Economic Research: How Increasing Income Inequality Is Dampening U.S. Economic Growth, And Possible Ways To Change The Tide
the past 30 years (27).
Not surprisingly, these differences persist into college and beyond. While there is a 45% chance that a child born into a poor family will remain there as an adult, chances of staying poor drops to 16% if that child finishes college (see chart 4). A child born into the bottom 20% will only have a 5% chance of reaching the top 20% of income earners as adults.
But that increases to 19% if they earn a college degree. Chart 4
For The Poor, Litthe Chance Of Breaking Into The Upper End Of The Income Range Without A College Degree
aVWithout a college degre eWith a college degre
— a =
= pak a o
= £ o oo Lak) = Cc a _— = fa o = a3
a oo
_ oa
am
Bottom 20% 20-39.9 4059.9 60-79.9 Top 20% Note: Calculations are based on the PSID, which compares chiddren’s adult income at
roughly age forty with that of their parents at about same age. Source: Haskins, Ron. “Education and Economic Mabilty" 2008.
© Standard & Poors 2014.
However, college graduation rates have stagnated for low-income students, in sharp contrast with strong gains for wealthy students. While college graduation rates increased by about 4 percentage points between those born in the early 1960s and those born in the early 1980s for the poorest households, the graduation rate for the wealthiest households increased by almost 20 percentage points over the same period (28). These trends likely feed into the income potential for kids as they grew older, with children of well-off families much more likely to stay well-off and the
children of poor families disproportionately likely to remain poor.
Given that education--particularly a college degree--is so important in a jobs market that increasingly demands a more educated workforce, these trends are disturbing. The findings suggest that last generation's inequalities will extend into
the next generation, with diminished opportunities for upward social mobility. Moreover, the U.S. is losing the
WWW.STANDARDANDPOORS.COM/RATINGSDIRECT AUGUST 5, 2014 11
1351366 | 302136118
HOUSE_OVERSIGHT_025773