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Here's who moves up the economic ladder

Education, employment and finding a mate are major factors when it comes to your financial well-being.

By Money Staff Nov 12, 2013 2:17PM

This post comes from Allison Linn at partner site CNBC.

 

CNBC on MSN MoneyWant to move up the economic ladder? Go to college, find a spouse who works and try to avoid getting laid off.

 

College graduates, people in dual-earner families, whites and those lucky enough to escape a bout of unemployment are also the most likely to move from the bottom fifth of the income ladder to at least the middle, according to a new Pew Charitable Trusts analysis of family income trends. 

Man climbing ladder © George Doyle, Stockbyte, Getty Images

"Education, race and family employment matter for movement out of the bottom," said Diana Elliott, a research officer on economic mobility at the Pew Charitable Trusts.

 

In general, Pew researchers have noted, the rags-to-riches tale so popular in Hollywood is less likely than many Americans would like to believe.

 

The researchers' analysis of the Panel Study of Income Dynamics, an in-depth look at family finances from 1968 to 2009, found that just 4 percent of Americans who grew up at the bottom fifth of the household income ladder made it to the top fifth as adults.

 

Overall, 43 percent of people who are raised in a family at the bottom of the income ladder stay there as adults.

 

The new analysis, released last week, looks at what factors made it more likely for those economic success stories to occur.

 

The Pew researchers compared adults in their prime working years with their parents at the same point in their lives.

 

They found that it paid to go to college: 53 percent of college graduates had moved from the bottom fifth of the income ladder to at least the middle, compared with just 28 percent who did not graduate from college.

 

Having more than one family paycheck also mattered. Fifty percent of people in dual-earner families had moved from the bottom fifth to at least the middle, compared with just 24 percent in single-earner homes.

 

The researchers also found that a stint of unemployment can be a severe setback. About 34 percent of people who did not experience any unemployment made it from the bottom to the middle, compared with just 15 percent that had experienced unemployment.

 

Race also appears to be important. The researchers found that whites were two times more likely to leave the bottom quintile at all than blacks. The data set from the early years was too small to get an accurate comparison of Hispanics and other races, Elliott said.

 

Elliott also noted that those who moved out of the bottom of the income ladder had more savings, wealth and home equity than those who did not.

 

Although that shouldn't be taken to mean that higher wealth drives people up the income ladder, she said it does show that people who have more money are able to do the things that help a person get—and keep—a higher-paying job. That can range from going to college without taking on onerous student loan debt to having enough money to fix your car if it breaks down, allowing you to get to work consistently.

 

"It underscores that financial security and economic mobility really go hand in hand," she said of the finding.

 

More from CNBC:

6Comments
Nov 12, 2013 3:52PM
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Ok I agree with going to college and marrying someone with the same expectations you have or more. But being white I disagree with. Blacks and other nationalities have the same opportunity if they take advantage of the opportunities that are available. I know this because that is exactly what I did, and a lot of people that I know. Let's stop using the word white or black.But anybody that wants to improve their way of life get an education, a good paying job and a significant other (no matter the race) and climb the ladder as high as you can step.  
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If America were a person, they'd have the flu right now. Get well America.

Nov 13, 2013 11:13AM
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I don't see this as a negative "43 percent of people who are raised in a family at the bottom of the income ladder stay there as adults."  what I see is that 57 PERCENT OF PEOPLE MOVED UP!!

That is fantastic. There is wonderful opportunity to move up if you  work hard. 
Nov 13, 2013 6:29PM
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I think success is generally something that people learn from their parents (but usually not in school).  So, if a child has parents that are broke, how can they possibly teach their kids how to be successful?

Kids really need some guidance on 'how to be successful', that really isn't happening in school.  They need someone to guide them on what sort of education to get, work ethics, savings, personal finance, etc.  - and broke, uneducated parents aren't going to be able to provide this guidance.

I think this is the reason why wealth is generational - wealthy parents are able to guide their children to a successful life.  I have a friend who used to pick stocks with his dad as a kid (instead of watching sports).  No surprise that he is doing quite well today.  That sort of thing isn't going to happen with a child living in the 'hood.

I think some wealthy people don't recognize the importance of this, and like to think that they are entirely self-made.  Generally, they are not - they are as much of a product of their upbringing as many poor people are.
Nov 13, 2013 12:36PM
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ether ways, it's all a rat race. problem with the rat race is you become a rat in the proccess.
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