FATHER DOES BEST?

All of the Democratic presidential candidates warn that this generation could be the first to face downward mobility.

“We are the first generation in the history of the United States that’s going to give less to our children,” former Massachusetts Sen. Paul E. Tsongas says.

“I refuse to stand by and let our children become part of the first generation to do worse than their parents,” Arkansas Gov. Bill Clinton says.

Polls and casual conversations show that many Americans share the fear that their children will face declining living standards.

But are those fears justified?

Frank G. Levy, an economist at the University of Maryland, has made probably the most comprehensive attempts to measure generational progress. In a new book co-written with Richard C. Michel, Levy plots the lifetime earnings of a typical young worker today against the lifetime earnings of his father.

For young men and women with a college degree--still only about one-fourth of the work force--the prognosis is fairly optimistic. Measured in 1987 dollars, the typical 30-year-old college graduate earned $26,000 in 1986--about $4,000 more than his college-educated father earned at age 30 in 1961.

But whether today’s young college graduate maintains that lead depends on whether the growth in productivity continues its sluggish pace of the last decade or rises to a higher figure closer to the long-term trend.

As the chart shows, if productivity growth returns to its historical level, today’s typical college graduate is projected to top out at average wages of $51,200--about $10,000 more than his father’s peak. But, if productivity continues to inch forward at its recent pace, the son’s best year will be only $1,700 better than his father’s.

For high school graduates--about 55% of all workers--the picture is much gloomier, largely because of the decline in high-paying manufacturing jobs. Even at a high rate of productivity growth, Levy and Michel estimate that today’s 30-year-old high school graduate--though slightly ahead at this point in his life--will just about equal his father’s best wages. But, if productivity growth continues at its recent rate, he will fall 20% short of his father’s peak.

Which future seems more likely? Lawrence Mishel, research director of the Economic Policy Institute in Washington, citing continued pressure from imports and the decline of unions, concludes that “any way you look at it, the vast majority of workers are going to see their opportunities erode.”

Even increasing the number of college graduates would not help much, Mishel argues, “because at most 30% of the jobs by the year 2000 will require a college education. If we educated three-fourths of the work force with a college degree, they wouldn’t all see their wages rise.”

But Levy is cautiously optimistic that the restructuring of American business--hastened by the pressure of the recession--may seed the ground for greater productivity, and earnings, gains in the 1990s. At least that is what he hopes.

“The definition of the American dream is mass upward mobility,” Levy says. “To my mind, when you have people who have a set of aspirations that are not totally out of whack and they fail to reach them year after year, that gives rise to a search for scapegoats.”

FATHER-SON INCOME COMPARISON: College Graduates Source: The Economic Future of American Families, Urban Institute Press, 1991.