American Dream collapsing for nation’s young workers

Economic study suggests children will earn less than parents.

Rising income inequality has eroded the ability for American children to grow up to earn more than their parents, according to groundbreaking new research from a superstar team of economists that carries deep implications for President-elect Donald Trump’s policy agenda.

The research from a team of economists led by Stanford’s Raj Chetty, and also including researchers from Harvard and the University of California at Berkeley, estimates that only half the children born in the 1980s grew up to earn more than their parents did, after adjusting for inflation. That’s a drop from 92 percent of children born in 1940.

The fall-off is particularly steep among children born in the middle class.

“If we simply care about absolute mobility,” Chetty said in an interview, “these results show, you have to care about inequality.”

Previously, Chetty’s team has studied a different measure of mobility: the ability of children to move up or down America’s income ladder as they grow up, when compared to other Americans. The new research attempts, for the first time, to quantify so-called “absolute mobility,” which people often associate with the American Dream: the odds of a child earning more as an adult than his or her parents earned at the same age.

The economists say rising concentration of income among the richest Americans explains 70 percent of what has been a steady decline in absolute mobility from the baby boom generation to millennials, while a slowdown in economic growth explains just 30 percent.

Absolute mobility “is something that was a feature of the American economy for kids born around 1940, that baby boomer generation,” said Nathaniel Hendren, a Harvard economist who is one of the authors of the study. “As we look forward, there’s just been a dramatic decline in that measure” — which, he said, runs