2Center or American Progress | Middle-Out Mobility: Regions with Larger Middle Classes Have More Economic Mobility
By using he same daa and mehodology employed by Chety and his colleagues, wecan see ha one o he mos imporan characerisics is he size o he region’s middleclass.
Pu simply, he daa show ha when a region has a larger middle class, is low-income children are likely o be more upwardly mobile. Indeed, he size o a region’smiddle class is a sronger predicor o economic mobiliy han all bu 2 o he 28regional characerisics ha he sudy’s auhors esed.Tis nding—ha he middle class and mobiliy are srongly relaed—is very much inline wih recen research ha shows a negaive correlaion beween inergeneraionalmobiliy and economic inequaliy. Inernaional sudies have shown ha counries wihmore inequaliy have less economic mobiliy, a relaionship ermed he “Grea Gasby Curve” by Alan Krueger, he ormer chairman o Presiden Barack Obama’s Council o Economic Advisers.
Now we know, based on he sudy rom Chety and his co-auhors,ha his relaionship is rue righ here wihin he Unied Saes, no only across counries.For oo long, a srong middle class was believed o be merely he consequence o srong economic growh, no he oher way around. Furhermore, income inequaliy was oen dismissed as a naural and harmless side eec o a purporedly equal-oppor-uniy economy. Bu increasingly, hose undersandings have been upended. A growing body o scholarship suggess ha a srong middle class can drive prosperiy while highinequaliy can hamper i.
Te laes daa rom Chety and his colleagues add o his work by revealing ha hemiddle class and inequaliy are clearly linked wih mobiliy: Regions wih larger middleclasses and lower income inequaliy have higher mobiliy. By conras, heir ndingsundercu he key premise o “supply-side” economic heory by showing ha places where sae income axes are lower and less progressive acually have lower mobiliy.Tese ndings should have a dramaic impac on he debae over wheher and how oaddress ever-widening income dispariies and an ever-weakening middle class.
Americans have long believed ha heir children would be beter o han hey were
;oday, only hal o all Americans hold his belie.
Tis growing pessimism is based oneconic shis in he American economy. In he decades ollowing World War II, he benes o robus economic growh were broadly shared. As a resul, rom he lae 1940so he early 1970s, amilies rom across he income specrum saw heir incomes grow anearly he same rae, roughly doubling over his period.
Bu since he early 1970s, pro-duciviy growh has decoupled rom median wage growh. Consequenly, nearly all o he income gains rom he las 40 years o growh have gone o he riches 10 percen.
And in he pas decade, median amily income acually declined.
In 1963, Presiden John F. Kennedy amously declared ha “a rising ide lis all boas.” oday, however, hisno longer holds rue.