Nothing is more central to the American dream than the idea of economic mobility — the ability to move up the economic ladder. This week, the Pew Economic Mobility Project, a non-profit, non-partisan research organization, released a report demonstrating that the American dream is alive and well, although it is much stronger in some states than in others.
Based on the Pew report, 24/7 Wall St. identified the nine sta
tes that are have the lowest economic mobility scores. Residents of these states were less likely to move to a higher income bracket and much more likely to drop to a lower one.
To determine economic mobility, Pew looked at the prime earnings period for a large group of residents in each state, specifically, the 10-year period between an individual’s late thirties and late forties. Pew used three economic mobility measures: absolute mobility, which measures an individual’s wage increase over time, and relative downward or upward mobility, which measure a person’s movement up and down the earnings ladder over time relative to their peers. According to the report, nine states exhibited worse than average scores in at least two of the three measures.
Nationwide, absolute mobility, increased 17%. In many of worst-off states, it was as low as 12%. Nationally, 34% of those studied went up the earnings ladder, while 28% fell down the ladder. In the worst-off states, as little as 27% were able to move up the income ladder, while as much as 40% slid down it.
In an interview with 24/7 Wall St., Diana Elliott, research manager of the economic mobility project, explained that finding the reasons behind the different scores in economic mobility among states was beyond the scope of the study. But “we do know, based on our national research, that there are particular drivers of mobility,” said Elliott.
One of the most important drivers is education, Erin Currier, project manager, explained. “Educational attainment is an extremely powerful driver of upward mobility from the bottom, and protects from downward mobility from the top and middle.” According to Currier, a four-year college degree “quadruples a person’s chances of making it all the way to the top of the income ladder if they start at the bottom.”
24/7 Wall St. reviewed high school graduation and college graduation rates to reflect the impact of education on professional success and income. All of the worst-off states have a relatively low portion of adults 25 or older with a high school diploma. Five of the six states with the lowest graduation rates among all 50 states are on this list.
According to Currier, poverty, particularly childhood poverty, has a major effect on a person’s mobility throughout life on a national level. “Growing up in a high-poverty neighborhood during childhood increases a person’s chances of downward mobility by 52 percent,” Currier said.
A review of regional data suggests that childhood poverty influences economic mobility by state as well. All nine of the states with the worst economic mobility were in the top third for poverty, and six were in the top 10. Eight of the 10 also had among the lowest median incomes in the country, including Mississippi, which has the lowest in the United States.
A final factor that appeared to have a strong correlation to economic mobility was labor force participation rate. The labor force rate reflects the total number of people working or actively seeking work. While the authors of the study did not discuss this trend, it suggests that a relatively high percentage of eligible workers are unable to work, possibly because jobs are inadequate or unavailable.
All but one of the states on the list were among the worst third for labor participation, and six of the nine were among the worst 10. Alabama, for example, has the second-worst labor participation rate in the country, with just 57.2% of eligible workers actively employed or searching for employment.
24/7 Wall St. examined Pew’s report, the Economic Mobility Project, which determines upward mobility, downward mobility and absolute mobility by state. Any state that was worse than the national average, after accounting for margin of error, in two of the three categories, made it on our list. 24/7 Wall St. also examined the percentage of 25-year-olds with high school and college educations, poverty rates, violent crime and median income from the Census Bureau. We also considered unemployment rates and labor force participation, provided by the Bureau of Labor Statistics.
Read more at 24/7 Wall St.