Is it true that half of all kids today will make less than their parents, as Andrew Yang claims?
Source: The Honest Company
Andrew Yang is an American Entrepreneur and 2020 Democratic candidate. In a recent poster, he claimed not only that the American Dream is not only dying. But, that half of the children today will earn less than their parents.
Are the claims he makes true? Consider these positions below.
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Yes, it’s approximately true that about half of young adults are making less than their parents did at a comparable age.
Raj Chetty and his co-authors have done a ton of work on this topic, studying the trends and determinants of social mobility over the last half-century.
Here’s a Brookings page with a brief overview of results: https://www.brookings.edu/blog/social-mobility-memos/2018/01/11/raj-chetty-in-14-charts-big-findings-on-opportunity-and-mobility-we-should-know/
And here is the “Opportunity Insights” research group at Harvard, where they post results and even share a good chunk of their basic data. https://opportunityinsights.org/
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Yes. Absolute income mobility in the US has declined to the point where only around half of the children born in 1984 earn more than their parents (compared to 90% of those born in 1940): see Chetty et al.‘s 2017 study. To visualize the decline, see this Brookings overview of the topic and how it has affected different economic classes.
Generally speaking, the American Dream is in a bad shape, at least in terms of mobility and the likelihood of changing position in the income distribution.
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