American Dream Harder Than Ever to Reach

Tue May 2, 2006 5:14 PM EDT

A new report by the Center for American Progress looks at economic mobility in the United States, and finds that children's potential for success in this country is very closely tied to the financial status of their parents. In particular, children from low-income families have only a 1 percent chance of reaching the top 5 percent of the income distribution in their lifetime, while children of the rich have a 22 percent chance of doing so.

Other key findings:

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  • African-American children who are born in the bottom quartile are nearly twice as likely to remain there as white children whose parents had identical incomes, and are four times less likely to attain the top quartile.
  • The difference in mobility for blacks and whites persists even after controlling for a host of parental background factors, children's education and health, as well as whether the household was female-headed or receiving public assistance.
  • By international standards, the United States has an unusually low level of intergenerational mobility: mobility in the United States is lower than in France, Germany, Sweden, Canada, Finland, Norway and Denmark. Only the United Kingdom had a lower rate of mobility than the United States.
  • The study also examines economic trends over the past five years, and finds that despite strong GDP growth in 2003-2004, median household income hasn't moved up any faster than it did during the recession of 1990-91. And working longer hours no longer increases one's chance for upward mobility: In 2003-04, families whose adult members worked 40 or more hours per week for two consecutive years were less upwardly mobile than in the early and late nineties.

    The upper class is doing better than ever. But "for the middle class… the recent economic expansion has generated tepid growth in median household income, and a considerable increase in the risk of major income losses from year to year. In today's environment of record levels of both secured and unsecured debt, these losses may have lasting effects on their financial health."