Income Trends 6: Can People Reverse the Income Gap

This concludes our series examining economic trends widening the income gap in America

One of the issues Pulling Apart a State-by-State Analysis on Income Trends asks and answers the question “Do Low-Income Families Move Quickly up the Economic Ladder?”  The question resonates. If you cannot change the direction and reverse the gap, the world looks pretty dismal. If, however, you can move up the economic ladder then hope can stimulate change.

Temporary Low-Income Situations

The study reviews how income gaps have occurred in the last 30 years and increased significantly in the past 10 years. The researchers then give hope:

Short-term Mobility versus Long-term Mobility

• “Some families, however, have low incomes for only a few years and quickly move into the middle class.
  • For example, the parents of a young child may be working part time while finishing college. The family’s income might be very low for a few years,
  • After both parents graduate from college and obtain well paying jobs, the family’s income could increase substantially.”
• “Most low-income families have low incomes for many years.
  • In the short term, workers in the bottom fifth of the income distribution experience very little income mobility.
  • In the early 1990s, 75% of individuals who were in the bottom fifth in year one were still in the bottom fifth the next year.

Mobility Improves Somewhat Longer Period of Time

• During the 1970s-1990s, about half of the individuals who started in the bottom fifth had moved up the income ladder after ten years.
  • However, the rest of the individuals remained in the bottom fifth
  • Half of those who did move up the income ladder only rose to the second-lowest quintile
• Faster movement up the economic ladder could offset the problems of greater income inequality
• Studies show that the income mobility of black families is half that of white families

Concluding Thought

We must reverse income gaps. Paying living wages encourages people to work. Higher wages gives people hope they can improve life. They believe they can achieve the American Dream.

Monday we encourage you to stop saying stupid things when looking for a job