Last week, the Pew Economic Mobility Project, in its report Economic Mobility of the States, released new state-level data on where U.S. residents have a greater chance at moving up the earnings ladder.  The report finds that state of residence significantly impacts one’s ability to achieve the American Dream.

Overall, the study found that states in the mideastern and New England regions (Maryland, New Jersey, New York, Connecticut, Massachusetts, Pennsylvania, Michigan and Utah) have greater economic mobility than the nation as a whole, while states in the South (Louisiana, Oklahoma, South Carolina, Alabama, Florida, Kentucky, Mississippi, North Carolina and Texas) have consistently lower economic mobility.

The study examines Americans’ ability to increase their incomes during their prime working years and follows individuals born between 1942 and 1958, with the most recent data included in the evaluation coming from 2007.

The report evaluates economic mobility using the three following measures:

1. Absolute mobility – Measures an individual’s average inflation-controlled earnings growth over time.  Americans’ absolute mobility has actually improved over time – our income is greater than our parents was at the same age.

2. Relative downward and upward mobility – Measure a person’s earnings relative to their peers/ rank within the income distribution over time.  Pew has found that relative mobility shows stickiness for those at the top and the bottom of the income distribution – in other words it’s much harder for people in the bottom and top tiers of the income distribution to move out of them.  For example, the Project has found that 40% of children whose parents were in the bottom part of the income distribution remain there as adults.

Texas fared worse than the national average on absolute mobility and relative upward mobility.  Texans’ absolute mobility was 15% compared the national average of 17% and our relative upward mobility was 31% compared to the national average of 34%.

What factors contribute to an individual’s economic mobility and lead to differences among states?

The Pew Economic Mobility Project has identified a few key factors that contribute to an individual’s economic mobility prospects.  Postsecondary education, savings rates and other personal assets and whether or not a person lives in a high-poverty neighborhood as a child all have an effect on a individual’s ability to move up the income ladder.

It’s critical that Texas graduates into the group of states ranking high on economic mobility.  OpportunityTexas, committed to improving Texans’ economic mobility prospects, is working to advance policies and proven tools that increase Texans’ educational attainment and ability to save and acquire assets.