e.g., political groups business leaders, or community members) and are their credentials or possible biases made clear?
Newswriting assignments
- Write a lead (or headline or nut graph) based on the study.
- Spend 60 minutes exploring the issue by accessing sources of information other than the study. Write a lead (or headline or nut graph) based on the study but informed by the new information. Does the new information significantly change what one would write based on the study alone?
- Interview two sources with a stake in or knowledge of the issue. Be prepared to provide them with a short summary of the study in order to get their response to it. Write a 400-word article about the study incorporating material from the interviews.
- Spend additional time exploring the issue and then write a 1,200-word background article, focusing on major aspects of the issue.
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