The U.S. National Bureau of Economic Research (NBER) found that California’s upward mobility has plunged to the point that over 50 percent of Millennial children will be poorer than their Baby-Boomer parents.
The NBER funded an intergenerational income study led by Stanford University’s Ray Chetty, and published in December 2016, titled: “The Fading American Dream: Trends In Absolute Income Mobility Since 1940.”
Famously defined by James Truslow Adams in his 1931 book The Epic of America, “The American Dream is that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement.”
Several prior studies had revealed that generations of Americans had much higher rates of income mobility than Europeans for the two centuries from the 1750s to the 1950s.
But Chetty found that the intergenerational odds of a 30-year old achieving the American Dream had fallen from 92 percent if born in the 1940s, to 79 percent for the 1950s, 62 percent for the 1960s, and 61 percent for the 1970s. For those born in the 1980s to Baby-Boomer parents, the odds of achieving the American Dream are just 50-50.
Chetty blamed the nation’s falling income mobility on the nation’s gross domestic product (GDP) growth falling relentlessly from a 2.5 percent growth rate per working-age family during from the 1940s to the 1970s; to a 1.5 percent growth rate per working-age family from the 1980s to the 2010s.
Chetty, as a Professor of Economics living in Silicon Valley, might have assumed that when he analyzed the data on a state-by-state basis, it would have been much easier for a Californian to achieve the American Dream.
But in an article titled “The Withering California Dream, by the Numbers,” Chetty found that 30-year old Californians were less likely in every decade to achieve the American Dream. Of those born in the 1980s to Baby-Boomer parents, a majority, or 51.2 percent, are expected to fail in achieving the America Dream.
Chetty commented that that probability of failure is understated, because he omitted the children of immigrants, due to an inability to document immigrant parents’ income. The U.S. Bureau of Labor Statistics reported that many U.S. jobs held by immigrants, especially those taken by illegal aliens, pay substantially lower wages than the wages paid to natural born citizens.
The Public Policy Institute of California estimates: “California is home to more than 10 million immigrants—about one in four of the foreign-born population nationwide. In 2015, the most current year of data, 27% of California’s population was foreign born, about twice the US percentage.”