The authors of the recently released study, “Downward Mobility from the Middle Class: Waking up from the American Dream” challenge the widely accepted idea that the economy is improving to the point where the next generation of the world’s population has a high chance of living better than their parents. This may be, at least in part, due to decisions made by parents.
- “Downward mobility” is the technical term describing the act of a person moving from one economic class down to a lower class.
- The “middle economic class” is defined as being in the 30th to 70th percentile in economic prosperity. Obviously, the middle class encompasses a large number of people.
This study focused on those who fell from the middle class to the lower economic class — often described as poverty. The problem is this: once a person falls to the lower classes, moving back up is difficult and becomes increasingly difficult for ensuing generations. Certain life choices as well as characteristics out of a person’s control are shown to have an effect on their ability to hold their economic class.
Based on this study, what are some choices that help both you and your children?
Get an Education
According to the study, women who were raised in a middle class household and only received a high school education are 14% to 16% more likely to live their adult lives in the lower economic class; men are 7% to 15% more likely. Even some college education increases a person’s chances of remaining in the middle class.
Get Married and Stay Married
Women who are divorced, widowed, or separated are 31% to 36% more likely to make a downward move; never married women are 16% to 19%. Men who were once married are 13% more likely to live in a lower economic class, while men who never marry are 6% to 10% more likely.
What are some of the factors you can’t (and probably don’t want to) control?
If you are an African American male you are 38% more likely to fall down a class compared with 21% of Caucasian men. For women, race was not found to be a factor. Thirty percent of white women, but only 21% of white men can expect downward mobility. Gender was not a factor for African Americans.
The most significant factors?
For women, divorce is the most detrimental economic event that could cause you to move down a class; if you’re a man, stay away from drugs … heroin use was the single biggest factor that moved men down to the lower class.
How Will Your Children be Affected?
Children in poverty tend to stay in poverty as adults. The cliché, “money doesn’t buy happiness” may be true, but reality is this: middle class households have more opportunities to prosper than do lower class families who have difficulty, beginning with baby costs, paying for activities which could help their children toward upward mobility.
Whereas some factors which create downward mobility from the middle class are out of your control, this study does give credibility to what most of us already know: life choices can have a profound effect not only on you but also on your children.
According to the study, the best things you can do for the future of your children are 1) get an education and 2) maintain a stable marriage.
Readers: Just digging a bit here … the results of this study seem rational, yet somewhat sterile. What do YOU think are the most important things you can do to help your children toward a stable financial future?