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Is the American Dream still alive, or are we just dreaming? Watch the full POINT TAKEN debate.

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Is the American Dream Dead or Alive? | Point Taken

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Is the American Dream still alive, or are we just dreaming?

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The United States has a long-held reputation for exceptional tolerance of income inequality, explained by its high levels of social mobility. This combination underpins the American dream - initially conceived of by Thomas Jefferson as each citizen's right to the pursuit of life, liberty and the pursuit of happiness.

This dream is not about guaranteed outcomes, of course, but the pursuit of opportunities. The dream found a persona in the fictional characters of the 19th-century writer Horatio Alger Jr - in which young working-class protagonists go from from rags to riches (or at least become middle class) in part due to entrepreneurial spirit and hard work.

Yet the opportunity to live the American dream is much less widely shared today than it was several decades ago. While 90% of the children born in 1940 ended up in higher ranks of the income distribution than their parents, only 40% of those born in 1980 have done so.

Attitudes about inequality have also changed. In 2001, a study found the only Americans who reported lower levels of happiness amid greater inequality were left-leaning rich people - with the poor seeing inequality as a sign of future opportunity. Such optimism has since been substantially tempered: in 2016, only 38% of Americans thought their children would be better off than they are.

In the meantime, the public discussion about inequality has completely by-passed a critical element of the American dream: luck.

Just as in many of Alger's stories the main character benefits from the assistance of a generous philanthropist, there are countless real examples of success in the US where different forms of luck have played a major role. And yet, social support for the unlucky - in particular, the poor who cannot stay in full-time employment - has been falling substantially in recent years, and is facing even more threats today.

In short, from new research based on some novel metrics of wellbeing, I find strong evidence that the American dream is in tatters, at least.

White despair, minority hope

My research began by comparing mobility attitudes in the US with those in Latin America, a region long known for high levels of poverty and inequality (although with progress in the past decades). I explored a question in the Gallup world poll, which asks respondents a classic American dream question: "Can an individual who works hard in this country get ahead?"

I found very large gaps between the responses of 'the rich' and 'the poor' in the US (represented by the top and bottom 20% income distributions of the Gallup respondents). This was in stark contrast to Latin America, where there was no significant difference in attitudes across income groups. Poor people in the US were 20 times less likely to believe hard work would get them ahead than were the poor in Latin America, even though the latter are significantly worse off in material terms.

A man waits at dawn, after sleeping in his car, to see a free 'mobile doctor' in Olean, New York. Photograph: Spencer Platt/Getty Images

Another question in the poll explores whether or not respondents experience stress on a daily basis. Stress is a marker of poor health, and the kind of stress typically experienced by the poor - usually due to negative shocks that are beyond their control ("bad stress") - is significantly worse for wellbeing than "good stress": that which is associated with goal achievement, for those who feel able to focus on their future.

In general, Latin Americans experience significantly less stress - and also smile more - on a daily basis than Americans. The gaps between the poor and rich in the US were significantly wider (by 1.5 times on a 0-1 score) than those in Latin America, with the poor in the US experiencing more stress than either the rich or poor in Latin America.

The gaps between the expectations and sentiments of rich and poor in the US are also greater than in many other countries in east Asia and Europe (the other regions studied). It seems that being poor in a very wealthy and unequal country - which prides itself on being a meritocracy, and eschews social support for those who fall behind - results in especially high levels of stress and desperation.

But my research also yielded some surprises. With the low levels of belief in the value of hard work and high levels of stress among poor respondents in the US as a starting point, I compared optimism about the future across poor respondents of different races. This was based on a question in the US Gallup daily poll that asks respondents where they think they will be five years from now on a 0-10 step life satisfaction ladder.

I found that poor minorities - and particularly black people - were much more optimistic about the future than poor white people. Indeed, poor black respondents were three times as likely to be a point higher up on the optimism ladder than were poor whites, while poor Hispanic people were one and a half times more optimistic than whites. Poor black people were also half as likely as poor whites to experience stress the previous day, while poor Hispanics were only two-thirds as likely as poor whites.

What explains the higher levels of optimism among minorities, who have traditionally faced discrimination and associated challenges? There is no simple answer.

One factor is that poor minorities have stronger informal safety nets and social support, such as families and churches, than do their white counterparts. Psychologists also find that minorities are more resilient and much less likely to report depression or commit suicide than are whites in the face of negative shocks, perhaps due to a longer trajectory of dealing with negative shocks and challenges.

Another critical issue is the threat and reality of downward mobility for blue-collar whites, particularly in the heartland of the country where manufacturing, mining, and other jobs have hollowed out. Andrew Cherlin of Johns Hopkins University finds that poor black and Hispanic people are much more likely than poor white people to report that they live better than their parents did. Poor whites are more likely to say they live worse than their parents did; they, in particular, seem to be living the erosion of the American dream.

The American problem

Why does this matter? My research from a decade ago - since confirmed by other studies - found that individuals who were optimistic about their futures tended to have better health and employment outcomes. Those who believe in their futures tend to invest in those futures, while those who are consumed with stress, daily struggles and a lack of hope, not only have less means to make such investments, but also have much less confidence that they will pay off.

Desperate people are more likely to die prematurely, but living with a lot of premature death can also erode hope

The starkest marker of lack of hope in the US is a significant increase in premature mortality in the past decade - driven by an increase in suicides and drug and alcohol poisoning and a stalling of progress against heart disease and lung cancer - primarily but not only among middle-aged uneducated white people. Mortality rates for black and Hispanic people, while higher on average than those for whites, continued to fall during the same time period.

The reasons for this trend are multi-faceted. One is the coincidence of an all-too-readily-available supply of drugs such as opioids, heroin and fentanyl, with the shrinking of blue-collar jobs - and identities - primarily due to technological change. Fifteen per cent of prime age males are out of the labour force today; with that figure projected to increase to 25% by 2050. The identity of the blue-collar worker seems to be stronger for white people than for minorities, meanwhile. While there are now increased employment opportunities in services such as health, white males are far less likely to take them up than are their minority counterparts.

