Downward Mobility and Recovery Rates Remain Virtually Unchanged Since the Late 1960s

Press Releases and Statements Read time:

Navigate to:

  • Table of Contents
Downward Mobility and Recovery Rates Remain Virtually Unchanged Since the Late 1960s

According to a new report from Pew's Economic Mobility Project, the likelihood that Americans experience a two- or ten-year income drop has been consistent over the last forty years.  Recovery rates from those losses have also been constant—half of adults who suffer a two-year income loss of more than 25 percent recover within four years.  However, half of those suffering such a drop over ten years fall permanently behind their peers and do not fully recover.

The report, “Ups and Downs: Does the American Economy Still Promote Upward Mobility?” was co-authored by labor economist Stephen J. Rose and Economic Mobility Project research manager Scott Winship. The authors examined the household incomes of adults aged 26 through 59, from 1967 through 2004.

“Over the last 40 years, the majority of American families who experience a short-term income loss have demonstrated incredible resiliency,” said John E. Morton, Pew's managing director of Economic Policy. “Yet still, there are those who fall behind their peers, unable to fully recover from longer-term losses over time. In light of the current economic downturn, policy efforts must focus more than ever on minimizing the drops and expediting recovery.”

The most recent two- and ten-year periods analyzed (2002-2004; 1994-2004) proved that while income fluctuations are normal, more Americans experienced a gain, rather than a drop. Fifty-eight percent enjoyed a ten-year income gain, 46 percent had a two-year gain, yet almost 40 percent suffered a two-year income decline. About one in five experienced a decline of more than 25 percent of their income between 2002 and 2004; and one in four experienced such a loss between 1994 and 2004.

“Contrary to the claim that there has been an increase in income volatility, the analyses find that over two-or ten-year periods, Americans are no more likely today to experience income drops than they were in previous decades,” said Winship. 

More often than not, those who experienced a short-term income drop recovered from it. Of those experiencing a loss of more than 25 percent in 1994, nearly one-fifth recovered within a year, nearly one-third recovered within four years, while one-third failed to recover after ten years.

“The findings suggest that if the current downturn mimics recent ones, the economy will continue propelling most Americans upward, setting them back temporarily, if at all,” said Rose. “However, those who experience longer-term setbacks are at risk of a permanent hit to their economic standing.”

The risk of facing an income drop is similar for individuals across demographic groups. But, it is highest among couples that split up, and has become increasingly higher among men who separate from their partners, while the risk has decreased for women who separate, reflecting the narrowing gap between men's and women's earnings. Recovery from ten-year drops is most likely among college graduates and couples who live together.

Comprised of a Principals' Group of experts from the American Enterprise Institute, the Brookings Institution, the Heritage Foundation, the New America Foundation, the Peter G. Peterson Foundation and the Urban Institute, with guidance from an Advisory Board of leading academics and economists, the Economic Mobility Project seeks to investigate the status of economic mobility in America.

To find out more information about the Economic Mobility Project, please visit www.economicmobility.org.

By forging a broad and nonpartisan agreement on the facts, figures and trends related to mobility, the Economic Mobility Project hopes to focus public attention on this critically important issue and generate an active policy debate about how best to ensure that the American Dream is kept alive for generations that follow.

Downloads Report Ups and Downs Does the American Economy Still Promote Upward Mobility
America’s Overdose Crisis
America’s Overdose Crisis

America’s Overdose Crisis

Sign up for our five-email course explaining the overdose crisis in America, the state of treatment access, and ways to improve care

Sign up
Quick View
America’s Overdose Crisis

America’s Overdose Crisis

Sign up for our five-email course explaining the overdose crisis in America, the state of treatment access, and ways to improve care

Sign up

MORE FROM PEW

An aerial view of a vast wetland, with scattered vegetation visible on sandy islands. In Western Australia, a Conservation Model for the World
A presentation being given by a businesswoman to a group of participants at a business conference. Four Plan Features Can Boost 'Retirement Readiness'
A large group of people in formal or traditional attire stands together on a stage, with a digital background depicting marine life and the large text “WTO Agreement on Fisheries Subsidies.” WTO Needs to Redouble Its Effort on Fishing Subsidies
A man in a winter hat and sunglasses kneels on a rocky shoreline in front of a campfire, holding a metal mug with gloved hands. Behind him, in the water, a motorboat is moored to the shore. Cliffs rise on both sides of the water. Why Newfoundland’s South Coast Fjords Are Sacred
Composite image of modern city network communication concept

Learn the Basics of Broadband from Our Limited Series

Sign up for our four-week email course on Broadband Basics
Quick View

How does broadband internet reach our homes, phones, and tablets? What kind of infrastructure connects us all together? What are the major barriers to broadband access for American communities?

Pills illustration
Pills illustration

What Is Antibiotic Resistance—and How Can We Fight It?

Sign up for our four-week email series The Race Against Resistance.
Quick View
Pills illustration

Antibiotic-resistant bacteria, also known as “superbugs,” are a major threat to modern medicine. But how does resistance work, and what can we do to slow the spread? Read personal stories, expert accounts, and more for the answers to those questions in our four-week email series: Slowing Superbugs.