“That dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement regardless of the fortuitous circumstances of birth or position.”

—James Truslow Adams, “The Epic of America” (1931)[1]

The idea of the American Dream as defined by historian James Truslow Adams reflects a powerful cultural narrative with deep historical roots.[2] It also reflects the understanding that broad-based opportunity propels the economy forward. Adams wrote at a time when Horatio Alger’s nineteenth-century rags-to-riches tales were confronting the harsh realities of the Great Depression. This American Dream of upward economic mobility, though deferred for many women and people of color, became reality for many among the generation of Americans who came of age during the Depression and World War II and entered the workforce in the 1950s and 1960s, and for many of their Baby Boomer children, too. This drove productivity gains and strong economic growth, as people with talent and initiative were able to match their skills to jobs and economic opportunities.

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Yet over the past decades, living the dream has seemed less likely for Americans following in their footsteps—those born into Generation X (1965-1980), the Millennials (1981-2000), and the so called Boomlet generation of the 21st century. Research suggests economic mobility in the United States as a whole has been essentially flat since the 1970s.[3] Although economic mobility may not have declined, income inequality has risen over that period, making the consequences of the ‘birth lottery’—the household a child happens to be born in—more stark.[4] Larger differences in income between people at the top and bottom of the income distribution are visible across the country, as are differences in perceived economic mobility. Understanding trends in levels of economic mobility is important to understanding what influences economic mobility, which in turn is important to understanding economic growth and stability.

The narrative that America was the best place for people to achieve a better life than their forebears, though once uncontroversial, was built at a time when reliable statistics were difficult to come by. Recent advances in data collection and more precise methodology allow us to examine how the United States measures up as a land of opportunity today.[5] Now we can ask ourselves whether the entire United States is a land of opportunity or a country where different lands of opportunity exist, depending on one’s geographic location or one’s place on the income spectrum.

In the pages that follow, we present the most recent research and data available on economic mobility, which we define as movement up and down the income ladder from one generation to the next. This report aims to explain recent scholarship on intergenerational economic mobility across the nation. Briefly, this research and data show that:

  • There are regional differences in economic mobility across the country.
  • Economic mobility nationwide has been roughly flat in recent decades, but it has not remained flat everywhere.
  • Economic mobility in the United States is lower than in many other developed economies.

We identify three sets of factors that are correlated with—though not necessarily causal determinants of—economic mobility: economic factors, social factors, and family factors. Economic factors are measures of economic well-being in an area. Social factors are a variety of measures of social cohesion and community activity. Family factors are various measures of family cohesion and structure. While there is more research to be done, this gives us ideas about what to pursue and where to look for answers. Researchers will need to explore these relationships further in order to identify the causal mechanisms driving levels and trends of economic mobility.

In this report, we first present terms related to economic mobility, before looking at how economic mobility varies across communities in the United States. We then examine how mobility has changed over time. Next, we look at factors that may influence mobility. Finally, we highlight a few questions for future research in this area.

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[1] James Truslow Adams, The Epic of America (Simon Publications, 2001).

[2] Ibid.

[3] Raj Chetty et al., Is the United States Still a Land of Opportunity? Recent Trends in Intergenerational Mobility, Working Paper (Cambridge, MA: National Bureau of Economic Research, January 2014), http://www.nber.org/papers/w19844.

[4] Ibid.

[5] Orsetta Causa and Asa Johansson, Intergenerational Social Mobility in OECD Countries (OECD, 2010), http://www.oecd.org/eco/growth/49849281.pdf.