“The American Dream is the belief that upward mobility is attainable for everyone through their own actions. This implies that growth will be continuous and widespread, two factors that have seemingly deteriorated in recent decades.”
–Marcus Lu, Financial Writer and Visual Capitalist for World Economic Forum
The Decline in Upward Income Mobility Is Responsible for the Death of the American Dream and the Rise in Homelessness
All across the United States of America, in the shadows of cities, in the corners of small towns, seeped into the soils of Indigenous reservations, and situated between the cracks of suburban sidewalks, homelessness exists.
It is not always in plain sight, hence the moniker Invisible People. But it is ever-present as a thread in our society, as common as it is unique.
As experts scramble to make sense of the alarming rise in its numbers and politicians claim to be helpless against the turmoil, the general public’s attitude is shifting toward short-term “solutions” and criminalization. These two propositions have historically caused more harm than good.
But, what good does it do to attempt to combat a national crisis if most people in positions of power fail to recognize its root causes? Instead, they choose to force-feed the masses stereotypical negative narratives long-debunked.
Advocates and fact-checkers know that a lack of affordable housing, unemployment, and poverty are the top three leading causes of homelessness. Since these are the most pressing issues, perhaps it would be best to address the underlying causes of each of these.
The Federal Reserve Bank of Minneapolis eloquently explains the cause of a lack of affordable housing in one brief but accurate quote. According to them, it all comes down to “too little income or too much regulation.”
In other words, wage stagnation, underemployment, and inadequate compensation are at the heart of every homeless story, even if other components are playing supporting roles in the background. This is further evidenced by the second and third-leading causes of homelessness – unemployment and poverty.
All three of the components fueling the homeless crisis find their roots in wealth distribution to some extent. Whether it is stagnant distribution, unequal distribution, uneven generational distribution, or something else, what we’re witnessing in real-time is this growing inequity that makes the American dream (one complete with a single detached dwelling and picket fence) unobtainable for most.
We’ve been through a lot as a nation in just our recent past. Indeed, we can lay some blame upon the pandemic, the recession, and the economic scars left by living in a state of perpetual war. But let’s go back in the timeline just a little bit further, say to the ’80s. This is the era most experts agree that homelessness exponentially and substantially increased. Here we find a less obvious culprit that was growing right on track with the homeless crisis. It is the national decline in income mobility.
What is Income Mobility?
Income mobility, alternatively referred to as economic mobility when factors other than income are also considered in the equation, is an individual’s ability to overcome generational economic hardship.
In layman’s terms, it measures how likely one would be to escape the poverty they were born into and improve their economic status. It also works the other way around on charts by measuring a wealthy individual’s likelihood to stoop beneath their parent’s income threshold. But in real life, the decline is notably only in upward income mobility, which is a root cause of poverty and subsequent homelessness.
While not as famous as the white picket fence symbolism, the ability to financially outearn and socially outpace one’s parents is largely considered part of the American dream we hold so dearly.
Pew Research recognizes and identifies a sharp decline in America’s upward income mobility beginning in 1980, precisely the year in which homelessness began dramatically increasing. Furthermore, this decline plays a massive part in making the United States the country that exhibits wealth inequality at the highest rate of all industrialized nations.
Before 1980, it was statistically more probable that an individual born into even the most crippling state of poverty could surpass their parents in income and overall wealth, climbing the social and economic ladder at the same time. So, what changed? And, more importantly, how do we fix it?
How Has Upward Income Mobility Been Declining for Decades with Little to No National Attention?
Jonathan Davis of the University of Chicago, who holds a BA in mathematics, economics, and statistics and a Ph.D. from the University of Chicago Harris School of Public Policy, produced a working paper on this subject in July of 2017.
His work was based on data collected through the National Longitudinal Surveys. These are comprehensive studies by the US Census Bureau of Labor Statistics and the US Department of Labor.
Each survey contains data representing thousands of individuals, and each study takes place over several decades. A careful review of this information revealed what Davis called “a sharp decline in intergenerational mobility” being evident for individuals who entered the labor force in 1980, the year that has been earmarked by economists as “the inflection point of inequality.”
These findings are published in multiple academic journals but have largely skirted the mainstream media.
One can only speculate why national and international news sources aren’t keen on reporting the fact that it is nearly impossible to surpass whatever poverty you were born into in modern times. This is true even with the prospect of advanced degrees and the popularity of social media as a purportedly rising source of wealth. What is clear is that data strongly counters the “bootstraps narrative” we all too often hear associated with homelessness.
It would be nice to believe that homeless people could dig themselves out of the ditch that is homelessness if they just worked hard enough. However, the data overwhelmingly confirms that this simply isn’t true.
The average person born into poverty or middle-income status has very little control over whether they will rise to the top from the bottom. Those that do are most certainly the exception, not the rule.
As a point of reference, American laborers born into the middle class in 1940 had a 93% chance of outpacing their parent’s wealth. By 1980, that number had dipped down to 45%, continuing this downward spiral with each passing year.
Each time you witness a tent-laden freeway or a new homeless shelter in the community already at capacity, know that this decline is a massive part of the overarching problem. The dream has already died, and those bootstraps are just a distraction.
How You Can Help
The World Economic Forum identifies two critical contributing factors to the drastic decline in upward income mobility. They are stagnant wages and income inequality.
Contact your legislators. Ask them their plan to resolve these rarely spoken of underlying causes of poverty and its heartbreaking after effect, which is homelessness.