NCPA - National Center for Policy Analysis

American Economic Mobility Readily Measurable

July 23, 2012

The Panel Study of Income Dynamics (PSID) has been tracking the income ups and downs of selected households and that of their children seeking to discern how their economic fortunes change over time. Washington University sociologist Mark Rank has delved deep into these data, exploring tendencies toward wealth security and insecurity over time, says Ronald Bailey, Reason Magazine's science correspondent.

With regard to wealth insecurity, Rank finds that workers between the ages of 25 and 60 experience vast changes in income over time, and that this exposes them to a wide variety of economic conditions.

  • He finds that by age 60, just under 45 percent of American adults will have relied for at least a year on one or more of the following: food stamps, Temporary Assistance to Needy Families (TANF), Medicaid or Social Security's Supplemental Security Income.
  • He finds that by age 60, just over 54 percent of American adults will have experienced at least one year of poverty or near poverty (150 percent of the federal poverty level).
  • More broadly, taking into account joblessness and sudden losses in income, Rank finds that more than 85 percent of adults by age 60 will have had a bout with income insecurity.

Rank comes to similar conclusions regarding relative wealth.

  • By age 60, nearly 77 percent of Americans will have lived in a household earning more than $100,000 for at least one year.
  • More than 33 percent will have enjoyed this level of household income for 10 or more years, and 22 percent would have done so for 10 or more consecutive years.
  • By age 60, nearly 51 percent will have lived in a household earning $150,000 for at least one year; more than 32 percent at $200,000 for a year; and nearly 21 percent at $250,000 for at least one year.

These massive swings in income security speak to the economic mobility that is readily measurable in American income data. For example, a 2007 Treasury Department study looking at shifts in income mobility between 1996 and 2005 found that over half of taxpayers moved to a different income quintile over this period. This corroborates similar findings in Rank's studies.

Source: Ronald Bailey, "You Have an 85 Percent Chance of Being Poor," Reason Magazine, July 3, 2012.

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