“It’s almost like a survival thing now,” he says. “I could live the way I’m living now and be OK, but I would like to have a family someday. I would like to take nice vacations, things like that.” His annual wage these days would put him at the federal poverty level for a family of four. Sometimes it angers him that he earns so little for a job he sees as important. (A Brookings study calculates that enrolling a disadvantaged child in a high-quality preschool correlates to a $100,000 increase in lifetime earnings.) “But I also kind of blame myself,” he says, “because without a college degree, that’s what you get paid.”
GAINING, BUT FALLING BEHIND
Here’s some good news: Today’s households with prime-aged workers are bringing home more income than their parents did. Even after adjusting for rising prices over time, according to Pew, nearly 90 percent of middle-class children earn more, as a household, than their parents did at the same age. They’re “ahead” of the previous generation—but with two painful caveats.
The first is that, compared to people at the top, most workers are slipping behind. Income gains for the highest quintile of earners have run about 50 percent higher than for the bottom quintile. Think of it as a marathon: Everyone is farther along the course, but the rich have widened their lead. Looking beyond income to consider a household’s wealth—including savings and assets such as investments and a home—the middle class and poor are actually moving backwards. For households in the top two quintiles of income, inflation-adjusted wealth has grown by a fourth from the past generation to this one. In the middle quintile, it has declined by 5 percent. At the bottom, it’s down by 63 percent.
The second uncomfortable truth is that the reason household incomes are rising from generation to generation is not because children are finding better-paying jobs than their parents held. It’s because more households are bringing in two incomes. Today, a young man in the top four income quintiles, Pew found, has roughly a 50-50 chance of earning more than his father did at the same age. The difference between that toss-up proposition and the 90 percent chance that a household’s income has risen between generations is that many more women work. Simply getting married and waiting until you’re 21 to have children, Sawhill and coauthor Ron Haskins have written, are two of the most important ingredients for moving from poverty into the middle class. But any additional income may be overstated: In families with children, having both parents work will typically entail higher costs for child care, mounting stress, and lost leisure time.
Add those two truths together and you see a generation working harder outside of the home but failing to get ahead like their parents expected them to.
For black Americans, that reality is even gloomier. African-Americans born in the bottom income quartile are about twice as likely to stay at the bottom in adulthood, compared with whites born in poverty, according to the recent Economic Policy Institute report. Whites are four times as likely than African-Americans to rise from the bottom quartile to the top. Middle-class African-Americans grow up to exceed their parents’ level of wealth less than a quarter of the time, compared with more than half the time for middle-class whites, Pew reports. (Neither survey looked at Latinos.)
College has become the golden ticket off that hamster wheel. But this, too, has widened the demographic gap in upward mobility. Lower-income children typically struggle to keep up in school, falling well behind wealthier children on K-12 test scores, which hurts their chances of getting into college and earning a diploma. A student with high scores on eighth-grade standardized tests but whose family is poor (in the lowest-income quartile) had only a 29 percent chance of finishing college, the EPI study found. That was a lower chance than a student from the top of the income ladder with low test scores. In other words, a dumb, rich kid is more likely to get a college diploma than a smart, poor kid.
“Although we cannot say with any certainty how much mobility today’s children will experience over the coming decades,” Bhashkar Mazumder, a senior economist at the Federal Reserve Bank in Chicago, wrote last spring, “recent research suggests cause for concern. The gap in children’s academic performance between high- and low-income families has widened significantly over the last few decades.” If this trend persists, college will no longer serve as the equalizer for a stratified economy in which the rich get richer and the poor don’t.
ONWARD AND … UPWARD?
In some ways, the story of middle-class mobility has a silver lining. If you’re born into the middle quintile, like the Sherry children were, you’ve got about a 50 percent chance as an adult of staying there or moving up a quintile, according to Pew. You’re just as likely to rise all the way to the top—about 20 percent—as you are to sink one quintile. Education improves your odds of climbing higher: A child born in the middle quintile who finishes college has a three-in-five chance of rising into the top two quintiles.
John has seen his sister Allison succeed. Now the chief of The Denver Post’s Washington bureau, she earns a salary roughly comparable to her father’s on the railroad and recently backpacked through the Alps with friends. So, too, their cousin, Andrew Elliot, who’s a lawyer living in one of Washington’s trendiest neighborhoods. John wants something like that for himself. He knows he has only one route, really: earning a college degree.
“Economic mobility is not predetermined,” says Erin Currier, project manager of Pew’s Economic Mobility Project, “but our research has shown that a host of drivers and factors can influence a person’s chances of moving up or falling down.” These determinants fall into three categories: social capital (who you know and where you live); financial capital (your savings and access to credit); and human capital (your education).
John’s parents have tried to help him with social capital (John rebuffed his dad’s offers to help him find a job at the railroad) and financial capital (the house with discounted rent, although no help with tuition). What he needs is more human capital. For that, his parents can’t help much, except to offer encouragement. “He’s smart enough to go to college,” Greg says. Beth adds: “We still want better for him, we really do. But we don’t know what to do.”
John is still planning his full-fledged return to college. He figures on taking school slowly this time, one or two classes a quarter, while working full time. He’s taking a course this fall in early-childhood education so he can keep his state license for teaching preschool.
Seated on a bar stool in West Denver, sipping a beer, lines of worry cross his narrow face. On his calves are tattoos he designed himself, crossed swords over a bicycle. Everyone in the place seems to know him and treat him as a friend. As he talks about his latest batch of home brew, his scowl lifts. He offers to pay for the drinks. His dreams are still flowing, like the microbrew. What isn’t clear yet is whether they are pipe dreams, or real.
The author is an economics correspondent for National Journal.