Poor get richer and rich get poorer in USA

September 12, 2000

Free Market Foundation

Much of Al Gore’s acceptance speech at the Democratic Convention in the USA was devoted to the rich versus the poor and the powerful against the powerless. But many academic studies have found that there is enormous mobility among income classes.

For example,

A 1984 University of Michigan study showed that almost half the families in the bottom 20 percent in 1971 were in a higher quintile by 1978, and almost half in the top quintile fell to a lower quintile.

A 1992 U.S. Treasury Department study showed that between 1979 and 1988, 86 percent of those in the bottom quintile moved to a higher quintile, and 35 percent in the top quintile moved to a lower quintile.

Studies by many other reputable economists have come to the same conclusion.

In the 1980s, Census Bureau reports on income mobility consistently showed about 20 percent of those in the bottom quintile moving up one or more quintiles and the same percentage of those in the top quintile moving down over just a one year period.

A 1992 Urban Institute study showed that about half of those in the bottom quintile in the 1967-76 period had moved up and half in the top quintile had moved down by the 1977-86 period.

A 1995 Federal Reserve Bank of Dallas report showed that almost three-fourths of those in the bottom quintile in 1975 were in a higher quintile by 1991, and almost 40 percent in the top quintile moved down to a lower quintile over the same period.

There is, in fact, very substantial movement up and down the income scale, belying the liberal myth that the poor will always be poor and the rich will always be rich, thus justifying government redistribution.

Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, August 23, 2000.

For text http://www.ncpa.org/oped/bartlett.html

For more on Income Mobility
http://www.ncpa.org/pd/economy/econ7.html