Sunday, June 10, 2007

Social mobility in the US

The classic American Dream is about how anyone can become rich in the US through hard work and endurance, no matter how humble a background they come from.
There are many stories out there about how someone got out of poverty and became rich - among them Kirk Douglas' auto-biography The Ragman's Son, in which he describes his childhood in absolute poverty, and how he worked his way up to become a world-famerous actor (and how he had to hide his Jewish background to be able to do so).

However, for each such tale, there are literately hundred of thousands of untold stories about those who didn't make it. Those that grew up in poverty, and stayed in poverty. Or those that sank into poverty either through bad decisions, or sheer ill luck.

What I want to do with this post, is to provide an place for links to articles and papers about social/income mobility in the US. The idea is to make it easier for people to find out the true state of affairs of the American dream. Something that large groups of the US don't seem to know. As a NY Times article from their 2005 special feature about class in the US made clear:

Most Americans remain upbeat about their prospects for getting ahead. A recent New York Times poll on class found that 40 percent of Americans believed that the chance of moving up from one class to another had risen over the last 30 years, a period in which the new research shows that it has not. Thirty-five percent said it had not changed, and only 23 percent said it had dropped.

Study after study has shown that income mobility in the US has declined in recent decades, as the article also makes clear

One study, by the Federal Reserve Bank of Boston, found that fewer families moved from one quintile, or fifth, of the income ladder to another during the 1980's than during the 1970's and that still fewer moved in the 90's than in the 80's. A study by the Bureau of Labor Statistics also found that mobility declined from the 80's to the 90's.

What the study (.pdf) by the Federal Reserve Bank of Boston also shows, is that the poorest quintile was the least mobile of all the quintile - 53.3% of all from the poorest quintile stayed there.

Interestingly enough, research also shows that the American Dream is more alive in Europe, than in the US. And not just in Scandinavia, but also in the UK and France.

One surprising finding about mobility is that it is not higher in the United States than in Britain or France. It is lower here than in Canada and some Scandinavian countries but not as low as in developing countries like Brazil, where escape from poverty is so difficult that the lower class is all but frozen in place.

Those comparisons may seem hard to believe. Britain and France had hereditary nobilities; Britain still has a queen. The founding document of the United States proclaims all men to be created equal. The American economy has also grown more quickly than Europe's in recent decades, leaving an impression of boundless opportunity.

But the United States differs from Europe in ways that can gum up the mobility machine. Because income inequality is greater here, there is a wider disparity between what rich and poor parents can invest in their children. Perhaps as a result, a child's economic background is a better predictor of school performance in the United States than in Denmark, the Netherlands or France, one recent study found.

This flies against the perception that most people have.

The mis-perception of how the true state of affairs is, could explain why there is a greater adversion towards social welfare in the US. If you believe that it's possible to get out of poverty through hard work, it social welfare would seem like support of people who are not willing to work. The legendary "welfare queens" that Reagan talked about back in the days.
A belief in upwards mobility could also explain why many people accept tax-cuts for the high income groups, instead of more distributed tax-cuts, that also benifits low income groups.

This theory is supported by a bi-partisan study (.pdf) carried out by the Economical Mobility Project, which consists of a coorperation between The American Enterprise Institute, The Brookings Institution, The Heritage Foundation and The Urban Institute. Here they found out that while only 33% of Americans agreed with "It is the responsibility of government to reduce differences in income", fully 89% of respondends from other countries agreed. As the study explains

The underlying belief in the fluidity of class and economic status has differentiated Americans from citizens in the majority of other developed nations. As the data in Figure 1 suggest, compared to their global counterparts, Americans have tended to be far more optimistic about their ability to control their own economic destinies through hard work, less likely to believe that coming from a wealthy family is important to getting ahead, less likely to think that differences in income within their country are too large, and less likely to favor the government’s taking responsibility to reduce those differences.

I highly recommend reading the report, and am looking forward to the future work of this bi-partisan project.

Hopefully it will be noticed enough to become an issue in the next US presidential race.

Other resources:
The Russel Sage Foundation's working papers on inequality

The Growing Importance of Family and Community: An Analysis of Changes in the Sibling Correlation in Earnings (.pdf) by Bhashkar Mazumder and David I. Levine (revised edition 2004, Federal Reserve Bank of Chicago)

If you have any good links on the subject, please feel free to post them in the comments.

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Blogger Sally Burr said...

This may be of interest to you. It is UK based research but I imagine the implications are similar for those who are young and disadvantaged in the US. London School of Economics and Social Policy (LSE) and Joseph Rowntree Foundation: Disadvantaged young people looking for work; A job in itself?
Best wishes,
Sally Burr

November 16, 2013 8:09 PM  

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