Lack of hope also contributes to rising mortality rates, as evidenced in my latest research with Sergio Pinto. On average, individuals with lower optimism for the future are more likely to live in metropolitan statistical areas (MSAs) with higher mortality rates for 45- to 54-year-olds.

Desperate people are more likely to die prematurely, but living with a lot of premature death can also erode hope. Higher average levels of optimism in metropolitan areas are also associated with lower premature mortality rates. These same places tend to be more racially diverse, healthier (as gauged by fewer respondents who smoke and more who exercise), and more likely to be urban and economically vibrant.

Technology-driven growth is not unique to the US, and low-skilled workers face challenges in many OECD countries. Yet by contrast, away from the US, they have not had a similar increase in premature mortality. One reason may be stronger social welfare systems - and stronger norms of collective social responsibility for those who fall behind - in Europe.

Ironically, part of the problem may actually be the American dream. Blue-collar white people - whose parents lived the American dream and who expected their children to do so as well - are the ones who seem most devastated by its erosion and yet, on average, tend to vote against government programmes. In contrast, minorities, who have been struggling for years and have more experience multi-tasking on the employment front and relying on family and community support when needed - are more resilient and hopeful, precisely because they still see a chance for moving up the ladder.

There are high costs to being poor in America, where winners win big but losers fall hard. Indeed, the dream, with its focus on individual initiative in a meritocracy, has resulted in far less public support than there is in other countries for safety nets, vocational training, and community support for those with disadvantage or bad luck. Such strategies are woefully necessary now, particularly in the heartland where some of Alger's characters might have come from, but their kind have long since run out of luck.
Carol Graham is the author of Happiness for All? Unequal Hopes and Lives in Pursuit of the American Dream (Princeton University Press, 2017).
Do you believe the American dream is dead? Please share your experiences in confidence at inequality.project@theguardian.com

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Research shows that poor people in the US are 20 times less likely to believe hard work will get them ahead than their (poorer) Latin American counterparts - with white Americans particularly pessimistic. What's driving their despair?

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Composite: iStockphoto

The "American Dream" is starting to look a lot different.

Gone are the days when Americans aspired to own a house with a white picket fence. Some 82 percent of Americans now say their "American Dream" is simply financial security for themselves and their family. That's according to Massachusetts Mutual Life Insurance, which commissioned a survey of more than 3,200 people during January and February 2018.

Three quarters of respondents said part of their "American Dream" is owning a home, the traditional definition, but 71 percent said it is achieving financial independence. MassMutual did not clarify what "financial independence" means in the survey, but it typically means no longer having to work, because one has enough savings.

More worrying, perhaps: 33 percent of those surveyed said they think that dream is disappearing. Why? They have too much debt. "Americans believe financial security is at the core of the American Dream, but it is alarming that so many think it is beyond their reach," said Mike Fanning, head of MassMutual US.

Some 64 percent of those surveyed said they have a mortgage, 56 percent said they had credit-card debt and 26 percent said they have student-loan debt. Many surveyed said they don't feel financially secure. More than a quarter said they wish they had better control of their finances.

It makes sense that debt is on Americans' minds. Collectively, Americans have more than $1 trillion in credit-card debt, according to the Federal Reserve. They have another $1.5 trillion in student loans, up from $1.1 trillion in 2013. Motor vehicle loans are now topping $1.1 trillion, up from $878.5 billion in 2013. And they have another nearly $15 trillion in mortgage debt outstanding.

For some, investments in education and property can pay off, said Rachel Podnos, a certified financial planner and attorney based in Washington, D.C., but for others, that debt is just an obstacle.

"I don't get anymore why owning a home is essential to the American Dream," she said. "It's a really bad idea if that is going to cause you to buy a home you can't afford, which could jeopardize your dream of ever reaching financial independence."

Despite the recent decline in unemployment, many people still feel they aren't benefiting from economic growth, said Matt Schulz, chief industry analyst at credit-card website CompareCards. "There is a lot of hopelessness and a lot of concern, simply because the Great Recession isn't that far in the rearview mirror," he said.

Indeed, based on their other answers in MassMutual's survey, many Americans are far from being financially stable. Some 18 percent said they had less than one month of expenses saved for an emergency. Another 26 percent said they have one to three months' expenses saved. And 21 percent said they had three to six months' expenses saved.

Many of those surveyed said they wish they had started saving earlier, Fanning said. One bright spot in all this: Households in recent months are better equipped financially to cope with their debts.

Podnos said more people should probably redefine what the "dream" means for them.

"That may not mean owning a home, at least for some time, and I think that's OK," she said. "Maybe it just means financial independence, living comfortably within your means and being able to build wealth."

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The "American Dream" is starting to look a lot different. Gone are the days when Americans aspired to own a house with a white picket fence. Some 82 percent of Americans now say their "American Dream" is simply financial security for themselves and their family.

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Blueflames | Getty Images

Rumors of the American dream being dead have been greatly exaggerated.

To that point, 63 percent of Americans believe they are living the American dream, according to a recent report, up from 59 percent in 2011.

More Americans also credit determination and hard work as the most important success factors in their financial well-being than in the report's recent history. The Allstate/National Journal Heartland Monitor poll reprise the same questions each year to compare sentiment now to sentiment during and after the Great Recession.

"When it comes to getting ahead, more people than ever think it's their own talents and hard work," noted Joseph McMahon, the poll's lead researcher. "There's a belief it's on you as an individual to make it happen."

No doubt for those trying to get by, it's been a rough ride. There are also signs that plenty of people still feel under financial pressure.

Almost half, or 45 percent, of those polled rated their personal financial situation as excellent or good, which was a three-year high. However, 54 percent said their personal financial situation was only fair or poor.

During the recession, 59 percent were confident they had enough of a financial cushion in the event of a job loss or significant decrease in income, but fewer said the same in 2016. Nearly half of the respondents said they still find it difficult to save for retirement. Another 15 percent said it was hard to make ends meet every month.

"There's a contradiction going on here," said Alec Levenson, a professor of economics at the University of Southern California's Marshall School of Business. With low unemployment but sluggish wage growth, the economy has been growing at a steady but slow rate since the recession.

"This is the economy that continues to stump us in terms of which direction we are heading," he added.

