The Great Income-Mobility Debate Analysts Study the Statistics to Learn If the Poor Become Richer in the 1980s

Article excerpt

OF the poorest one-fifth of Americans in 1979, 1 in 7 had moved into the richest fifth 10 years later.

Among the richest 20 percent in 1979, more than a one-third had fallen out of that group a decade later.

So says a study released by the United States Treasury early this month, showing substantial movement up and down the income ladder.

But another study out this month shows a different, more static, picture. According to the Urban Institute, a think-tank, only 1 in 25 of the poorest in 1977 joined the ranks of the richest by 1987 - moving from the bottom fifth to the top fifth.

The difference matters because it is part of a much larger argument about the growing distance between rich and poor in the 1980s and how much opportunity the American economy offers to have-nots.

On one side are conservatives who argue that the "supply-side" economics of the Reagan years brought prosperity to all Americans. On the other side are liberals who claim that "Reaganomics" benefitted only the rich, and that the US needs more social welfare programs to help the poor.

One point of consensus is that inequality between incomes grew during the late 1970s and 1980s. The rich grew richer. That the poor grew poorer is widely held and quite possibly true - but not at all certain.

The debate opens simply enough. Between 1979 and 1989, the average family income rose 7.2 percent, using the latest methods for canceling out inflation. But the average income in the bottom fifth dropped by 2.1 percent while the top fifth rose 13.9 percent.

So the rich grew richer, the poor slightly poorer, and the middle held about even.

But wait, say conservatives, defending the Reagan era against charges of unfairness: those groups did not contain the same people from year to year. When individual families are tracked through the years, the poor ones are not getting poorer at all. And some of those ever-richer rich are newcomers, wearing silk stockings for the first time.

The conservatives are "absolutely correct," says Isabel Sawhill, who is not one. She is a senior fellow at the Urban Institute who co-authored the recent report on income mobility.

In fact, when families in the poorest fifth in 1977 are followed through the decade, their incomes grew an average of 77 percent to the 1991 equivalent of $27,998. That whopping progress far surpasses the conservative 5 percent improvement for the families in the top fifth in 1977.

But wait, says Dr. Sawhill. Some of those poor in 1977 were farmers and business owners just having a bad year. …