Climbing Income Ladder Easier in New Jersey Than Texas, Pew Says

Thursday, 10 May 2012 09:48 AM

 

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A week after the Occupy Wall Street movement protested economic inequality in May Day rallies across the U.S., a study found that the ability to become rich may depend on where you live.

Residents of three East Coast states — Maryland, New Jersey and New York — were the most likely to move up the earnings ladder from the bottom and the least likely to fall from the top, according to a study released by Pew Charitable Trusts, a nonpartisan research organization based in Washington. Louisiana, Oklahoma and South Carolina had the worst prospects for so-called economic mobility.

“This shows that the American dream and equality of opportunity differ from state to state,” Diana Elliot, research manager at Pew’s Economic Mobility Project, said in an interview. “This is yet another indicator that leaders and policy makers have at their disposal to understand how their state measures up.”

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

The report, the first gauge of economic mobility at the state level, adds context to the debate over America’s image as a land of opportunity amid growing income inequality. It follows past Pew studies showing that Americans trail their Canadian and European counterparts in their ability to improve their financial standing.

Census Data

Pew used confidential data from the Census Bureau and Social Security Administration on the inflation-adjusted earnings of more than 60,000 people born between 1943 and 1958. The analysis then compared participants’ average earnings over a five-year period in their 30s to those in their 40s.

The report measured how states’ residents stacked up against the national average on so-called absolute mobility, which compares earnings growth over time, and relative mobility, which examines whether people’s position along the income spectrum rose or fell compared with their peers.

Maryland, New Jersey and New York scored above-average on all three measures, followed by Connecticut, Massachusetts, Pennsylvania, Michigan and Utah, which did so on two. Louisiana, Oklahoma and South Carolina scored the worst on all three gauges, followed by Alabama, Florida, Kentucky, Mississippi, North Carolina and Texas.

Determining why states or regions performed the way they did was beyond the study’s scope, said Elliot, who worked on the report with Erin Currier, who oversees the Economic Mobility Project. Important drivers of economic mobility at the national level include educational attainment, savings and assets, and neighborhood poverty during childhood, she said.

On an individual level, people who moved from the state in which they were born had better-than-average financial mobility, the study found. More than two-thirds of Americans remain in their birth states throughout their lives, Elliott said.

The most recent data the study used was from 2007, so it’s unclear what impact the recession that began in December of that year may have had since, Elliot said.

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

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