"We have people who are worried about their future and people who think they are fine. One reason is because they are paying down debt, so they don't have as much cash on hand," Levenson said. "In economic terms, they are in better shape, but until they get out from underneath that debt entirely, they won't feel more financially secure."

In fact, nearly twice as many Americans said that personal debt is an obstacle rather than a stepping stone to achieving the American dream.

Fifty-seven percent of those polled said easy credit encourages people to spend beyond their means, ultimately burdening them with high levels of debt and years of interest payments, compared to just 36 percent who said it makes it possible to pay for college, start a business, buy a car and purchase a home.

Still, 42 percent of the people surveyed said they expect their financial situation to improve in the next year, up slightly from 37 percent six years ago.

"The thing about this country, even in the midst of things not going that well economically, there's this strong spirit," Levenson said, adding, "That's always been one of the things that made America resilient."

The Allstate/National Journal poll surveyed 1,000 adults in January to measure changes in opinions and attitudes.

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Blueflames | Getty Images Rumors of the American dream being dead have been greatly exaggerated. To that point, 63 percent of Americans believe they are living the American dream, according to a recent report, up from 59 percent in 2011.

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A new study shows that a majority of Americans are living the American Dream - even if they largely don't realize it.

The poll, conducted by marketing firm DDB as part of its 2014 Life Style Study, found that only 40% of American adults over the age of 18 believed they were "living the American Dream."

That same 7,015-person study also found that sizable majorities reported owning a home, receiving a "good education," finding a "decent job" and giving their children better lives than they themselves had-all traditional tenets of the American Dream. Although these findings may not seem intuitive, the answer behind this discrepancy could lie in an important trend in American financial security.

"Even though people report that they are not living the dream, they actually are when you look at the traditional benchmarks," said Denise Delahorne, SVP, Group Strategy Director, DDB Chicago, who worked closely with the survey. She theorized that many people do not see themselves as having attained the traditional American Dream because of a shifting definition of the term.

"If you're new to this country, then life seems pretty good here," Delahorne said. "But for many people who have lived here a long time, they've started to think of the American Dream less as the traditional elements, and more relative to wealth."

In the DDB survey, only 25% of adults reported that they have been able to "make a lot of money" in their life.

But Erin Currier, director of economic mobility at The Pew Charitable Trusts, told CNBC she does not think the disparity between the DDB respondents' life histories and their own assessment of American Dream fulfillment lies in an evolving definition. Still, she agreed with Delahorne: The explanation lies in wealth.

"[American families] have enough that they are able to consume those indicators of the American Dream, but they aren't financially secure," Currier said, drawing the distinction to an increase in citizens' incomes, but not their wealth. "My instinct is that people feel that on a day to day basis."

Because Americans are "treading water," she said, they are too insecure to be able to enjoy their achievements. Still, Pew research from 2009 confirms that the elements listed on the DDB survey roughly align with what citizens see as the American Dream.

* I am living the American dream 40%

In my life, I have been able to:

* Own a home 66%

* Get a good education 78%

* Find a decent job 74%

* Have decent health and medical care 78%

* Give my children a better life than I have 81%

* Feel relatively safe 89%

* Be treated fairly 81%

* Have enough food to eat 93%

* Speak my mind freely 87%

* Buy the car of my dreams 35%

* Make a lot of money 25%

Sample size, 7,015 U.S. adults age 18 and over; the margin of error for DDB's poll is +/- 1.2%.

© CNBC is a USA TODAY content partner offering financial news and commentary. Its content is produced independently of USA TODAY.

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American Dream is still alive, but unrecognized

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A new study shows that a majority of Americans are living the American Dream - even if they largely don't realize it. The poll, conducted by marketing firm DDB as part of its 2014 Life Style Study, found that only 40% of American adults over the age of 18 believed they were "living the American Dream."

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Is the Modern American Dream Attainable?

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According to recent studies, more than half of Americans believe that the prospect of a good job and a home with a "white picket fence" is gone, never existed or unachievable.

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Economic mobility is the ability of someone to change their income or wealth. It is measured over generations or during one's lifetime. Research has found that the best way to improve one's mobility is through education. But the increasing cost of education is creating a block to those starting out in low-income families. It's a form of structural inequality that keeps the poor from improving their lives.

The biggest block to mobility is widening income inequality. But race also plays a significant role, affecting black men the most. As a result, the United States has lower levels of economic mobility than other developed countries.

Mobility is calculated using earnings, income, or wealth. The measurement used will give different results. Earnings are wages and salaries from paid jobs and businesses, including farms. Income is revenue from all sources before taxes but after transfers. It includes earnings plus settlements, government programs, such as Social Security, and income from investments. Wealth is the net worth of the household.

The Federal Reserve Bank of Minneapolis found that age was the greatest determinant of mobility in all measurements. As people age, they get better jobs and have higher net worth. But older people who are retired have lower incomes, although they might have the highest wealth.

Mobility is also measured through time. Some studies look at intergenerational, or whether children have higher incomes than their parents. Others only consider intragenerational, or how far someone can go in their lifetime.

Then there is absolute mobility, which is how likely children can exceed their parents' income at that same age. Relative mobility compares someone to others. It could be to foreigners, different races, or genders.

Research shows that the greatest single correlation of high income is the education level of one's parents.

The Fed study showed that income, earnings, and wealth increased with education levels. It also found that college graduates had the most wealth compared to earnings than those without college. They were able to save and invest more of their earnings.

In 2017, 29 percent of American adults had only a high school education. On average, they earned $712 per week. Those without a high school degree only earned $520 a week. Another 10 percent had an associates degree. They earned $836 a week.

The 21 percent with a college degree earned $1,173 per week on average.

Only 9 percent had a Master's, earning $1,401 per week. Even fewer, 1 percent, had a professional degree, such as doctor or lawyer. They garnered $1,836 a week. The 2 percent of the population who were Ph.D.s earned $1,743 a week.

The increasing cost of education makes that pathway more difficult for those in low income families. Instead of a pathway, it looks like a block. The best way to overcome that is to create more equity in education. It would provide more resources to those at the lowest levels to help them catch up.

