Economic Mobility in Illinois

The Pew Center on the States recently released an analysis showing how Americans move up and down the earnings ladder in each state. Nationwide, 34% of Americans experienced upward mobility and 28% experienced downward mobility in the years studied between 1978 and 1997 and again between 1988 and 2007.

The study focused on Americans in their prime working years and examined earnings averaged between ages 35 and 39 and later for those same adults when they were between ages 45 and 49.

Relative upward and downward mobility measures people’s rank on the earnings ladder relative to their peers. In Illinois, relative upward mobility was 36%, which was only 2 percentage points higher than the national average. Relative downward mobility, at 28%, mirrored the national average.

Nationwide, incomes increased 17% in the years studied, which is known as absolute mobility. In Illinois, absolute mobility was only slightly higher at 19% growth. To see more about economic mobility in Illinois and other states, check out Pew’s interactive tool online.

Illinois must do better on all measures: increasing relative upward mobility and absolute mobility and decreasing relative downward mobility. However, economic mobility is not just about income levels. We need to looked deeper at asset accumulation an intergeneraltional wealth. Efforts should focus particularly on populations that lack access to the tools that help people build wealth and financial security

Data shows that many Americans remain in the income category into which they were born. For example, 42% of Americans raised in the lowest income levels stay there in adulthood. A child starting out in the bottom fifth of incomes has only a 1 in 3 chance of ending up solidly in the middle class.

In essence, intergenerational poverty has a direct impact on economic mobility. Because of the racial wealth gap, minority children are most affected. Two-thirds of African American children experience neighborhood poverty rates at a level that only 6% of white children see. Furthermore, 45% of African American children whose parents are considered middle-income will end up falling into the bottom income bracket sometime during adulthood; this number is only 16% for whites.

Policies must be pursued to help increase assets and economic mobility among poor populations. They include:

• Promoting savings and access to safe loans
• Increasing access to post-secondary education through Children’s Savings Accounts, which has been shown to increase future earnings and access to savings tools
• Ensuring a strong government safety net so vulnerable populations are not pushed further into poverty