Steven Mahoney: The American Dream is statistically dead

Single_moms_business_deskIf, like many Americans, your American dream is to build a better life for your children, you might be better off moving to Denmark, Norway, Finland, or Canada.

An article by Miles Corak for Pathways magazine analyzes vast amounts of data surrounding intergenerational earnings mobility, or the percentage change in child earnings for each percentage change in parental earnings.

In the U.S., 40 to 50 percent of income inequality is passed on to children through generations. This is closer to countries like Peru, South Africa, China, and Brazil where 50 to 60 percent of income inequality is passed on generationally. On the other end of the spectrum is Denmark, Norway, Finland and Canada, where less than 20 percent of inequality is passed down generationally.

ladderThis may come to a surprise to many Americans, especially those who believe the American Dream is still intact. Corak finds that money isn’t the only thing that matters for increasing intergenerational earnings mobility. This is a better system, Corak said, because children need more than just money to flourish. In a high-mobility country like Canada, a much higher percentage of parents read to their children on a daily basis regardless of parental education level.

In the United States, a higher percentage of mothers are in poor health. Why? We have expensive healthcare and no federal paid sick leave policy. A higher percentage of mothers are forced to work full-time jobs to make ends meet. That’s not the case with countries with higher economic mobility. The United States also has more children born to teen moms, and less children who live with both biological parents.


Corak says that there are three takeaway from this information: stable and secure families are central to childhood development and must be promoted, work-family balance needs to shift in favor of families, and the playing field needs to open up to the disadvantaged early on because it’s more difficult to create opportunity after the fact.




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