The likelihood that young adults will earn more than their parents has been low in the recent decades. According to a recent study, researchers found that less than half of 30-year-olds earn more than their parents did when they were at the same age amid a widening wealth gap.
According to a research released Thursday by Stanford economist Raj Chetty and five colleagues, only half of the Americans born in 1984 earned more than their parents at the age of 30, as compared to 92 percent in 1940. The Wall Street Journal noted there are two reasons for the drop: income inequality has widened and the average annual economic growth has slowed since 1980.
It was further explained that when the economy has grown, fewer Americans have received enough income gains to overtake their parents. The average annual economic growth, on the other hand, was sluggish in the '80s, compared to the 35 years after World War II.
Anxieties about status and economic opportunity formed a backdrop to the 2016 election campaign, with many voters concerned that their children wouldn't fare as well as they had. Conversely, many younger voters worry that they won't do as well as their parents, largely because of sluggish income growth and higher costs for housing, health care and student debt.
Among the poorest 10 percent of Americans, 94 percent of those born in 1940 had surpassed their parents' income 30 years later. The statistics fell to 70 percent for those born in 1980 and who reached 30 years of age in 2010, Investing said.
The middle class suffered a sharper drop. Ninety-three percent of those born in 1940 into families with median household incomes, which are halfway between the top and bottom, had fared better than their parents by 1970. By 1980, only 45 percent of those born into the middle class did better than their parents 30 years later.
As for children born into the richest 10 percent in 1940, nearly 90 percent did better than their parents. That figure plunged to 33 percent in 1980, partly because it became harder for children of wealthy families to surpass their parents.
The study followed a separate research released this week by Thomas Piketty at the Paris School of Economics and two colleagues that documented worsening income inequality since 1980. That study found that Americans in the bottom half of the income scale have experienced stagnant income since 1980.