The group with the worst economic mobility were single women with children. They were also most likely to be in financial trouble.

Between 1979 and 2007, income inequality destroyed Americans' economic mobility. The gaps between the rich and the poor have grown wider. Household income increased 275 percent for the richest 1 percent of households. It rose 65 percent for the top fifth. The bottom fifth only increased 18 percent. That's true even after "wealth redistribution." In other words, subtracting all taxes, and adding all income from Social Security, welfare and other payments.

Since the rich got richer faster, their piece of the pie grew larger. The richest 1 percent increased their share of total income by 10 percent. Everyone else saw their piece of the pie shrink by 1-2 percent. In other words, even though the income going to the poor improved, they fell further behind when compared to the richest.

The 2008 financial crisis worsened the gap. The rich got richer through the recovery. In 2012, the top 10 percent of earners took home 50 percent of all income. That's the highest percent in the last 100 years. The top 1 percent took home 20 percent of the income, according to a study by economists Emmanuel Saez and Thomas Piketty.

White children whose parents are in the top fifth of the income distribution have a 41.1 percent chance of staying there as adults; for Hispanic children, the rate is 30.6 percent, and for Asian-American children, 49.9 percent.

But for black children, it's only 18 percent, and for American Indian children only 23 percent. They have the same likelihood to fall to the bottom fifth of the income distribution as to stay in the top fifth.

Conversely, upward mobility for children born into the bottom fifth of the distribution is markedly higher among whites than among black or American Indian children. Among children who grew up in the bottom fifth of the distribution, 10.6 percent of whites make it into the top fifth of household incomes themselves, as do 25.5 percent of Asian-Americans. By contrast, only 7.1 percent of Hispanic children born in the bottom fifth make it to the top fifth, along with 3.3 percent of American Indian children and a tiny 2.5 percent of black children.

The disadvantage is most striking among the men. Black men born into families at the 75th percentile of the income distribution wind up, on average, 12 percentiles below white men born into equally affluent families. Black and Caucasian women are more likely than men to remain in the income range they were born into. But women of both races earn less than men.

As a result of all these blocks, most Americans don't aspire to get ahead. In a 2017 study, 85 percent of respondents more worried about falling behind. Almost 40 percent of those surveyed couldn't afford a $500 financial emergency. They had to go to friends or family to cover an unexpected bill that size. One reason is one-quarter of American workers makes less than $10 per hour. They are living below the federal poverty level. Their focus on short-term financial survival prevents them from pursuing long-term goals.

The United States has lower rates of income mobility than other developed countries. America scores lower than France, Germany, Sweden, Canada, Finland, Norway and Denmark. The researchers concluded that the idea of America as the land of opportunity was misplaced.

As a result, the concept of rags-to-riches in a generation is no longer a realistic component of the American Dream. The American Dream is the ideal that the government should protect each person's opportunity to pursue their own idea of happiness. The Founding Fathers embodied it into the Constitution.

They put into law the revolutionary idea that each person's desire to pursue happiness was not just self-indulgence. It was a part of what drives ambition and creativity. By legally protecting these values, they created a society that attracted those who want a better life. But decreasing economic mobility threatens that dream.

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Economic mobility is the ability of someone to change their income or wealth. It is measured over generations or during one's lifetime. Research has found that the best way to improve one's mobility is through education. But the increasing cost of education is creating a block to those starting out in low-income families.

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What would happen if we gave everyone free money, every year, forever, with no strings attached?

This is a concept known as a "universal basic income," or UBI. The idea is to guarantee everyone some minimum amount of money so that no one has to live in poverty. And while it might sound a little crazy, the idea is being tested around the world - with pilot studies in Canada, Finland, the Netherlands, Kenya, and even one in the United States, based out of Silicon Valley.

In the most recent episode of the Weeds in the Wild podcast, we explored a Kenyan pilot experiment run by a nonprofit called GiveDirectly. They're giving everyone in a small village around $22 a month for the next 12 years. We talked about how it might shape policies overseas.

In our reporting, we also talked to two people about something slightly different: what a universal basic income might mean here in the United States.

Bob Greenstein has been working on poverty-related policies for 45 years. He's with the Center on Budget and Policy Priorities.

Andy Stern is a former national union leader.

Stern and Greenstein both like the concept of universal basic income and think that people could be trusted to spent a basic income appropriately.

But when it comes to making an American universal basic income a reality, the two have examined the same set of facts and come to fundamentally different conclusions. We spoke to Greenstein and Stern on different occasions, but we asked each of them questions about arguments the other had raised. We've put them into a kind of dialogue, so that they can address each other's claims.

Would a universal basic income work in the United States?

Greenstein is skeptical of the idea. He worries, given his experience in the United States, that creating something like a UBI here would mean slashing other important safety net programs. And he doesn't think it's worth the trade-off:

UBI would replace virtually every program in the federal budget focused on low- or moderate-income people.

No food stamps. No Medicaid. No low-income housing. Forget child care. Head Start. Job training. Pell Grants to help people attend college.

You're going to have more deep poverty, homelessness and things like that. That's not what UBI proponents favor, I know. I've had discussions with people where they say, Bob, that's not what we're calling for! I know!

But what they're calling for? I don't see it in the US politically. I share the goals; I just don't think you can get there from here. And I want to focus on progress we can make.

Stern argues that the US is losing jobs to automation and new technology, and is only going to lose more. He says we need to start getting very creative about ways to solve the problems that job loss will create. A universal basic income might mean cuts to welfare, Stern admits, but he argues that it would be an effective way to build bipartisan support, or "crossover."

I think it's politically unfeasible in a ... world that, at the moment, politically, is controlled at a federal level by Republicans that we're going to hold on to the things that Bob says we need to improve upon.

I think you need crossover. And I think Bob is right that if you gave the Republicans a free rein, they would cut too many programs and hurt too many people, but I don't think that's the starting place for the discussion.

I am for getting rid of some of basic welfare as we know it. I would get rid of EITC [the earned income tax credit], food stamps, [and] unemployment insurance, and substitute cash for it. I would never touch, you know, Medicare, Medicaid, and Social Security. So I'm taking about half of the existing welfare programs and repurposing them for a universal basic income.

