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The Ladder

A Blog from New America's Asset Building Program

How are Families Really Doing?

Published:  December 1, 2011

Two years after the official end of worst recession since the Great Depression, the economy is recovering but families are not. According to a flurry of new data, poverty and inequality are reaching historic highs and the current of economic mobility is flowing most forcefully down the economic ladder. 

For those of us who work to improve the conditions and opportunities of families lower on the income scale, this information isn't surprising, but the sustained attention is. When the annual Census poverty numbers were rescued from obscurity a couple of years ago when the release was moved from a Friday in August to a Tuesday in September, that seemed cause for celebration. But now that the Occupy movement is capturing national attention, the themes of their protest are assuming a relevance on a scale that has long been sought, but infrequently achieved.

With this attention, though, has come confusion and even disagreement about what all the numbers mean. A family’s proximity to the federal poverty line has historically been the arbiter of how they’re doing, but the shortcomings of this standard are widely recognized, including by the Census Bureau. This year, for the first time, they released a supplemental poverty measure to provide a modernized picture of what a family needs to get by. According to this metric, 49.1 million Americans were living in poverty in 2010, over 2.5 million more than by the historical measure. Despite the refinement, there are important ways that the new measure still falls short, such as failing to account for the level of savings a family has to draw on in the event of a financial emergency or to invest in the future. On the other end of the argument, there are others who perceive a comprehensive measure of well-being as needlessly complicated, and believe that the same determination could be made simply by establishing whether or not a family had access to basic household appliances.

In addition to measuring levels of material deprivation or economic security at the household level, there are also a set of approaches that look at trends and dynamics at the macro level. The inequality lens allows us to see how the benefits of productivity gains and economic growth are distributed, who’s getting ahead and who’s falling behind. The Congressional Budget Office reports the income gains made during times of economic growth were heavily concentrated at the top 1 percent (earning more than $505,000) of the distribution scale. Those households saw a 275% growth in income from 1979 to 2007 while the bottom quintile (earning less than $38,000) saw a mere 18% growth in income. The inequality picture is even more stark when applied to wealth. Over the recent decades, almost all of the growth in wealth has accrued to the top 10%, while the wealth owned by families the bottom 60% has remained stagnant. By 2007, households in the top 10% owned $120 for every $1 owned by families in the bottom 20%.

Wealth Inequality in the US

Yet, critiques of the inequality perspective would say that the distance between those at the bottom and those at the top matter less than the ability of those at the bottom to get ahead. Economic mobility and the underlying value that where you start out doesn’t have to dictate where end up, is the essence of the American Dream. But, even when looking through that lens, people appear "stuck" at the ends: 42% of kids born into the lowest income quintile stay in the bottom as adults and 39% of kids born into the highest income quintile stay in the top as adults.

In the end, though, evaluating these approaches is about more than just understanding how people are doing; it’s about advancing solutions to help them do better and assessing our progress along the way. To make sense of what this data tells us about how families are really doing post-recession and how we might design more effective public policies, the New America Foundation convened a panel of experts to weigh in with their take at an event called "Poverty, Inequality, Mobility, Oh My," which took place on November 22nd. 

Over the next few days, we will be releasing a series of interviews with each of the panelists to have a more in-depth conversation about the perspective that they highlighted. Stay tuned for upcoming interviews on economic security, poverty, income inequality, and economic mobility.


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