The Dilemma of Stagnating Economic Mobility
• 2 min read
- Brief: Global Economy
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Economic mobility is stalling in the United States, making the American Dream more of a pipe dream for many young people.
Among Americans born in 1940, 90% went on to earn more than their parents, but by 1984, that figure dropped to 50%, according to the Congressional Research Service.
The pursuit of economic mobility—the ability for individuals to elevate their socioeconomic status from one generation to the next—is a fundamental feature of a healthy society. Even ancient Greek philosophers like Aristotle understood that a solid middle class is essential for social stability and upward mobility.
One thing is certain, education beyond high school plays a big role in economic advancement, but it’s not everything. Millions of Americans with college degrees still live below the poverty line. Political scientist Charles Murray contends that intergenerational upward mobility is also directly helped by family traits that include intensive parental involvement, delayed childbearing, stable two-parent households, and cultural and community engagement.
Harvard economist Raj Chetty asserts that the community in which an individual is raised can also bolster their potential upward mobility. Community characteristics such as good schools, functional families, high social interactions and lower unemployment rates can have a positive impact on children’s economic future. Notably, even if the parents are frequently unemployed, a supportive community environment can enhance a child’s chance to get ahead.
Besides research institutes and charitable organizations, a number of local, state and federal politicians on both sides of the aisle are pushing for programs designed to enhance opportunities for economic mobility, including reform of welfare systems such as food stamps; expansion of the early education programs; free higher education; raising the minimum wage; increasing the childcare tax credit; and providing government grants to churches, charities and civic groups to increase community services.
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This information is for general information use only. It is not tailored to any specific situation, is not intended to be investment, tax, financial, legal, or other advice and should not be relied on as such. AMG’s opinions are subject to change without notice, and this report may not be updated to reflect changes in opinion. Forecasts, estimates, and certain other information contained herein are based on proprietary research and should not be considered investment advice or a recommendation to buy, sell or hold any particular security, strategy, or investment product.
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