How would we pay for it?

The two also disagree about whether it would be possible to fund a universal basic income even if you did make cuts to welfare as we know it. Stern has a plan to offer $1,000 a month to every citizen between the ages of 18 and 64. He estimates it will cost around $1.7 trillion, and believes we could find that by shuffling around our tax code:

I think paying for things is always important. I say that there's $500 billion as part of the 122 current cash transfer programs that could be repurposed for this.

There's $1.3 trillion in sort of corporate tax expenditures, which mostly go to [the] middle and upper middle class. There're tax breaks, you know, for things like charitable deductions or your second vacation home that most working people don't ever get to take advantage of...

People who've lived in other countries understand that we're the only country in the OECD that doesn't have a value-added tax of any level. You know, that would raise a tremendous amount of money.

So to me it's about political will, not a question of is there enough money in the United States.

Again, Greenstein doesn't believe that's politically feasible. He told us that a radical shift like this is unlikely to pass, especially since it involves the government giving cash payments to people without jobs. Policy change, he says, is incremental:

Yes, I know that UBI supporters, some of them, say, "No, no, we'll do huge taxes on the rich." Well, we haven't done a really good job of getting them through. You completely lose the right side of your left-right coalition when you do that.

And besides, we're going to need very substantial tax increases in the years ahead just to shore up and prevent insolvency in Social Security and Medicare, to deal with other big problems like crumbling infrastructure, climate change...

If I thought the political culture in the US was like Western Europe, where you have much higher levels of taxation, and more universal support, I'd love that. I'm for that. But that's not the real world in the US.

The political culture and history of the US is very clear that policymakers and the general public do not support big cash payments for poor people who don't work, who don't have jobs, who aren't employed.

I don't agree with that! I've spent years fighting that!

I have really learned in 45 years in the trenches that there is not the same kind of support in this country. I wish there were!

Wishing doesn't make it so.

I've been working here on poverty and budget issues since 1972, and what I've really learned is: Change comes incrementally in this country.

It's ﻿unglamorous. It's frustrating. It's imperfect. The name of the game is just to spend year after year, decade after decade, working as hard as you can.

If automation eliminates jobs, a basic income could be a solution

Stern thinks the loss of jobs to automation is going to change what is and isn't politically feasible:

I think technology is gonna destroy the labor market as we know it, and it's going to create a desperate need to find solutions in order to provide social stability.

Wealthy people, historically - when there were riots in the '60s, you know - were able to respond in order to in some ways protect themselves. But now their kids, middle-class kids, are going to be affected.

So I think there will be a growing political movement that includes middle-class people involved.

And, Stern adds, the policies Greenstein is fighting for may not be any more feasible than a UBI in the current political climate.

We're about to lose some of the most basic programs we had, like Medicare, potentially. I don't think there's any proof that it's any more politically feasible to hold on to what we have than to build on a big new idea.

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The case for and against a universal basic income in the United States

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What would happen if we gave everyone free money, every year, forever, with no strings attached? This is a concept known as a "universal basic income," or UBI. The idea is to guarantee everyone some minimum amount of money so that no one has to live in poverty.

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The US Census Bureau dropped its annual load of statistics on American poverty and income last year, and the data shows that 2017 was a good year for many Americans, and not-so-great for others.

On the upside: 2.4 million more people snagged full-time jobs, the median household income ticked up, and poverty rates dropped slightly.

On the downside: Women still earned about 80 cents for every dollar a man earned, incomes grew slower than they did in the previous two years, and that income growth mostly benefited the richest 10 percent of US families.

The bottom 10 percent of US households - earning an average income of $14,219 - saw their incomes fall slightly compared to the previous year, adjusting for inflation. But one of the most striking data points shows the massive economic impact that federal entitlement programs, such as food stamps and housing subsidies, have on low-wage workers.

During President Donald Trump's first year in office, income from these safety net programs directly kept 44.9 million people out of poverty in 2017. That's 200,000 more people compared to 2016. So far, Trump and congressional Republicans have been unable to gut spending on the safety net programs they have long despised, facing resistance from Democrats whose votes they needed to pass a budget deal in March.

Of all the social safety net programs, Social Security had the biggest impact last year, keeping 27 million people above the poverty level, which was $12,060 for an individual in 2017. Refundable tax credits, such as the earned income tax credit, helped another 8.3 million people. Food stamps (a.k.a. SNAP), disability insurance, and housing subsidies each kept about 3 million people from falling into poverty.

That good news, however, was (partly) canceled out by one of the most persistent drivers of economic hardship: health care costs. In 2017, out-of-pocket medical costs, which includes health insurance premiums, copays, and prescription drug costs, pushed the incomes of 10.9 million people below the poverty threshold. That's 400,000 more people who were impoverished by medical bills in 2017, compared to last year.

This chart sums it up quite well:

The new data confirms what progressive policy groups and Democrats have long argued: Large government anti-poverty programs work.

That said, the census data also suggests an exception: Obamacare, which remains in place despite the current administration's efforts to cripple it, is not lowering health care costs enough to put a huge dent in the official poverty rate. More importantly, it suggests that current Republican efforts to slash welfare spending, and the president's efforts to sabotage Obamacare, will just make Americans a whole lot poorer.

The rosy view from the White House

The White House is quite happy with the new census report, or at least, President Donald Trump's economic advisers seem pleased.

In a statement released Wednesday, the president's Council of Economic Advisers said the new report signals that the effects of a "strong economy are reaching Americans throughout the United States."

The council downplayed the impact of the safety net programs - long detested by Republicans - on the country's economic health.The official poverty rate (which is based on outdated, limited economic factors) dropped from 12.7 percent to 12.3 percent. And the Supplemental Poverty Measure, which includes more forms of income, showed a more modest drop from 14 percent to 13.9 percent.

Yet the White House tried to make the case that these social programs are doing more harm than good.

"While absolute material hardship has declined, less success has been achieved in strengthening self-sufficiency. Employment rates of non-disabled working-age adults have been stunted, and their dependency on welfare programs has grown. It is important to ensure that welfare programs do a better job of promoting work, especially in today's hot economy. Expanding work requirements in welfare programs can help achieve that goal," the economic advisers wrote in their statement.

