What Happened to the American Dream? | The Bell Policy Center

What Happened to the American Dream?

Date: Aug 11, 2017
Author:

While at the NCSL Legislative Summit in Boston, I attended a session entitled, “What Happened to the American Dream?”

Several of the presentation’s key takeaways will help inform our work promoting economic opportunity in Colorado. Robert Manduca of Harvard University presented research conducted by the Economic Opportunity Project, and as the chart below shows, the rate of economic mobility has had quite the decline. For children born in 1940, 90 percent went out to outearn their parents, compared to only 50 percent of children born in 1980. The Economic Opportunity Project attributes wage stagnation since the 1970s as the main cause of the lack of mobility.

Kenan Fikri from the Economic Innovation Group talked about the role of economic dynamism and opportunity. EGI, a bipartisan public policy organization based in Washington, D.C., conducts research and advocates for public policies to empower entrepreneurs and investors to forge a more dynamic economy.

EIG publishes an index ranking the state’s economies on their level of dynamism. The index is based on seven factors:

  • Business churn: The number of firms opened in the past year minus the number of firms that closed;
  • Change in firms: Annual change in the number of firms that employ workers;
  • Jobs in new companies: Share of total state employment in firms opened in the last year;
  • Jobs in incumbent companies: Share of total state employment in firms open for at least 16 years;
  • Labor market churn: The number of jobs created compared to the number of jobs destroyed in the past year;
  • Labor force participation: Share of civilians aged 16 or older who are either working or actively looking for work
  • Net domestic migration: The number of people moving to and from a state per 1,000 residents.

Slower job growth, more industry concentration, and less innovation become commonplace in economies with less dyanism. EIG argues the U.S. economy has become less dynamic in recent decades, limiting economic opportunity. However, Colorado has the fourth most dynamic economy in the U.S. according to the index. As the Bell continues doing research for our Opportunity Report, I'll be sure to keep this session in mind. 

State

Score

Rank

Nevada

50.5

1

Utah

45.9

2

Florida

45.0

3

Colorado

44.9

4

North Dakota

44.0

5