NCPA - National Center for Policy Analysis


November 13, 2007

A new study by the U.S. Treasury shows that the United States remains a dynamic society marked by rapid and mostly upward income mobility.  Much as they always have, Americans on the bottom rungs of the economic ladder continue to climb into the middle and sometimes upper classes in remarkably short periods of time, says the Wall Street Journal.

The Treasury study examined a huge sample of 96,700 income tax returns from 1996 and 2005 for Americans over the age of 25.  The study tracks what happened to these tax filers over this 10-year period:

  • One of the notable, and reassuring, findings is that nearly 58 percent of filers who were in the poorest income group in 1996 had moved into a higher income category by 2005.
  • Nearly 25 percent jumped into the middle or upper-middle income groups, and 5.3 percent made it all the way to the highest quintile.
  • Of those in the second lowest income quintile, nearly 50 percent moved into the middle quintile or higher, and only 17 percent moved down.
  • This is a stunning show of upward mobility, meaning that more than half of all lower-income Americans in 1996 had moved up the income scale in only 10 years.

Also encouraging is the fact that the after-inflation median income of all tax filers increased by an impressive 24 percent over the same period.  Two of every three workers had a real income gain -- which contradicts the Huckabee-Edwards-Lou Dobbs spin about stagnant incomes.  This is even more impressive when you consider that "median" income and wage numbers are often skewed downward because the United States has had a huge influx of young workers and immigrants in the last 20 years.  They start their work years with low wages, dragging down the averages, says the Journal.

Source: Editorial, "Movin' On Up," Wall Street Journal, November 13, 2007.

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