Majority Think it Is Harder to Get Ahead Economically
Polls in CPA Letter Daily offer an insight to our readers’ opinions about topics taking place in today’s world.
On Jan. 24, CPA Letter Daily published the survey results from The Hill Poll: Most voters say path to economic top is steeper. We decided to ask our readers to weigh in too. More than 2,500 readers responded: What do you think? Is it harder or easier to move from one economic class to another than it used to be?
- Much harder – 57.01%
- Somewhat harder – 25.89%
- Stayed about the same – 8.86%
- Somewhat easier – 3.75%
- Much easier – 2.38%
- Not sure – 2.11%
- Much harder – 33%
- Somewhat harder – 33%
- Somewhat easier – 14%
- Stayed about the same – 7%
- Much easier – 7%
- Not sure – 6%
66% of The Hill’s respondents thought it was at least somewhat harder now to move from one economic class to another. A resounding 83% of CPA Letter Daily’s readers agreed.
Sorry, Economic Mobility Has Stayed About the Same
While it may seem like it’s harder, according to data from Pew’s Economic Mobility Project (May 2008), we may not be right. Relative economic mobility in the U.S. has remained stagnant for more than 20 years. There hasn’t been a significant increase or decrease in the rate of economic mobility. The project measured a group’s economic class from 1984 to 1994 and again from 1994 to 2004. Of those in the lowest economic bracket, more than half were likely to still be in the same class 10 years later. Of those who were able to move up, 10% moved to the middle, 7% to the upper-middle and only 4% reached the top economic class.
However, a more recent Pew study (Sept. 2011) found that a third of children raised middle class are now in a lower economic class as adults. Pew compared a person’s economic status in 1979 to the mid-2000s to see if they had changed classes. They defined the middle class in the 1979 study as having an income of $33,000 to $64,000, while the middle class delineation in the mid-2000s was $54,000 and $111,000. Almost one-third of those studied had dropped to lower class in the mid-2000s.
Maybe the next iteration of Pew’s Economic Mobility Project (2004-2014) will reflect our expected decrease in economic mobility.
How do we Ensure Upward Economic Mobility?
There are a lot of ideas about how the U.S. can ensure more people have the ability to move up through the economic classes. And much like ideas on how to spur the economy, there is no one single right answer. But here are some general consensus ideas:
Education. Providing access to postsecondary education can be a huge factor in upward mobility. Whether it’s a community college, four-year university or specialized technical training, education is a great pathway to increasing the opportunity for upward economic mobility. Scholarships, like those provided by the AICPA, state CPA societies and other organizations are a great way to ensure everyone has the chance to get a quality education.
Financial Literacy. Educating your children about proper money management probably isn’t going to be the key factor that makes that leap from middle-class to upper middle-class, but it certainly would contribute. Learning how to handle investment decisions, debt and money in general is critical to ensuring that your children will at least be as well off as you, if not better. 360 Degrees of Financial Literacy has some great resources to help people prepare for all stages of financial life.
Entrepreneurship. We’ve heard a lot about the impact that small business owners have on the economy already in this election cycle. What’s more important, though, is creating additional opportunities for entrepreneurs to start businesses. This creates opportunities for others as well, through the creation of new jobs and new clients for other small businesses. Programs like the AICPA’s Veteran Fast Launch Initiative provide the opportunity for many to successfully transition from one role to another and encourage entrepreneurship.
What are some other strategies you think the U.S. should be doing to ensure upward economic mobility?