Wednesday, May 12, 2010

The Economist gets the scoop on rising U.S. inequality

If any of this is news to you, it's probably because you only read The Economist. I've distilled the relevant parts:


In a new poll for The Economist by YouGov, 36% of respondents said they had less opportunity than their parents did, compared with 39% who thought they had more. Half thought the next generation would have a lower standard of living, double the share that thought living standards would rise.

  • Between 1947 and 1973, the typical American family's income roughly doubled in real terms. Between 1973 and 2007, however, it grew by only 22%—and this thanks to the rise of two-worker households. In 2004 men in their 30s earned 12% less in real terms than their fathers did at a similar age.
  • Compared with people in other rich countries, Americans tend to accept relatively high levels of income inequality because they believe they may move up over time. The evidence is that America does offer opportunity; but not nearly as much as its citizens believe.
  • Parental income is a better predictor of a child's future in America than in much of Europe, implying that social mobility is less powerful.
  • More than 40% of those Americans born in the bottom quintile remain stuck there as adults.
  • Ms Sawhill and Mr Haskins argue for a drastic shift in federal priorities: rather than pay for the consumption of the old, America should invest in the productivity of the young.


The American dream is simple: work hard and move up. As the country emerges from recession, the reality looks ever more complicated

April 15, 2010 | The Economist

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