Salt Lakers have better chance of moving up economic ladder than others, study says

Published: Monday, July 22 2013 8:25 p.m. MDT

To measure economic mobility, researchers gathered millions of household income records for unidentified 30-year-olds in the United States, and their parents' earnings between 1996 and 2000.

They found "significant correlation" between the tax rates and mobility, according to the executive summary of the study, but little correlation between the Earned Income Tax Credit and mobility.

While the tax programs have some impact on mobility, it did not explain everything, according to Nathan Hendricks, one of the study's authors. They found "variation that we had no idea existed."

"That was just so surprising to us and from what we can tell, it's been surprising to other people as well," he said.

The first step was to identify which areas are doing well and which were not. The next, he said, is to understand what components account for those differences.

"There are differences and there are places that are good at helping people rise out of their present circumstance," he said, but research has yet to determine the specific patterns for success.

For instance, a child who grew up in Salt Lake whose family made less than $30,000 per year has an 11.5 percent chance of making $100,000 or more, whereas in Charlotte, N.C., they have a 4.3 percent chance.

Even though Utah is doing well compared to other areas in the nation, 11.5 percent is still not great, Perlich said. "It's not zero. I guess that's good news."

Although nothing has been proven about what causes some regions to be fruitful for economic opportunities and others not, the study did reveal one trend, Perlich said: income inequality.

"We know that the context is that we have incredible inequality of wealth and income in our country," Perlich said. "That's a given."

A lot of social safety net policies have disappeared with or before the recession, including benefits and high paying jobs, Perlich said.

This study set out to see how tax benefits "stem the tide" that has risen with these lost opportunities.

"It's really a very incredible piece of work that they've done here in processing a huge and complex data set," Perlich said, but minus the details of why, she said, it is difficult to come to any definite conclusions.

Nic Dunn with the Utah Department of Workforce Services found the study's results to be validating.

"Often at DWS we work on a micro level — person to person helping connect you know John Doe with a job opportunity. And then we see stories like this come out and we see, essentially, we're seeing a good return on our investment."

The Department of Workforce Services works to help not only people, but families, Dunn said. The department also reaches out to the different age demographics in Utah, offering youth and traditional job fairs to help citizens "chart a path so they're not spinning their wheels."

It also works to connect individuals with education to help their economic situation.

"What we do is a small piece of the puzzle that helps Utah succeed on the economic stage," Dunn said.

The data and research are available at equal-of-opportunity.org.

Email: wevans@deseretnews.com

Twitter: whitevs7

Try out the new DeseretNews.com design!
try beta learn more
Get The Deseret News Everywhere