"Areas With A Strong Middle Class Also Give Kids Better Chance Of Climbing The Economic Ladder"
Regions in the country that have larger middle classes have higher mobility, meaning that children who grow up in those areas have a greater chance of climbing into higher social classes, according to a new report from the Center for American Progress (CAP).
Authors Ben Olinsky and Sasha Post call the relationship between the middle class and mobility “striking and statistically significant.” Nearly half of the variation between areas that have high and low mobility can be explained by the size of the middle class. Olinsky and Post used data from a recent study by economists Raj Chetty, Nathaniel Hendren, Patrick Kline, and Emmanuel Saez on economic mobility and geography that considered a range of factors. But the size of a region’s middle class is more strongly associated with mobility than 26 of the 28 characteristics that the economists considered, only barely exceeded by the concentration of single mothers and region’s divorce rate.
Specifically, for every percentage point increase in how many people live in the middle class, or those between the 25th and 75th percentiles of national income, children who are born into families in the 25th percentile will climb up nearly half a percentile. For example, the authors imagine a city with 40 percent of its population living in the middle class, which would mean a child in the 25th income percentile will reach the 37th by age 30, making $22,000 a year. But the same child in a city with 50 percent of the population living in the middle class will make it to the 42nd percentile, earning $26,000 a year — or $4,000 more.
Olinsky and Post also accounted for a region’s level of poverty but still found that the size of the middle class is a stronger factor. One caveat, however, is that areas with large African American populations see smaller increases in mobility from larger middle classes. “This suggests that the middle class’s influence on mobility may be dampened by racial inequities, both social and economic,” they write.
Unfortunately, however, overall American children have little chance of climbing into higher economic classes than the ones they are born into unless they are very wealthy. A third of those born into the top 1 percent of the income distribution will make $100,000 by the age of 30, according to the economists’ original study. But just one out of every 25 people who grew up in the bottom half of the income distribution will make that much by that age.
And income inequality keeps growing. It has gone up in nearly every state over the past 30 years. Incomes for the wealthiest 20 percent of Americans are now eight times higher than those in the bottom 20 percent.
Meanwhile, the original study showed that low taxes don’t make people more upwardly mobile: Places with lower and less progressive state income taxes have less mobility. And the social safety net has done a good job of staving off even more income inequality.