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The phrase from clogs to clogs in three generations, and its variants, mean: wealth gained in one generation of a family will be lost by the third generation.

This phrase occurs, for example, in a review of Family Wars: Classic Conflicts in Family Business and How to Deal With Them (Kogan Page, 2008), by Grant Gordon and Nigel Nicholson—review by Jonathan Guthrie, published in the Los Angeles Times (Los Angeles, California, USA) of Monday 7^th July 2008 [page C2, column 1]:

Professional advisors sometimes mutter a damning phrase after first meeting a chief executive who got a job, along with his DNA, from dad—“clogs to clogs in three generations.”
Typically, Grandpa sets the business up, building it to modest size. Pa turns it into a global force across five time zones, or at least across greater Northampton, Britain. Junior runs the company into the ground through incompetence or sheer indifference.

The phrase from clogs to clogs in three generations refers to clogs (i.e., sturdy wooden-soled shoes) being typically worn by factory workers, and hence expressing the idea that the first generation of a family will acquire wealth through hard work, the second will live an affluent life but lack a strong work ethic, and, as a result, by the third generation, the family will be reduced to their original circumstances.
—American-English synonym: from shirtsleeves to shirtsleeves in three generations.

—Cf. also:
– ‘to pop one’s clogs’: meaning and early occurrences;
– ‘where the bugs wear clogs’: meanings and origin;
– ‘clogdogdo’: meaning and origin;
– ‘like one o’clock’: meaning and origin.

These are, in chronological order, the earliest occurrences of the phrase from clogs to clogs in three generations and variants that I have found:
—Note: These early occurrences indicate that this phrase originated in Lancashire, a county of north-western England, on the Irish Sea:

1-: From Notes of a tour in the manufacturing districts of Lancashire; in a series of letters to His Grace the Archbishop of Dublin (London: Published by Duncan and Malcolm, 1842), by the Irish author William Cooke Taylor (1800-1849) [Letter 14 (undated), page 281]:

I should be very much puzzled if I were asked to point out a dozen schools in the country where youth could obtain instruction in those branches of knowledge which are the best calculated to train them for a life of commerce and active business. In plain terms, the manufacturing youth of the higher and middle classes are not trained for the order to which they must eventually belong, but for an order to which there are few chances of their ever attaining, but after which there is all but a perfect certainty that they will render themselves miserable by aspiring. This defect is sufficiently notorious, and one consequence of it has passed into a proverb, that “There is but one generation in Lancashire between clog and clog.”

2-: From Stray Notes, published in The Preston Chronicle and Lancashire Advertiser (Preston, Lancashire, England) of Saturday 1^st February 1868 [page 4, column 6]:

A saying is prevalent in East Lancashire, with reference to the speedy dissipation of property speedily acquired, that “there are only three generations from clogs to clogs,” or as it is sometimes expressed, “clogs to pumps, pumps to clogs.”

3-: From the transcript of a speech made by Mr. Ald. Hutchinson, of Blackburn, Lancashire, during the inaugural tea-party of the Longridge Constitutional Association, held at Longridge, Lancashire, on Thursday 22^nd October 1868, published in The Preston Herald (Preston, Lancashire, England) of Saturday 24^th October 1868 [page 3, column 2]:

What shall I say in reference to the people? Is it not true that in this country all classes recruit one another?—(hear, hear). You know there was an old proverb that said it was clogs to clogs for three generations—(laughter). I believe it is so in a great measure in trading districts; and many of us have, if not in our own persons, at any rate in the persons of our ancestors, have belonged to one class and been raised to another.

4 & 5-: From Notes and Queries: A Medium of Intercommunication for Literary Men, General Readers, etc.—Fourth Series—Volume Seventh (London: Published at the Office):

4-: Of Saturday 3^rd June 1871 [page 472, column 2]:

Pʀᴏᴠᴇʀʙ.—“From clogs to clogs is only three generations.” A Lancashire proverb, implying that, however rich a poor man may eventually become, his great-grandson will certainly fall back to poverty and “clogs.” M. D.

5-: Of Saturday 24^th June 1871 [page 547, column 1]:

“Fʀᴏᴍ Cʟᴏɢꜱ ᴛᴏ Cʟᴏɢꜱ,” ᴇᴛᴄ. (4^th S. vii. 472.) M. D. has sent you a refined copy of the proverb in question. The original, I venture to think, is the better of the two: “There’s nobbut three generations atween clogs and clogs.” Hᴇʀᴍᴇɴᴛʀᴜᴅᴇ.

6-: From the transcript of a speech made by one Mr. Rawlinson at the opening of the Social Science autumnal session, in Present State of the Co-operative Movement, published in The Co-operative News: A Record of Industrial, Political, Humanitarian, and Educational Progress (Manchester, Lancashire, England) of Saturday 16^th December 1871 [page 172, column 3]:
—Note: Yorkshire is a county of north-eastern England, on the North Sea:

The manufacturers of this country have for the most part been working men themselves. In Yorkshire, almost every manufacturer who makes his £150,000, or whatever it may be, generally springs from the workshop, and in many instances to so bad a purpose does he put his wealth, that, according to the general adage of the country, there are only three generations from clogs to clogs again.

7-: From Lancashire Legends, Traditions, Pageants, Sports, &c. (London: George Routledge and Sons, 1873), by the English antiquary John Harland (1806-1868) and the English teacher and author Thomas Turner Wilkinson (1815-1875) [Part 6: Miscellaneous Superstitions and Observances, page 237]:

The aristocracy sometimes complain that their estates are rapidly being absorbed by the money-making, trading population. If the Lancashire adage be true, their misfortunes will only be temporary. We frequently hear it affirmed that “It only takes three generations from clogs to clogs.” This evidently means that a father will get riches during the time he wears clogs; that his sons will squander his money and estates; and that their children will come to wearing clogs again. This is no doubt correct in numerous instances; but there are many marked exceptions.

8-: From the transcript of a speech made by the senior attorney at a Law Society’s dinner, published in The New Zealand Saturday Advertiser, Time-Table and Literary Miscellany (Dunedin, Otago, New Zealand) of Saturday 9^th October 1875 [page 9, column 2]—I have not discovered whom “the Paisley bodies” refers to:

“It is gratifying to find that our New Zealand Parliament has, by “The Real Estate Descent Act, 1874,” which came into operation on the first of this month, taken a step in the right direction. […] This salutary law will be beneficial in a variety of ways. It will operate as a check upon the accumulation of large landed estates. The people’s inheritance may be improvidently sold in 50,000 acre blocks, but the tendency will be for the blocks to disintegrate and be subdivided. The natural law under which wealth never survives the third generation will have full play. There are only three generations between clogs and clogs, the Paisley bodies say, and a similar result will follow in New Zealand.