Confronting the spectre of declining opportunity.

• Author: Sawhill, Isabel V.

"Stagnating incomes and increasing earnings inequality have reconfigured the economic landscape for tens of millions -- particularly younger Americans."

America always has called itself "the land of opportunity." Reality never quite has matched the rhetoric, but a number of factors historically have brought the U.S. progressively closer to that ideal. The continued expansion of opportunities to previously excluded groups, the extension of education to an ever-increasing share of the population, and the impressive economic growth that prevailed for many years all made it easier for opportunity to spread broadly through the population.

In recent years, however, this record has not been sustained. The period since the early 1970s has been marked by an unprecedented decline in opportunity for many, especially young, men without college degrees. Today. it is more difficult than it ever has been for young workers to surpass their parents' standard of living, thereby achieving the proverbial American dream.

The decrease in opportunity is illustrated by the average earnings of young men. Males born between 1940 and 1949, who were ages 25 to 34 in 1974, had average incomes of about $30,000 that year (in 1993 dollars). Men born between 1960 and 1969, by contrast, who were 25 to 34 in 1994, averaged under $23,000 in that year -- a precipitous drop. Similar trends prevail with regard to family and household incomes, although an increase in the number of two-earner families and growth in fringe benefits partially have offset the effects of the decline in individual wages.

Over all, young men today have lower incomes than their counterparts did in earlier years. This reduction in relative well-being early in the earnings cycle is likely to persist or even worsen as this generation ages. These economic trends could have political consequences, as those affected look for someone to blame for their downward mobility.

What has gone wrong'? Two broad economic trends lurk behind the decline in opportunity. First, economic growth has slowed significantly since 1973, causing average earnings to stagnate. Almost simultaneously, earnings inequality has widened. bringing about a dramatic reversal of the trend toward greater equality that had prevailed since World War II. Either trend, occurring alone, would have had troubling consequences. The two together have wrought a wrenching change in prospects for many members of the younger generation.

Upward economic...