Where you live may be hampering your economic potential.
If you live in New York, New Jersey or Maryland, chances are your prospects for moving up the ladder of financial success are better than if your home is in Oklahoma, Louisiana or South Carolina.
A study by the Pew Charitable Trust called “Economic Mobility of the States” paints a gloomy picture for many southern states when it comes to whether residents there are likely to have better economic mobility. But many states in the Northeast seem to fare better when it comes to things like average earnings growth.
“When it comes to achieving the American Dream, it matters where you live,” said Erin Currier, project manager of Pew’s Economic Mobility Project, released Wednesday.
The report looked at average earnings for workers ages 35 and 39, and measured those earning from 1978 through 1997. Researchers then looked at how those rose and fell a decade later when the same individuals were 45 and 49.
To measure economic mobility, the researchers looked at absolute mobility – average earnings growth over time – and upward and downward relative mobility – measuring people’s rank on the ladder relative to their peers.
Here’s a breakdown on the economic mobility winners and losers:
- Eight states, primarily in the Mideast and New England regions, have consistently higher upward and lower downward mobility compared to the nation as a whole: Maryland, New Jersey, and New York have better economic mobility than the national average on all three measures investigated; Connecticut, Massachusetts, Pennsylvania, Michigan, and Utah have better mobility than the national average on two measures.
- Nine states, all in the South, have consistently lower upward and higher downward mobility compared to the nation as a whole: Louisiana, Oklahoma, and South Carolina have worse economic mobility than the national average on all three measures investigated; Alabama, Florida, Kentucky, Mississippi, North Carolina, and Texas have worse mobility than the national average on two measures.
Several factors propel economic mobility, said Nikolai Roussanov, professor of finance at the Wharton School of Business.
“For the bulk of the population, education is the main driver of upward mobility; accessibility to education and educational opportunities,” he said. “But, it’s also determined on how you apply the education, what sort of careers people go into.”
Beyond education, he added, entrepreneurship has the potential to enrich individuals. “The ability and willingness of people to start their own businesses and take risks is a big driver of wealth mobility,” he said.
And just because you don’t live in a region with better overall economic mobility doesn’t mean you won’t succeed, he said. “Even in areas where there is limited access to education there could be people taking big risks, and they can be successful and move up,” he said.
The Pew numbers tell an interesting story on where the better job opportunities may be, and it seems employers also see the potential.
Another study on mobility, this one from national moving company Atlas Van Lines, found that the Northeast is the top transfer location for companies relocating employees.
Atlas reported earlier this month that: “The Northeast is now the top destination of transfers (42 percent) followed by 2011’s top destination, the Midwest (37 percent) and the South (31 percent). The West remains fourth in relocation numbers (26 percent).”
If your company isn’t willing to move you, or you don’t have a job yet, it might be a smart idea to consider relocating yourself to a state offering more potential when it comes to upward economic mobility.
The Pew study also found those individuals who moved out of the state where they were born had “better mobility outcomes on average.”
To find out how your state fared in the study go check out Pew’s interactive map.