Mobility of Middle Income Families

Yesterday, Pew’s Economic Mobility Project released a new report that focused on various contributors to uneven downward economic mobility. As I mentioned in a post last week about another Pew report, economic mobility refers to movement up or down the income ladder over time or across generations. The title of this report “Downward Mobility from the Middle Class: Waking Up from the American Dream” reminds us what is at stake. Across multiple measures of downward mobility, a quarter of children raised in the middle-class are downwardly mobile as adults but the likelihood of this happening is inconsistent across demographic groups. The middle class is defined here as families between the 30^th and 70^th percentile of income distribution, translating to incomes between $32,900 and $64,000 (in 2010 dollars) for a family of four.

The Pew report identifies some factors associated with an increased chance of downward mobility: marital status (divorce and never marrying), lower levels of formal education, low test scores (all the study participants took the Armed Forces Qualification Test), and drug use (a proxy measure for “destructive decisions”). Interestingly, the influence gender and race have on economic mobility is not straightforward at all. Black and Hispanic men were more likely to be downwardly mobile (that is, to fall out of the middle class) than Black and Hispanic women, while white women were more likely to be downwardly mobile than white men. This is a compelling example of why different forms of disadvantage rooted in historical and present-day inequities need to be considered together, as intersecting parts of a complete identity, rather than separately as different hats we take on and off.

The disparities in downward mobility among men of different races and between white men and women can be accounted for by many of the variables the report measured and controlled for, but not entirely. The role of family wealth and assets during one’s youth, for example, is not explored here. The report’s unanswered questions give rise to related inquiries. How might children who grew up in families that owned homes compare to those who rented? What impact does family savings and assets have on educational achievement as seen through test scores? When we use parental income to assign a child to the “middle class,” what are we missing that might be critical to understanding that child’s future economic mobility? A report that the Asset Building Program worked on in collaboration with Pew and others suggests that savings play a considerable role in determining opportunities for upward economic mobility for people from across the income spectrum.  For example, 50% of children from low-income families who had below median savings levels will remain in the bottom income quartile as adults. However, low-income families who had above median savings levels saw 71% of children move up at least one income quartile. Trends are similar for families starting in the higher income quartiles, which speaks to the powerful effect of savings at all income levels. By including an analysis of the role savings can play in the outcome of children from middle class backgrounds, we can build a more nuanced perspective of economic mobility across generations.