The American Dream, Quantified at Last

David Leonhardt:

The American Dream, Quantified at Last: …Chetty, a Stanford professor, and his colleagues …. constructed a data set that shows the percentage of American children who earn more money — and less money — than their parents earned at the same age.

The index is deeply alarming. It’s a portrait of an economy that disappoints a huge number of people who have heard that they live in a country where life gets better, only to experience something quite different. …

It begins with children who were born in 1940… The researchers went into the project assuming that most of these children had earned more than their parents — but were surprised to learn that nearly all of them had… About 92 percent of 1940 babies had higher pretax household earnings at age 30 than their parents had at the same age. (The results were similar at older ages and for post-tax earnings.)

The few 1940 children who earned less than their parents were also, for the most part, doing just fine. They were generally earning less because they had grown up rich…

For children born in 1950, the likelihood of achieving the American Dream had begun to fall but remained very high. …

For babies born in 1980 — today’s 36-year-olds — the index of the American dream has fallen to 50 percent: Only half of them make as much money as their parents did. In the industrial Midwestern states that effectively elected Donald Trump, the share was once higher than the national average. Now, it is a few percentage points lower. There, going backward is the norm. …

It goes on to discuss how the trend might be reversed.