We all know about the American Dream, right? Start out poor, work hard, become rich. But Diana Elliott, with the Pew Charitable Trust's Economic Mobility Project, says there's a wide gulf between The American Dream Idea and The American Dream Reality.
"Many Americans believe that it’s possible to start poor and become wealthy over the course of a lifetime," says Elliott. "But in fact, when we look at the data, we see that just 4% of Americans start at the bottom and make it all the way to the top in that next generation."
So how did that 4% do it? Well, there's no hard and fast rule that says 'have these qualities, will succeed.' But a new Pew study called Moving On Up looked at data from over 700 adults, and it shows that folks who managed to climb up at least one rung on the economic ladder shared these characteristics:
1. College
According to the Pew report, college graduates are more than 5 times more likely to leave the bottom quintile than those who do not have a college degree.
2. Dual-earner family
Families that bring in two paychecks are nearly 3.5 times more likely to leave the bottom rung on the economic ladder than those who live in single-earner families.
3. Race
This one is a little trickier to quantify. Turns out that whites were 2 times more likely than blacks to leave the bottom rung of the economic ladder, but the higher up people get on the income ladder, the less race matters.
4. Savings
We know that movement up the income ladder requires a higher income, but the Pew report also shows a strong connection between an increase in income and an increase is wealth and savings. Specifically, "those who left the bottom of the income ladder had 6 times higher median liquid savings, 8 times higher median wealth, and 21 times higher median home equity" than those who stayed at the bottom rung of the economic ladder.
So that's the hard data. Now let's meet a family that's managed to climb up one rung on the economic ladder, but still has a long way to go before they're on solid financial footing.
The Blackman family just bought their new house in Battle Creek about three months ago. Nine-year old Analieh thinks the house is great and "better than [her parents'] apartment because there wasn’t a lot of space." Now she gets to play outside in their nice-sized backyard, and there's a big table in the living room for the whole family to hang out around. But more importantly, having a home ups the Blackman's chances of climbing out of poverty, according to the Pew Report.
So that's a plus.
I first interviewed Analieh’s mom, 30-year old Tiffany Blackman, a few years ago for the public radio show Marketplace. Back then she and her husband only had three kids. Her husband was out of work, and she was making $22,000 a year as a volunteer coordinator at a local food bank. Since then, a lot has changed. She still works at the food bank, but now makes $14,000 more a year, which she's "really excited about."
She also earned her associate’s degree in business management, has a new baby (that brings the grand total up to four children), and bought the new house.
Those changes have helped catapult Blackman and her family from the bottom fifth of the economic ladder up one rung. But it’s not all roses:
"You would think that making $14,000 more a year is excellent and awesome and it’s gonna take you to some new level that you’ve never been to. For me reality really is that it’s not very different."
For one thing she gets less help from the government now that she earns more money. She and her family used to get $550 a month for food stamps, now they get $130 a month. And her husband's still out of work, so attaining that 'dual-earner' family status that the Pew Report says is so crucial is a long way off.
She knows it’ll take a while to climb out of the poverty she inherited from her parents, grandparents and great grandparents. But she’s not giving up. Blackman continues to save and she’s on her way to getting her bachelor’s degree. Two things that – according to Pew – could help her create an American Dream success story for her and her family.
CORRECTION: We initially wrote that the Economic Mobility Project is a part of the Pew Research Center. It is, in fact, housed within the Pew Charitable Trusts. The text has been updated to reflect this.
