The U.S. Treasury Dept. has released a study on the income mobility of U.S. taxpayers between 1996 and 2005, and found evidence of upward mobility even as the gap between incomes at the upper and lower ends of the scale has grown.
Nearly 58 percent of households in the lowest income quintile in 1996 had moved to a higher quintile by 2005. While 29 percent moved up to the second quintile, the same percentage moved up at least two quintiles, and about 5 percent moved all the way to the top quintile. The study also found that about 55 percent of taxpayers moved to a different income quintile between 1996 and 2005.
Middle-income taxpayers also did well. A much larger portion moved up to a higher-income quintile than dropped to a lower quintile. About one-third of the taxpayers in the middle-income quintile in 1996 were still in the middle quintile in 2005.
Among those with the highest incomes in 1996 - the top 1/100 of 1 percent - only 25 percent remained in the group in 2005. The median real income of these taxpayers declined over the study period.
The report also found that the degree of mobility among income groups was unchanged over the prior decade, between 1987 and 1996. To the extent that increasing income inequality widened income gaps, this was offset by increased absolute income mobility so that relative income mobility has neither increased nor decreased over the past 20 years.
However, other studies by the Pew Charitable Trusts found evidence of downward mobility and racial disparities. According to one of Pew's studies, 45 percent of African American children whose families earned $55,000 in inflation-adjusted dollars in 1968 grew up to be in the lowest fifth of earners with only $23,100 in median family income. Only 16 percent of whites experienced similar downward mobility. The study found that while two-thirds of American families are earning more than their parents did a generation ago, their likelihood of moving up or down the economic ladder still depends in large measure on their parents' position.
