'Upward Mobility' in Real Decline, Studies Charge

Article excerpt

Many older Americans were raised on Horatio Alger novels, the stories of poor boys using their wits and pluck to rise from rags to riches.

Success stories still happen, of course. Nowadays girls also rise from poverty to prosperity.

But for most of the poor, the United States is no longer the land of opportunity. Economic research in the past decade has found that upward mobility has faded; most of the children of rich parents stay rich and the children of the poor remain poor. "Economists in the past have underestimated the barriers to the children of the poor getting ahead," says Samuel Bowles, an economist at the Santa Fe Institute.

Actually, it is about two or three times as difficult for children of poor families to rise above their economic circumstances as economists reckoned in the 1970s and 1980s, he adds. "There was a bit of wishful thinking about equality of opportunity."

Further, the children of rich parents very seldom slide into the bottom half of the income ladder. Most retain at least a major chunk of their inherited wealth.

In general, Americans still believe their economic/social system is fair. Surveys show that both rich and poor think that economic success in life depends on hard work and willingness to take risks.

Certainly such attitudes can't hurt an individual's life prospects. But "there is a very substantial amount of blocked opportunity for people at the bottom," says Mr. Bowles. Often the poor are too fatalistic, lacking confidence in their ability to rise out of poverty..

The playing field is especially uneven for blacks, who face racial prejudice at work as well as educational and social difficulties. on top of that, Bowles finds that well-to-do blacks are less likely to transmit their wealth-building skills to their offspring than rich whites.

Bhash Mazumder, a Federal Reserve Bank of Chicago economist, calculates that on average fully 60 percent of the income gap between any two people in one generation persists into the next generation.

In the 1980s, studies found that only 20 percent of the income gap persisted. But improvements in econometrics show a gloomier picture - that poverty may well endure over several generations.

"For people to say we are a very mobile society, people will have to confront this evidence," says Mr. Mazumder.

All this is relevant to President Bush's economic program. …