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35 Years of a Hollowed Middle Class From the Children's Perspective

Derek Thompson
Oct 7 2011, 9:40 AM ET

The Hamilton Project is doing some of the best work out there about families and inequality. This is the group that showed that men's real wages [ http://www.hamiltonproject.org/papers/have_earnings_actually_declined/ ] have fallen to levels unheard of since the 1950s, while women's remarkable education surge [ http://www.hamiltonproject.org/papers/women_in_the_workforce_is_wage_stagnation_catching_up_to_them_too/ ] has helped bolster the incomes of dual-earner families. This morning, they shared with The Atlantic a soon-to-be-published study looking at the question of family earnings from a new perspective: children.

"Think of lining up every single child in the country by their family's earnings and look at the 50th percentile. That child is being raised in family that has seen no income growth in the last 35 years. And every child behind him has seen income declines," said Michael Greenstone, director of the Hamilton Project.

That striking statement can be summed up in this graph that shows real family earnings falling by more than a fifth for families in the 15th percentile, even as family fortunes have nearly doubled for the 99th percentile since 1975.



This isn't just a story about parents' falling fortunes. It is, in fact, all about the kids. "Our parents' education levels and employment situation have implications that extend far into adulthood," Greenstone and Adam Looney write in a report [(there now) full report http://www.hamiltonproject.org/files/downloads_and_links/100711_jobs_greenstone_looney.pdf , via introductory article http://www.hamiltonproject.org/papers/what_is_happening_to_americas_children_a_look_at_the_widening_opportun/ ] shared exclusively with The Atlantic that will go live on the Hamilton Project [ http://www.hamiltonproject.org/ ] site later today. For example, the best indicator for whether a teenager goes on to college is that his parents went to college:

Research has shown that children whose parent(s) suffered a job loss due to their firm closing are more likely to be unemployed and receive social assistance during their lifetime, and less likely to complete high school and attend college ... What is more, evidence suggests the importance of family background and community influences on the future earnings and opportunities of children has been increasing since the 1970s.

Real family earnings for the typical child have been flat since 1975, after rising during the economic expansions of the 1990s and collapsing in the recession. In 2010, the typical child lived in a family earning about $45,750 per year, down 7 percent from 1975 after adjusting for inflation.

One surprising figure for this stagnation: more single-parent households.The number of children living in single-parent or unmarried families has nearly tripled in four decades, from 12 percent in 1968 to 30 percent today. Despite higher earnings from two-parent/dual-earner households over that period, "those gains have been offset because fewer children benefit from the earnings of both parents," the authors write.

Copyright © 2011 by The Atlantic Monthly Group

http://www.theatlantic.com/business/archive/2011/10/35-years-of-a-hollowed-middle-class-from-the-childrens-perspective/246326/ [with comments]

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