What Great Stagnation?
Steven Horwitz
In last week's Washington Post, Robert Samuelson reported on the results of the Pew Mobility Project, looking at the income and wealth mobility of Americans over the last several decades. Although not all the news is good, most of it is. A couple of highlights:
? Most Americans (84 percent) exceed their parents’ income at a similar stage. Income gains were sizable across the economic spectrum. For the richest fifth, median income grew 126 percent from the late 1960s to the early 2000s, from $49,075 to $111,115. Among the poorest fifth, the median rose 74 percent, from $11,064 to $19,202. (All figures are in inflation-adjusted 2008 dollars.)
? Among sons, 59 percent had higher inflation-adjusted wages and salaries than their fathers. For the poorest fifth, 85 percent exceeded their fathers’ earnings. Higher family incomes also reflect more women with paid jobs. (From 1970 to 2000, the labor force participation rate of women 16 and over went from 43 percent to 60 percent.) Men’s earnings represent 61 percent of family income, down from 75 percent in the late 1960s.
? Along with higher incomes, there was much movement across class lines. Fully 60 percent of children born to the richest fifth of Americans in the late 1960s fell out of that category — 23 percent to the second-richest fifth and the rest scattered; 8 percent landed in the poorest fifth. As for upward mobility, about 57 percent of children born to the poorest fifth of Americans in the late 1960s moved up — 27 percent into the second-poorest fifth and 4 percent into the richest fifth.
Bottom line? Whatever is true of the comparative statics of quintiles, there remains significant inter-generational mobility and starting off poor does not prevent you from getting out of poverty. Even if you remained in one of the lower quintiles, your absolute standard of living improved. This is not the vision of an America being pulled apart by rigid economic classes.
And it makes me ask my favorite question of all: WHAT "Great Stagnation?"
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