Americans Have a 1 in 9 Chance of Making It into the 1% -- Staying There Is the Problem

NEW YORK (MainStreet) — If you think it’s impossible to get into the top 1% of income earners in the United States, think again.

According to new research released by Washington University in St. Louis and Cornell University, there is actually a one in nine chance that a typical American citizen will at some point in his or her lifetime make it into the top percentage of income earners in the nation. The caveat is this: becoming part of the nation’s most affluent will last for only a limited time, with very few getting to remain among the wealthy elite for the long term.

That’s not all.

Researchers also found that non-white workers face the greatest odds in breaking into the top percentile of income earners.

The study -- which was conducted by Mark Rank, the Herbert S. Hadley Professor of Social Welfare at the Brown School at Washington University, and Tom Hirschl, professor of development sociology at Cornell -- was published at the end of January in the journal PLOS One.

Rank and Hirschl’s recent research builds upon the findings presented in their book Chasing the American Dream: Understanding What Shapes Our Fortunes (Oxford University Press, 2014), which offered an in-depth look at social mobility for lower income Americans.

For their latest study, Rank and Hirschl have shifted their focus to social mobility at the top end of the income spectrum. To accomplish this, the duo utilized a new “life course” methodology. Specifically, they relied on data collected regularly since 1968 as part of the University of Michigan’s Panel Study of Income Dynamics. This life-course approach analyzed thousands of people ages 25 to 60, including an examination of a large amount of their work lives.

Some of the results of the study have been rather unexpected.

In particular, the most remarkable finding was that nearly 70% of the working population in the United States will experience at least one year in the top 20% of income earners. And overall, more than half (53%) will have at least one year among the top 10%. Additionally, just over 11% will spend at least one year in the top 1% of income earners.

Though these findings are evidence that there is much more fluidity among the ranks of America’s wealthiest than previously thought, the researchers also discovered that only a very slim minority who break into the income elite actually stay there for a long time. For instance, while 70% of the working population may break into the top 20% of the income spectrum, barely 20% remain there for a consecutive decade or more. Meanwhile, though one in nine Americans may at some time in their careers make it into the top 1% of income earners, fewer than one in 160 (or 0.6%) will remain there for ten years or more.

And people who are closer to the top in terms of income--say those who are middle- or upper middle class as opposed to working class--are more much likely to make it into the wealthy elite than those born in or who are closer to the bottom.

“Rather than static groups that experience continual high levels of economic attainment, there would appear to be more movement into and out of these income levels,” the study notes.

Why do so many people who make it into the wealthy elite backslide?

“I would venture to guess that there are a wide variety of reasons for the fluidity we see at the top," says Rank. “These might include…job loss, cut wages, divorce and having children.”

Rank and his colleague also believe this generally high level of turnover among the top ranks of income earners in the U.S. can work to buffer economic inequality in the country. And while this surprising economic fluidity reflects more widespread opportunity for top-level earners, it also creates a genuine insecurity for those once they reach that high end of the income spectrum.

Additionally, while there is opportunity for social mobility than previously thought, Rank and Hirschl uncovered specific indicators for being able to break into the top tier of income earners; these included being educated, being married and being white.

“It would be misguided to presume that top-level income attainment is solely a function of hard work, diligence and equality of opportunity,” Rank and Hirschl note in the article. “A more nuanced interpretation includes the proposition that access to top-level income is influenced by historic patterns of race and class inequality.”

However, Rank did tell MainStreet he thinks there are factors that could help level the playing field.

“Reducing some of these differences would be important,” said Rank. “One important factor is the differences in quality of education that whites and non-whites receive, particularly at the K-12 level. In addition…making college education more affordable for those with less resources would also be helpful.”

--Written by Laura Kiesel for MainStreet

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