The American dream — the idea that anyone can own their own home and do better than the previo✱us generation with the right amount of hard work — has , with rising house prices and stagnant wages. Now, people who want to achieve it may be better off seeking it in Canada, the U.K. or Denmark according to a new study published by the Federal Reserve Bank of St. Louis.
The study, authored by Raj🐬 Chetty, professor of economics at Stanford University, d𝕴efined the concept as the ability for children born in the bottom fifth of income distribution to reach the top fifth. In the U.S. the likelihood of that is 7.5%, whereas in Canada children born in that group are twice as likely to rise to the top — at 13.5%. In the U.K. the likelihood of achieving that move from the bottom fifth to the top fifth is 9% and in Denmark it is 11.7%.
“When some people initially see these numbers, they sometimes react by saying, ‘Even in Canada, which has the highest rates of upward mobility, the rate of success doesn’t look all that 🅘high,” Chetty wrote. “’You only have a 13.5% chance of reaching the top if you start out at the bottom.’ It is important to remember that, unfortunately, no matter what you do, you can’t have more than 20% of people in the top 20%. As such, these differences are actually quite large.”
The higher class mobility around the﷽ world comes as America’s middle class . Families that had large fluctuations in their incomes — even when it was a 25% gain — were more likely than those with stable incomes to say they wouldn’t be able to come up with $2,000 for an unexpected need, according to recent research released by the Philadelphia-based nonprofit Pew Charitable Trust🔜s.
People’s faith in the American 😼dream has been on the decline, with 69% saying obstacles to realizing it . And while the vast majority of people say the American dream is on the decline, the majority of people still beli♉eve they are living the dream — or soon think they will be. Half of all Americans say they are living it right now and more than one-fifth say they can achieve the American dream in their lifetime.
While the U.S. has its struggles with income inequality, however, Denmark isn’t necessarily comparable in this case, said Richard Reeves, senior fellow in Economic Studies at the Brookin𒆙gs Institution and author of the upcoming book, “Dream Hoarders: How the American Upper Middle Class Is Leaving Everyone Else in the Dust, Why That Is a Problem, and What to Do about It.”
Its economy, demographics, and diversity make the “American dream” more achievable there overall. However, there are areas in Utah, Iowa and North Dakota that would give Scandinavian countries, which are traditionally praised for their high rates of social mobility, a run for their money. It would be more useful, Reeves said, to look ꦺat why inequality exists in one country versus another. “Segregation has a dampening effect on the American ♚dream,” he said. “The country is very segregated by race and economics.”
Indeed🍃, the rich do appear to be leaving the middle class🎶 behind. Most U.S. middle-income households (81%) had flat or falling income between 2004 and 2014, according to a U.S. Congressional Budget Office data analyzed by the McKinsey Global Institute, a global management company.
Meanwhile, have consisted of extraord💜inary growth for billionaires, according to the UBS/PwC “2015 Billionaire Report.” By 2043, the Forbes 400 will see their average wealth skyrocket to eight times what it is today at $58 billion. And 61% of middle-income households say their incomes are either not advancing or they’re staying the same as they were last year:
“Most people growing up in advanced economies since World War II have been able to assume they will be better off than their parents,” the report said. “Y🙈et this overwhelmingly positive income trend has ended.”