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Economic Mobility Remains Stable, and That’s Not a Good Thing

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By Johnathan Mills


 

| A New York Times article from last January detailed research showing that the level of upward economic mobility has remained steady over the last two decades, despite fears that it’s getting harder to escape the socioeconomic class of one’s parents. The study, conducted by Raj Chetty of Harvard University and Emmanuel Saez of UC Berkley, indicates that children born into poor families have about the same odds of reaching higher income brackets as the children of the previous generation.

This is hardly good news, though. Despite not getting any worse over the last twenty years, the level of intergenerational economic mobility is “alarming,” in the words of Saez, who also serves as the director of the Center of Equitable Growth. Less than one in ten of those born into the bottom-fifth of income distribution will reach the top-fifth in their lifetimes. Those in the middle-fifth fare only slightly better: just 20% manage to join the ranks of the highest quintile. Conversely, those born into the highest income brackets tend to stay there. The results also suggest that any progress we’ve made in reducing discrimination and expanding access to education over the last twenty years have done little to increase upward mobility.

The study also points out that because the divide between rich and poor has become more and more vast, the consequences of what the authors call the “birth lottery” are increasingly severe. Those in the middle appear to be falling into the ranks of the poor as wages stagnate and the cost of living rises. As the wealth inequity worsens, the middle class has fallen from 59.5% of the U.S. population in 1979 to 45.1% today.

Perhaps even more troubling, the study indicates that economic mobility in the United States is considerably lower than it is in Canada and Western Europe. The level of upward mobility in Denmark is twice that of the U.S.

Solving our stagnant economic mobility problem is vital not only for upholding our American identity as the land of opportunity, but also for building a more sustainable economy. Writing for the New Economic Foundation, Faiza Shaheen states, “Forecasts show that, without narrowing the gap between the richest and poorest in our societies, other attempts to fight poverty and stabilise the environment could be fatally undermined.”

Strategies for promoting economic mobility are varied. The president’s recent push for free community college tuition is part of a larger effort to increase upward mobility. Higher education has traditionally been seen as a means toward economic mobility. Other options include more progressive taxation of those in the highest income brackets and building a more robust social safety net, but the viability of any measure is predicated on our willingness to accept the severity of the problem.

Keywords: income inequality, economic mobility, wealth gap, education, Raj Chetty, Emmanuel Saez, middle class, wealth inequality

 

Photo: Flikr

1 Comment

  1. Crysti

    I strongly recommend people who interest in this topic to watch a trailer of a British made documentary “56 UP”, this documentary costs a team working for 5 decades to record kids from different family to grow to their 56 years old. It is very reality reflective, and wealthy family kids do become better off. https://www.youtube.com/watch?v=UcrTX6x_qpw

    This truly is a problem of social inequality and unequal educational and other resources allocation. However, if we change our lens, to think that all kids get the same quality education then lazy parents can be less motived to work harder, and free ride on the social resources. Then it becomes a free riding issue, that less fathers and mothers would have incentive to try their best in order to upgrade their class status.

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