NCPA - National Center for Policy Analysis

Up And Down The Income Ladder

November 2, 2000

Politicians addicted to class warfare rhetoric use the term "the rich" as though it were some permanent economic class. But more moderate analysts point out that individuals move up and down the income ladder with startling frequency.

Are those individuals with higher incomes right after graduation from high school or college still on the top rung 10 or 20 years later? Anyone who has attended a school reunion knows that the end results are often surprising.

  • A Social Security-based study has documented that more than 70 percent of male workers move significant distances up or down the income ladder in a span of only 15 years.
  • Earnings histories tracked by Social Security show that less than 50 percent of the people on the top or bottom rung in any year are still on the same rung 10 to 15 years later.
  • On the bottom rung, the "stagnation rate" is only 35 percent.
  • Another study, using the National Longitudinal Survey of Youth, has revealed that 60 percent of the young people who start out working for minimum wages no longer work for such low wages two years later -- and only 15 percent have minimum-wage jobs three years later.

Some observers point out that many academics fail to appreciate the dynamics of economic mobility because they work in rigidly hierarchical university systems where promotion must be granted by one's seniors.

The evidence is overwhelming, however, that such immobility is the exception, not the rule.

Source: Bradley Schiller (American University School of Public Affairs), "Who Are the Rich?" Washington Times, November 2, 2000.

 

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