The allure of the American dream is the promise of equal opportunity, which allows a person achieve any goal. This means economic opportunity and mobility to any American, and especially to new generations. While debate rages on about just how widespread the experience of the American dream is, research certainly indicates it is not uniform across the country.
While opportunities and upward income mobility exist in some areas, they are nearly non-existent in others and have been falling sharply in recent decades.
It used to be that the vast majority of children ended up earning more than their parents. Today, however, the situation is considerably different. According to recent research on intergenerational mobility, approximately 90% of those born in the 1940s earned more than their parents, while only about 50% of those born in the 1980s do.
The Equality of Opportunity Project — now part of the Opportunity Insights program at Harvard University — considered average incomes of 26-year-olds raised in the bottom quartile of income in 2,973 U.S. counties and county equivalents (such as parishes, boroughs, Census Areas, and certain cities). A 26-year-old from this background who earns more than the national average for the bottom quartile is said to have managed upward income mobility.
The researchers found that neighborhood environments have substantial effects on children’s long-term economic outcomes. The probability of earning in adulthood more than $26,090 — the average annual income for the bottom quartile nationally — declines every year of childhood spent in nearly 1,000 low-income counties. To highlight the substantial geographic variation of this pattern, 24/7 Wall St. reviewed the 50 counties and county equivalents where the average income losses are greatest.
Children growing up in counties with less concentrated poverty, less income inequality, better schools, a larger share of two-parent families, and lower crime rates are significantly more likely to surpass their parents later in life. The counties where the American dream is dead include some of the worst counties to live in.
To identify the counties where the American dream is dead, 24/7 Wall St. reviewed the effect on household income earned in adulthood for every year of childhood spent in 2,973 U.S. counties and county equivalents from data published by The Equality of Opportunity Project. Researchers at the organization used data from 1996-2012 tax returns to study the long-term economic outcomes of approximately 50 million children.
This annual effect on adult earnings is called the exposure effect and is measured as the percentage gained or lost from the average annual household income for a 26 year old in the bottom quartile of U.S. earners — $26,090. To find the average income lost per county per year, we multiplied the exposure effect by this income threshold.
The Equality of Opportunity Project publishes economic mobility-related research and data files for public use. It receives funding from Stanford University, Harvard University, the National Science Foundation, and several charitable groups, including the Robert Wood Johnson Foundation.
Population figures and poverty rates for each county came from the U.S. Census Bureau’s 2017 American Community Survey and are 5-year averages. February 2019 unemployment rates are seasonally adjusted from the U.S. Bureau of Labor Statistics.