The idea that welfare is keeping people from working is a deeply entrenched belief within the GOP. There is some truth to it, but research shows that the incentive to avoid working is actually quite small, and many of the federal government's biggest social programs already have work rules. These requirements were implemented as part of the 1996 welfare reform legislation signed by former President Bill Clinton.

For example, one program that has work requirements is the Supplemental Nutrition Assistance Program, often known as food stamps. Beneficiaries who are not disabled, and have no children, must work 80 hours a month, or show they're meeting other similar requirements.

But in regard to other programs that don't require beneficiaries to work, such as Medicaid - most of the recipients work anyway. Two out of three Medicaid recipients have jobs, and the rest are mostly people who are ill, disabled, retired, or taking care of a family member.

Vox's Alvin Changand Tara Golshan reviewed the research on the impact of forcing welfare recipients to work in exchange for benefits, which is something several states have tried. They say the rules did increase employment among participants, but only by very little, because most beneficiaries were already working. And they note that the requirements didn't do much to lift people from poverty:

Work requirements barely caused poverty rates to budge, partially because even people who found work weren't earning enough to lift themselves out of poverty. In addition, at half the experiment sites, work requirements caused more people to be in deep poverty.

The fact that work requirements don't seem all that effective in helping keep Americans out of poverty hasn't discouraged Republicans from pushing for more work rules, or from trying to slash millions of dollars in spending on the social programs that seem most effective in preventing economic hardship.

Republicans are chipping away at the social safety net

It's no secret that Trump and Republican leaders in Congress want to gut the government's anti-poverty programs. The president's budget proposal for fiscal year 2019 would slash spending on Medicare, Medicaid, food stamps, and housing assistance over the next 10 years. It includes a7.1 percent cut to Medicare, a 22.5 percent cut to Medicaid and Obamacare subsidies, a 27.4 percent cut to SNAP, and a 20.1 percent cut to Section 8 housing aid.

Trump can't cut all this from the budget without Congress, and Republican leaders on Capitol Hill would love to do so. The president's proposal mirrors budget plans House Speaker Paul Ryan proposed when he was the House Budget Committee chair.

Congress is still trying to hammer out a spending bill to fund the government in 2019 and will need to get some Democrats on board to avoid a potential shutdown. So they might not be able to squeeze the social safety net as much as they are hoping they can.

For now, though, Republicans aretoughening up work requirements, hoping it will knock people off welfare.

In January, the Trump administration let states to impose work requirements for Medicaid, which provides health care to Americans who are poor and disabled. Then in April, Trump told his Cabinet to find other social services on which they could add work requirements or make existing rules harsher.

And in July, House Republicans passed a farm bill that imposes strict work requirements on food stamps, but the Senate took them out before passing its version. Ryan hasn't given up.

"In this economy, with all of the opportunities available, there could not be a better time to help more people move from welfare to work," he said at an event in July.

This popular GOP solution to deal with poverty conveniently leaves out an important fact: Millions of full-time workers qualify for welfare because businesses pay them poverty wages. Wages are hardly rising, and these social welfare programs could be the only reason millions of low-wage workers have food on the table.

So while this year's census data shows that safety net programs helped millions of low-income Americans pay their bills and feed their families, if Trump and his fellow Republicans get their way, that might not be the case next year. The numbers from the next report may not be as rosy.

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Social Security, food stamps, and other programs kept 44 million people out of poverty last year

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The US Census Bureau dropped its annual load of statistics on American poverty and income last year, and the data shows that 2017 was a good year for many Americans, and not-so-great for others. On the upside: 2.4 million more people snagged full-time jobs, the median household income ticked up, and poverty rates dropped slightly.

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Space, place, race: Six policies to improve social mobility

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Richard Reeves and Allegra Pocinki review six policy proposals brought forth at a recent event featuring Professor Raj Chetty on place, opportunity, and social mobility.

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WASHINGTON - Benjamin Franklin did it. Henry Ford did it. And American life is built on the faith that others can do it, too: rise from humble origins to economic heights. "Movin' on up," George Jefferson-style, is not only a sitcom song but a civil religion.

But many researchers have reached a conclusion that turns conventional wisdom on its head: Americans enjoy less economic mobility than their peers in Canada and much of Western Europe. The mobility gap has been widely discussed in academic circles, but a sour season of mass unemployment and street protests has moved the discussion toward center stage.

Former Senator Rick Santorum of Pennsylvania, a Republican candidate for president, warned this fall that movement "up into the middle income is actually greater, the mobility in Europe, than it is in America." National Review, a conservative thought leader, wrote that "most Western European and English-speaking nations have higher rates of mobility." Even Representative Paul D. Ryan, a Wisconsin Republican who argues that overall mobility remains high, recently wrote that "mobility from the very bottom up" is "where the United States lags behind."

Liberal commentators have long emphasized class, but the attention on the right is largely new.

"It's becoming conventional wisdom that the U.S. does not have as much mobility as most other advanced countries," said Isabel V. Sawhill, an economist at the Brookings Institution. "I don't think you'll find too many people who will argue with that."

One reason for the mobility gap may be the depth of American poverty, which leaves poor children starting especially far behind. Another may be the unusually large premiums that American employers pay for college degrees. Since children generally follow their parents' educational trajectory, that premium increases the importance of family background and stymies people with less schooling.

At least five large studies in recent years have found the United States to be less mobile than comparable nations. A project led by Markus Jantti, an economist at a Swedish university, found that 42 percent of American men raised in the bottom fifth of incomes stay there as adults. That shows a level of persistent disadvantage much higher than in Denmark (25 percent) and Britain (30 percent) - a country famous for its class constraints.

Meanwhile, just 8 percent of American men at the bottom rose to the top fifth. That compares with 12 percent of the British and 14 percent of the Danes.

Despite frequent references to the United States as a classless society, about 62 percent of Americans (male and female) raised in the top fifth of incomes stay in the top two-fifths, according to research by the Economic Mobility Project of the Pew Charitable Trusts. Similarly, 65 percent born in the bottom fifth stay in the bottom two-fifths.

