The American Dream Is Not Dead by Michael R. Strain

Author:Michael R. Strain
Language: eng
Format: epub
Publisher: Templeton Press

RELATIVE MOBILITY FOR AMERICAN ADULTS

Using the PSID data, I gather people who are in their 40s in recent years (2013–2017). To compute a measure of their permanent income, I take the average of their annual income across the years when they are in their 40s. I adjust income for household size following a standard method and adjust for inflation using the PCE. I then compute an income quintile rank for these current 40-somethings. 46

I want to know whether their rank is the same as the rank of the family in which they grew up. I then follow the same procedure for their parents. Specifically, I identify the household in which they grew up and compute size-adjusted family income for the years in which the head of their childhood household was in his or her 40s. I average income across these years in order to mitigate the influence of transitory fluctuations. Then I compute the income quintile rank for these households.

Figure 16 summarizes the results. Each of the five vertical bars captures the income quintile in which today’s adults were raised—that is, their parents’ quintile. The color-coded segments within each vertical bar show where today’s adults ended up. For example, 19.2 percent of today’s 40-somethings raised in the middle quintile as children ended up in the bottom quintile as adults. Twenty-two percent of today’s adults raised in the middle quintile ended up in the second quintile. And around 11 percent of adults raised in the middle quintile have made it to the top 20 percent.

FIGURE 16. FAMILY INCOME MOBILITY.

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