Published February 06, 2012
In recent speeches, President Obama and his advisers have laid out a clear election-year theme -- the poor and middle classes are losing ground and the suggestion is that the rich are to blame.
And there is nothing subtle about some of the administration's arguments: "The middle class is getting screwed," Vice President Joe Biden says bluntly.
And Obama said in a recent speech in Kansas, "Over the last few decades, the rungs on the ladder of opportunity have grown farther and farther apart, and the middle class has shrunk."
The suggestion is that everyone but the rich is losing ground, but some analysts say that's not true. One who supports Obama writes that the argument that economic mobility is in decline is "deceitful" and "dishonest."
"You kind of routinely hear year after year that this is the first generation that is going to do worse than their parents," says Scott Winship, a researcher on income mobility at the Brookings Institution. "And I don’t think there's any data so far that supports that that's ever actually been true."
There is no dispute that the wealthiest 1 percent of Americans have enjoyed stunning gains in income over recent decades. And the latest census statistics on household incomes show that the average American family watched its earnings shrink in the last few years to levels not seen since 1996, when adjusted for inflation.
But there is no evidence that the gains made by the rich came at the expense of middle class.
"You can argue that mobility is not as high as it ought to be, and I would actually make that argument myself," says Winship. "But what the bulk of the evidence shows is that it (mobility) is not declining."
Nevertheless, administration officials such as Alan Krueger, head of the Council of Economic Advisers, push the point even further.
"It is hard not to bemoan the fact," he says, "that because of rising inequality the happenstance of having been born to poor parents makes it harder to climb the ladder of economic success."
Much of the research, however, flatly contradicts that.
"If you are born in the lowest 20 percent, the likelihood is you're not gonna end up in the lowest 20%," says Jim Kessler of the moderate think tank Third Way.
And Winship says, "the chances of starting out at the bottom and ending up in the middle class end up being something like 55 percent."
Research from several Federal Reserve Banks and think tanks all agree on that point.
A Pew Foundation study looked at more than three decades and found that over any 10year period, "Americans are much more likely to experience a large income gain than large income drops."
It also found that "the American economy continues to promote upward absolute mobility. ... Income gains over time outnumber income losses, and this is as true today as it was in the past."
The administration depicts income levels as rigid and talks as if the same people are stuck at the same levels.
In fact, one study after another shows people are constantly moving up and down the income ladder, much like an escalator with some people going up and some going down.
The American Enterprise Institute looked at Federal Reserve data from 2001 to 2007, which shows that 44 percent of those in the lowest 20 percent of incomes moved up to higher income levels, while 34 percent of those in the highest 20 percent moved down.
Other studies have found the same.
"There's a lot of churning through the economic ladder of success," says Paul Ryan, R-WI, chairman of the House Budget Committee. "We are not a system where people are fixed in a certain category of income. People move all the time."
The distance between those near the bottom and very top is enormous to be sure. But, except in periods of recession, millions toward the lower end have always been able to move up, no matter how well the rich were doing.
The U.S. places great value on equality of opportunity, not on equality of incomes. And that, say all the researchers, is the core of the American dream -- that if you work hard, you have a chance to better yourself and your family.