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TIMES BOARD OF ECONOMISTS / David M. Gordon

American Dream Growing Elusive

September 01, 1987|DAVID M. GORDON | David M. Gordon is professor of economics at the New School for Social Research in New York and is a member of the Institute for Advance Study in Princeton, N.J

The American Dream of upward mobility has long nourished the hopes of millions of U.S. households.

But the dream is fading fast. The pace of upward mobility appears to have declined sharply in the United States in the past decade or more. Class divisions are becoming increasingly rigid. The haves and the have-nots are more and more distinct groups.

Upward mobility became an especially important socioeconomic force during the first two decades following World War II. The American Dream was sustained not so much by immigration (which slowed dramatically after the war) or by movement off the farms (which began to ebb during the 1960s), but by increasingly rapid and palpable economic progress for those already working in the non-farm wage-labor force. Real hourly compensation for non-farm private sector employees increased 4% a year from the late 1940s through the mid-1960s.

Equally important, families had every reason to expect that their children's futures would be at least as bright as their own. New white-collar occupations were opening up; the university system was mushrooming. Parents turned increasingly to the promise of stable and remunerative professional work for their children, rather than self-employment, as the next step up the ladder to status and economic security.

Experiencing Declines

All that now seems to be history. Workers' real wages have stagnated since the late 1970s and so has real median family income. But we are just now beginning to appreciate the longer-term effects of these trends on the once-buoyant American Dream.

Progress within generations has come screeching to a halt. Recent studies report that an "average" 30-year-old man, who was able to look forward to huge income growth over his peak career years during the postwar boom, is now able to project only a 10% to 20% growth in income from age 30 to 40--at the height of his potential advancement. Older workers are now experiencing, on average, declines in real earnings.

The prospects for future generations appear just as bleak. Those hit hardest by the decline in real household earnings have been families with children--especially poor households and those headed by women. Evidently as a result of the real income squeeze, young families in 1981 were able to save less than 1% of their after-tax income, compared to 4% for similar young families as recently as 1973.

These trends are not likely to abate. Several developments point to an ominous hardening of class divisions. The first important indicator is that there will be no more room for upward movement at the top of the occupational ladder. Between 1950 and 1980, total managerial, professional and technical employment grew from 10.2 million to 25.7 million, increasing its share of the experienced civilian labor force from 17% to 25%.

In sharp contrast are the Labor Department projections released last year, which show that the share of managerial, professional and technical groupings in total employment is likely to increase only marginally during the next decade, rising to 27% by 1995.

Who will be able to lay claim to those future jobs with the greatest income, status and security? The ideal in an egalitarian society is that all children, irrespective of background, will have relatively equal chances of "making it." But we seem recently to be moving away from the ideal.

Recent research indicates that occupations of employees are now more similar to their parents' than they were in the early 1970s, indicating a tightening of bonds between generations. This trend is most striking in managerial and professional ranks, in which the index of the similarity between current occupation and parental occupation increased by roughly one-third from the early 1970s to the early 1980s. Established parents are better able to pass their mantles to their children than before.

Another fairly dramatic development involves a reduction in the ratio of employees experiencing upward and downward mobility. In the early 1960s, the number of male employees experiencing upward mobility was 238% higher than those experiencing downward mobility--where mobility is defined by an index reflecting both income and the perceived status of the occupation. By the early 1980s, that percentage had dropped to 78%. Although there still is more upward mobility than downward mobility, the recent trends point fairly decisively toward an increasingly frozen class structure.

Finally, it appears that the gates of access to more advantaged occupations are closing. Historically, as professional and managerial employment has supplanted self-employment as the goal of the American Dream, the relative importance of higher education has risen dramatically. Achieving more equitable opportunity requires increasingly open and equal access to college and postgraduate degrees.

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