Moving up the Economic Ladder: An Analysis of Economic Mobility in Utah

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The opportunity for upward mobility as the result of individual effort is viewed as one of the defining characteristics of the U.S. economy. However, data show Utah has been experiencing growing inequality since the 1980s. While inflation-adjusted income actually fell for the bottom four fifths of families in the first half of this decade, it increased by more than $6,000 for families in the top fifth.

Looking at these numbers alone, it is easy to conclude that Utah is becoming an increasingly bifurcated economy with the poor getting poorer and the rich getting richer. However, it is important to acknowledge that these numbers do not tell a complete story. Although the distribution of income among individuals may be unequal in any given year, this does not necessarily mean it is unequal over their lifetimes. An individual who is in the lowest-income bracket in one particular year may be in a much higher income bracket five years later due to changes in skill level, education, or work situation.

To determine the extent to which Utah households are able to move up the economic ladder, Utah Foundation examines Utah’s income mobility from 1994 to 2007. Four different measures of income mobility are analyzed in the report:  two measures of relative mobility (how household income changes relative to the incomes of other households), one measure of absolute mobility (how the real incomes of households change), and a measure that combines relative and absolute mobility.

Since many Americans think of the American Dream in terms of both gaining higher incomes and rising in society, the combination measure may be the most compelling. Results show almost one-third of Utah taxpayers are “Upwardly Mobile,” or have both higher income and moved up one or more income quintiles between 1994 and 2007. However, a slightly larger percent of taxpayers are simply “Riding the Tide,” meaning they have higher incomes, but the increase was not enough to move them into the next income quintile. Interestingly, 14% of taxpayers are “Falling Despite the Tide,” meaning that despite their income increasing, their relative economic standing fell. One-fifth of Utah taxpayers are “Downwardly Mobile,” meaning they lost income during this period.

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