By emphasizing the influence of family background, the studies not only challenge American identity but speak to the debate about inequality. While liberals often complain that the United States has unusually large income gaps, many conservatives have argued that the system is fair because mobility is especially high, too: everyone can climb the ladder. Now the evidence suggests that America is not only less equal, but also less mobile.

John Bridgeland, a former aide to President George W. Bush who helped start Opportunity Nation, an effort to seek policy solutions, said he was "shocked" by the international comparisons. "Republicans will not feel compelled to talk about income inequality," Mr. Bridgeland said. "But they will feel a need to talk about a lack of mobility - a lack of access to the American Dream."

While Europe differs from the United States in culture and demographics, a more telling comparison may be with Canada, a neighbor with significant ethnic diversity. Miles Corak, an economist at the University of Ottawa, found that just 16 percent of Canadian men raised in the bottom tenth of incomes stayed there as adults, compared with 22 percent of Americans. Similarly, 26 percent of American men raised at the top tenth stayed there, but just 18 percent of Canadians.

"Family background plays more of a role in the U.S. than in most comparable countries," Professor Corak said in an interview.

Skeptics caution that the studies measure "relative mobility" - how likely children are to move from their parents' place in the income distribution. That is different from asking whether they have more money. Most Americans have higher incomes than their parents because the country has grown richer.

Some conservatives say this measure, called absolute mobility, is a better gauge of opportunity. A Pew study found that 81 percent of Americans have higher incomes than their parents (after accounting for family size). There is no comparable data on other countries.

Image

Occupy protesters, like these in Flint, Mich., have pushed discussions about economic mobility toward center stage. Credit... Ryan Garza/The Flint Journal, via Associated Press

Since they require two generations of data, the studies also omit immigrants, whose upward movement has long been considered an American strength. "If America is so poor in economic mobility, maybe someone should tell all these people who still want to come to the U.S.," said Stuart M. Butler, an analyst at the Heritage Foundation.

The income compression in rival countries may also make them seem more mobile. Reihan Salam, a writer for The Daily and National Review Online, has calculated that a Danish family can move from the 10th percentile to the 90th percentile with $45,000 of additional earnings, while an American family would need an additional $93,000.

Even by measures of relative mobility, Middle America remains fluid. About 36 percent of Americans raised in the middle fifth move up as adults, while 23 percent stay on the same rung and 41 percent move down, according to Pew research. The "stickiness" appears at the top and bottom, as affluent families transmit their advantages and poor families stay trapped.

While Americans have boasted of casting off class since Poor Richard's Almanac, until recently there has been little data.

Pioneering work in the early 1980s by Gary S. Becker, a Nobel laureate in economics, found only a mild relationship between fathers' earnings and those of their sons. But when better data became available a decade later, another prominent economist, Gary Solon, found the bond twice as strong. Most researchers now estimate the "elasticity" of father-son earnings at 0.5, which means that for every 1 percent increase in a father's income, his sons' income can be expected to increase by about 0.5 percent.

In 2006 Professor Corak reviewed more than 50 studies of nine countries. He ranked Canada, Norway, Finland and Denmark as the most mobile, with the United States and Britain roughly tied at the other extreme. Sweden, Germany, and France were scattered across the middle.

The causes of America's mobility problem are a topic of dispute - starting with the debates over poverty. The United States maintains a thinner safety net than other rich countries, leaving more children vulnerable to debilitating hardships.

Poor Americans are also more likely than foreign peers to grow up with single mothers. That places them at an elevated risk of experiencing poverty and related problems, a point frequently made by Mr. Santorum, who surged into contention in the Iowa caucuses. The United States also has uniquely high incarceration rates, and a longer history of racial stratification than its peers.

"The bottom fifth in the U.S. looks very different from the bottom fifth in other countries," said Scott Winship, a researcher at the Brookings Institution, who wrote the article for National Review. "Poor Americans have to work their way up from a lower floor."

A second distinguishing American trait is the pay tilt toward educated workers. While in theory that could help poor children rise - good learners can become high earners - more often it favors the children of the educated and affluent, who have access to better schools and arrive in them more prepared to learn.

"Upper-income families can invest more in their children's education and they may have a better understanding of what it takes to get a good education," said Eric Wanner, president of the Russell Sage Foundation, which gives grants to social scientists.

The United States is also less unionized than many of its peers, which may lower wages among the least skilled, and has public health problems, like obesity and diabetes, which can limit education and employment.

Perhaps another brake on American mobility is the sheer magnitude of the gaps between rich and the rest - the theme of the Occupy Wall Street protests, which emphasize the power of the privileged to protect their interests. Countries with less equality generally have less mobility.

Mr. Salam recently wrote that relative mobility "is overrated as a social policy goal" compared with raising incomes across the board. Parents naturally try to help their children, and a completely mobile society would mean complete insecurity: anyone could tumble any time.

But he finds the stagnation at the bottom alarming and warns that it will worsen. Most of the studies end with people born before 1970, while wage gaps, single motherhood and incarceration increased later. Until more recent data arrives, he said, "we don't know the half of it."

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Harder for Americans to Rise From Lower Rungs (Published 2012)

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WASHINGTON - Benjamin Franklin did it. Henry Ford did it. And American life is built on the faith that others can do it, too: rise from humble origins to economic heights. "Movin' on up," George Jefferson-style, is not only a sitcom song but a civil religion.

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Welfare programs are government subsidies to the poor. Recipients must prove their income falls below a target, which is some percentage of the federal poverty level. In 2018, that's $25,100 for a family of four.

Welfare Programs in the United States

There are six major U.S. welfare programs. They are Temporary Assistance for Needy Families, Medicaid, Food Stamps, Supplemental Security Income, Earned Income Tax Credit, and Housing Assistance.

The federal government provides the funding, while states administer them and provide additional funds. When the federal government reduces funds without lowering the states' responsibilities, it creates an unfunded mandate. For example, the 1998 reduction in food stamp administration costs added $5 million to state budgets.

Welfare programs are not entitlement programs. Those base eligibility upon prior contributions from payroll taxes.

