Study: Economic Opportunity Better in Northeast, Worse in South

Residents of southern states are finding it harder to move up in the world.

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They call it the American Dream, but it doesn't seem to be stretching from sea to shining sea.

Residents of mid-Atlantic and Northeastern states experience the highest upward and lowest downward economic mobility—that is, movement along the earnings ladder—while the South and Southeast experience the exact opposite, according to a new study from the Pew Charitable Trusts' Economic Mobility Project.

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To Erin Currier, project manager of the Economic Mobility Project, the message is clear: "When it comes to achieving the American Dream, it matters where you live," she said in a release accompanying the study.

The study focused on Americans in what Pew calls their "prime working years," comparing people's average earnings over a 10-year span—between the ages of 35 to 39 and 45 to 49, cumulatively covering the years 1978 through 2007. Researchers considered three different metrics: absolute mobility—growth in earnings over time—as well as relative upward and downward mobility—residents' movement on the earnings ladder compared to their peers.

For the U.S. as a whole, residents' average earnings grew by 17 percent over the decade of time studied. By the study's measures of mobility, more seemed to move up than down: 34 percent of people in the bottom half of the earnings ladder climbed up by 10 percent or more, and 28 percent of people in the top half fell by 10 percentiles or more. Maryland, New Jersey, and New York were the only states that performed better than the national average on all three measures. Five more states—Connecticut, Massachusetts, Michigan, Pennsylvania, and Utah—bettered the national average on two measures.

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Meanwhile, residents of Louisiana, Oklahoma and South Carolina have a distinctly tougher time climbing the ladder. These three states were below the national average on all three measures, and six more southern states—Alabama, Florida, Kentucky, Mississippi, North Carolina and Texas—underperformed against the national figures on two of the three measures.

The study tells the wheres and whats of mobility, but they whys are cloudy—it is hard to say exactly why a person in Atlanta might find it harder to move up in the world than someone in Annapolis. However, past research suggests broader trends at work.

"We know that there are certain drivers of mobility including education, savings and assets, and neighborhood poverty during childhood that are important for economic mobility," said Diana Elliott, Manager of Research at the Economic Mobility Project, discussing the results in a Wednesday call with reporters. In addition, another Pew report from 2011 also showed that drug use and marital status strongly influence whether a child who grows up middle-class slips down the ladder as an adult.

It seems easy to say that more mobility is better for society, so children who come from impoverished households can eventually move into the upper classes. But determining where mobility "should" be is a tricky proposition, as Scott Winship, a fellow in economic studies at the Brookings Institution, has pointed out. Testifying before the Senate Budget Committee earlier this year, Winship noted that a child in the bottom fifth of the economic heap has only a 1-in-3 chance of moving into the top three-fifths. Then again, he said, there is both good and bad mobility.

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"A world of perfect mobility, as the researcher/writer Reihan Salam has noted, is 'one in which no matter how hard you work to provide your children with every advantage in life, they're just as likely to sink to the bottom of the heap as to rise to the top,'" he said.

Perhaps counterintuitively, there is reason to think that these state-by-state mobility trends, measured only through pre-economic-crisis 2007, will continue with little change, even in the wake of a crippling recession.

"Past research studying trends in mobility suggests that there haven't been recessionary effects [on mobility] in the past 40 to 50 years," said Elliott. "This is not to say that individuals don't experience income increases/drops over the short-term, but the long-term economic mobility of an entire state is likely to be relatively stable through a recessionary period."