05/12/2009 - Most Americans believe that with discipline and perseverance they can still get ahead. And by one measure, the American Dream is alive and well. Recent data on economic mobility show that two-thirds of Americans have higher incomes compared to their parents. But for others, the Dream remains out of reach.
Surprisingly, America is a less economically mobile society than many European countries. Some 42 percent of children born on the bottom rung are still there a generation later. Almost half of middle-income African-American children fall to the bottom of the income ladder as adults.
Data show that while a child born poor who gets a college education quadruples her chance of making it to the top income levels, she still has less chance of making it than a child born rich who doesn't go to college.
How do we get the dream back on course? A few smart policy choices could make a big difference.
Family may have an impact, but education is still far and away the best bang for the mobility buck.
First, Congress should dramatically simplify the bewildering federal student aid system and streamline the application process. In response to a yawning 26 percentage point chasm between college enrollment and completion rates, Congress should condition federal aid based on which states move students not just into the freshman classroom, but through to graduation day. And lawmakers should extend middle-class tax benefits to lower-income families by making tax credits for tuition and education expenses refundable.
Investments in education may be the best place to start but studies show that reducing the cost of health care, providing incentives to savings and wealth creation, and strengthening job training programs are also important components to improving upward mobility.
Given the receding economic tide and rising constraints on the federal budget, Washington needs to be far more strategic about how it invests in people and shores up the storied American meritocracy.
Americans aren't asking for handouts. They want equality of opportunity and access to the skills and tools to chart their own course toward a better future.
Listen to this commentary on the Marketplace Web site.