The four major U.S. entitlement programs in the United States are Social Security, Medicare, unemployment insurance, and worker's compensation. Instead, welfare programs are based on a family's income. To qualify, their income must be below an income based on the federal poverty level.

On April 10, 2018, President Trump signed an executive order directing federal agencies to review work requirements for many welfare programs. The programs include TANF, Medicaid, food stamps, and housing assistance. Trump wants agencies to standardize work requirements between programs and states.

For example, food stamp recipients must find a job within three months or lose their benefits. They must work at least 80 hours a month or participate in job training. But several states, such as Alaska, California, and Nevada, have opted out of the work requirement. They say unemployment rates are too high. The executive order encourages agencies to make sure all states follow the same rules.

The Six Major U.S. Welfare Programs Myths Versus Facts

In 2016, TANF assisted only 23 percent of the families living in poverty. On average, a three-person family received $447 a month. Despite this help, they still live below the poverty line.

Welfare received a bad reputation due to President Reagan's 1976 presidential campaign. He portrayed the welfare queen who cheated the system to get enough benefits to drive a Cadillac. He also warned of how welfare created a cycle of poverty. As a result, 61 percent of Americans believe the government should provide jobs instead of welfare payments.

Fraud like Reagan described has been cut since 1996. That's when President Clinton created TANF out of the ashes of Aid to Families with Dependent Children. The number of families "on the dole" dropped from 10 million before welfare reform to 1.9 million in 2017.

The new requirements were the reason for this decrease. Families who receive TANF must get a job within two years.

They might not get more money if they have another child. They can own no more than $2,000 in total assets. They can only receive TANF for five years or less in some states.

Medicaid also paid health expenses for 9.8 million blind and disabled people. The smallest category was 5.4 million low-income seniors. It paid for any health costs that Medicare didn't cover.

Child's Health Insurance Program. In addition to Medicaid, 6 million children received additional benefits from CHIP. It covers hospital care, medical supplies, and tests. It also provides preventive care, such as eye exams, dental care, and regular check-ups.

Food Stamps is the Supplemental Nutrition Assistance Program. It gives food vouchers to 47.6 million people or 23 million households. They receive $133 a month on average. The total federal cost is $79.9 billion, of which $3.8 billion is administration. It requires recipients without children to work after three months. It waives the requirement for the 2.8 million who live in areas with high unemployment.

There's an additional food stamp program for nursing mothers and young children. The Special Supplemental Food Program for Women, Infants, and Children provides food or vouchers, education, and referrals to help feed pregnant women and children up to age six. In 2017, 7.7 million people received WIC each month. Of those, more than 75 percent were children or infants. ("WIC FAQ" U.S. Department of Agriculture. for 2013)

The Child Nutrition Program provides free or reduced-cost lunches to 30 million children. It costs the federal government $12 billion.

Supplemental Security Program provides cash to help the aged, blind, and disabled to buy food, clothing, and shelter. On average, roughly 8.4 million people receive $536 per month. Of those, 7.3 million are blind or disabled.

Earned Income Tax Credit is a tax credit for families with at least one child. They must earn less than $51,567 a year to qualify. In 2012, over 27 million received credits totaling $63 billion. That's a little more than $2,335 per taxpayer. EITC lifted 6.5 million people out of poverty, half of whom were children. It costs just 1 percent of the amount paid out to administer it. Unfortunately, almost one-fourth of the payments are in error. An unknown amount is fraudulent.

Housing Assistance is provided by 1.2 million units of public housing. The Housing Choice Voucher Program gives certificates to rent approved units. The subsidy allows them to pay no more than 30 percent of their income. Local agencies administer it to 2.2 million renters. This is the old Section 8 program. The Public Housing Agency allows​ some families to use the voucher to purchase a modest home.

Myths About Welfare Programs in General

Ironically, many of those with this belief live in states that receive the most aid. This disconnect is because the states receive aid in the form of federal contracts, grants, and tax cuts.

The residents don't realize that they themselves are benefiting from aid to their state governments.

In 2012, presidential candidate Mitt Romney said that 47 percent of the population would vote Democrat no matter what. He claimed it was because they receive some type of federal assistance.

Instead, the states that rely the most on federal benefits vote Republican. They often aren't aware of how dependent they are on tax credits, such as the interest deduction for home mortgage interest. They only consider visible federal benefits, such as welfare checks or food stamps. As a result, they don't think the government has done much for them personally.

The research shows that welfare and food stamp recipients don't vote much. They are so low-income that they are too busy to try and survive to go to the polls.

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6 Major Welfare Programs Myths Versus Facts

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Welfare programs are government subsidies to the poor. Recipients must prove their income falls below a target, which is some percentage of the federal poverty level. In 2018, that's $25,100 for a family of four. There are six major U.S.

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Understanding the Hidden $1.1 Trillion Welfare System and How to Reform It

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Since the beginning of the War on Poverty, government has spent vast sums on welfare or aid to the poor, but the aggregate cost of this assistance is largely unknown because the spending is fragmented into myriad programs.

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'Inequality is bad for everyone': Robert Reich fights against economic imbalance

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subscribe to Planet Money podcast

According to the government, there are 46.5 million Americans who live below the poverty line. In other words, that's how many people are officially poor. But pretty much everyone who studies poverty agrees: The way we arrive at this figure is completely wrong.

On today's show, we figure out how we got here, why still measure poverty in a way that so many people agree is wrong, and how could we do it better.

For more, see our stories:

* A College Kid, A Single Mom, And The Trouble With The Poverty Line

* The Poverty Rate Ignores Programs That Fight Poverty
Music: Local Natives' "Wide Eyes." Find us: Twitter/ Facebook/Spotify/ Tumblr. Download the Planet Money iPhone App.

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Episode 487: The Trouble With The Poverty Line

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subscribe to Planet Money podcast According to the government, there are 46.5 million Americans who live below the poverty line. In other words, that's how many people are officially poor. But pretty much everyone who studies poverty agrees: The way we arrive at this figure is completely wrong.

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Infographic: What Does it Mean to Be Poor in America?

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Despite the nation's slow economic recovery, lower and middle class incomes have largely stagnated in recent years, broadening the gap between the wealthiest Americans and everyone else.