Income Mobility

Out on the campaign trail you hear various candidates (from the president to congressional candidates) lament that “the middle class has shrunk” and that it is becoming harder and harder for the poor to move up the socioeconomic ladder.

Economist Stephen Moore, writing in the May issue of Newsmax, says that he “believes America is still a land of incredible opportunity where people of all income groups move up and down the income elevator.” He has a number of studies that illustrate that.

A 2008 study by the “Treasury Department examined what happened to the incomes of real people from 1987-2005.” The study found that the biggest income gains were recorded by those who started with the lowest incomes. By contrast, the smallest income gains were among those who began with the highest income.

Richard Burkhauser is an economist at Cornell University and senior fellow at the American Enterprise Institute. He has shown that every income group has made gains during the boom years (1982-2007) before the recent recession when the proper adjustments are made. He makes those adjustments based on such changes as family size, taxes paid, government benefits received, and total compensation to workers (not just salary).

It is true the multibillionaires like Bill Gates and Steve Jobs saw their wealth grower at a faster pace (63 percent). But even the bottom 40 percent in income saw gains (25 percent) when you factor in income, compensation, and benefits. Burkhauser concludes that: “The real income story of the last 30 years in America is not one of stagnation, but one of upward income mobility.”

I think it is possible that the last recession may have skewed our perception of income mobility in America. These statistics illustrate that it is still possible for Americans to move up the socioeconomic ladder and better their lives and the lives of their children. I’m Kerby Anderson, and that’s my point of view.

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