Tag Archives: social mobility and income inequality

Tips For Adulthood: Five Facts About Social Mobility

Every Wednesday I offer tips for adulthood.

One of the hallmark features of adulthood is believing that you have the means to better yourself. As you step outside the comfort zone of the home in which you were raised, part and parcel of your newfound freedom and responsibility is harnessing that independence towards making something of yourself.

In the American context, at least, there’s the added belief that where you start doesn’t affect where you end up. Describing the putative American Dream, Horatio Alger wrote that we live in  “a social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position.”

In other words, people of my generation – and those before me – were all raised believing that, regardless of where we started, we could achieve a life for ourselves that was as good as – if not better than – that of our parents.

What a bummer to discover that this great national mythology that’s sustained us for so many generations may no longer be true. Indeed, a spate of recent studies suggests that Americans – unlike many of their European counterparts – are no longer upwardly mobile.

Here’s what I’ve learned:

1. Social mobility is declining in the U.S. The basic data are startling. According to research by the Economic Mobility Project of the Pew Charitable Trusts, despite frequent references to the United States as a classless society, about 62 percent of Americans (male and female) raised in the top fifth of incomes stay in the top two-fifths. Meanwhile, 65 percent born in the bottom fifth stay in the bottom two-fifths. Pew further found that nearly one third of individuals raised in middle-class families couldn’t hold on to their status when they reached adulthood. Yikes.

2. Increased Income inequality is a major culprit. In a recent article in The Atlantic on this topic, Timothy Noah talks about one of the major causes of downward mobility in America: rising income inquality. Drawing on data by labor economist Alan Kreuger and others, Noah notes that during the American industrial revolution, growing income inequality was the price the United States paid for growing economic mobility. In the present era, in contrast, income inequality may be choking off opportunity. If you want to see this in comparative perspective, have a look at this graph of this so-called Great Gatsby Curve on Paul Krugman’s blog at The New York Times which shows quite clearly that the U.S. is both more unequal than other comparable developed countries (as measured by its Gini coefficient) and also has quite limited social mobility (as measured by income heritability). Kreuger further predicts that the persistence in the advantages and disadvantages of income passed from parents to children will rise by about a quarter for the next generation as a result of the rise in inequality that the U.S. has seen in the last twenty-five years. (The U.K. exhibits a similar trend.)

3. The Higher Education System is also to blame. Another culprit is America’s higher education system, which – despite efforts to broaden its applicant pool – remains highly exclusive. A Georgetown University study of the class of 2010 at the country’s 193 most selective colleges showed that of entering freshmen, only 15 percent of students came from the bottom half of the income distribution, while sixty-seven percent came from the highest-earning fourth of the distribution. (Again, you see a similar trend in the U.K.) Another study showed that recruiters for the best firms in investment banking, law and consulting hire disproportionately from only five top schools. With a year’s worth of higher education clocking in at near $50,000, is this at all surprising?

4. Race and Gender matter too. The Pew Study on Economic Mobility also showed that a number of factors have impacted adults’ ability to earn a middle-class income like their parents. Among them are marital status, educational attainment, race and even gender. For instance, those who are divorced, widowed or separated are more likely to fall out of the middle class, and women face a greater likelihood than men. Also, Americans who don’t attend college are likely to face downward mobility, with African American men the most likely to drop out of the middle class.

5. Class tension is also on the rise. In light of all of the above, it should come as no surprise that class conflict is also on the rise. According to a different study by Pew, conflict between rich and poor now eclipses racial strain and friction between immigrants and the native-born as the greatest source of tension in American society.


Image: HIP_339628104.219198 by Steve Rhodes via Flickr under a Creative Commons License.