A Closer Look at Inequality and Mobility
These dimensions of wage, income, and spatial inequality would be less of a concern if the economy afforded real mobility; if everyone was poor when they were twenty, for example, but rich by the time they reached thirty. But, in a startling reversal of both historical and international patterns, Americans are less mobile now than they used to be and less mobile than many of their peers. For most of the full sweep of American history—from the middle of the nineteenth century into the second half of the twentieth—differences in opportunity based on family circumstances fell. For the last generation, however, that progress has stalled.37
This is true of intergenerational mobility [see FIG below]. In the United States, a child whose family income falls into the poorest fifth, has about a 30 percent chance of achieving a middle income or better as an adult. A child born into the richest fifth has about an 80 percent chance of the same achievement. While most Americans have higher family incomes than their parents, there is “stickiness” at both ends of the income spectrum: those born at the bottom or at the top of the income spectrum are likely to stay there. In the 1970s, 36 percent of families stayed in the same income decile; in the 1980s, that figure was 37 percent; and in the 1990s, it was 40 percent. In other words, over time, a larger share of families were staying within their class through the duration of their lives.38
In this respect, the United States has one of the weakest rates of is intergenerational mobility among rich, democratic nations. There is a stronger link between parental education and children's economic, educational, and socio-emotional outcomes in the United States, than in any of its peers. This relative immobility both reflects background inequality, and sustains it: the more unequal the income distribution, the more likely it is that poor kids will inherit the disadvantages (and rich kids inherit the advantages) of their parents.39
In this respect, the United States has one of the weakest rates of is intergenerational mobility among rich, democratic nations. There is a stronger link between parental education and children's economic, educational, and socio-emotional outcomes in the United States, than in any of its peers. This relative immobility both reflects background inequality, and sustains it: the more unequal the income distribution, the more likely it is that poor kids will inherit the disadvantages (and rich kids inherit the advantages) of their parents.39
Rates of mobility are also uneven geographically. Some states and cities offer sharply better prospects for getting ahead than others, with the industrial midwest and South trailing much of the rest of the country in this respect [for a graphical overview, CLICK HERE].
Some of these loses reflect growing gaps in educational attainment. For most of our history, the growing infrastructure of public education (and then the decline of discrimination by race and gender) generated real and sustained opportunities for most Americans. Each generation graduated high school at higher rates than the last, and these gains paid off family incomes. But the last forty years have seen both further impoverishment of our struggling public schools and dramatic spikes in the costs of higher education.40
As a result, the gap in average test scores between students from low-income and students from high-income families is growing. The share of poor kids completing college has barely budged in a generation (rising from 5 to 9 percent) while the share of rich kids has increased steadily (from 36 to 54 percent). As a result of the uneven quality of K-12 education and the skyrocketing costs of higher education, the US is now the only major economy in the world in which children are unlikely to exceed the educational attainment of their parents.41
We also see this collapsing mobility in the labor market. In most European settings, the incomes of workers in the lower deciles rise more quickly over time than overall income growth. In the United States, just the opposite is true. Those who start in the lower deciles see little income growth over time (or actually suffers losses), while those at the highest deciles see rates of income growth sharply higher than either other Americans or their European peers.42 All of this reflects the deterioration in wages, job quality, and employment opportunity traced above: with deindustrialization and the parallel collapse of collective bargaining, we lost the jobs (decent wages, modest educational attainment) most likely reward hard-working families with better opportunities for their children.
Not only is mobility constrained, but—in the absence of a range of social supports and programs common in most other developed democracies—Americans also have far more volatile and insecure incomes. A child of modest means and background in the United States is less likely to surpass her or his parents, less likely to move up the labor market during their lifetime, and more likely to face dramatic blows to family income and family security. Alongside inequality, income insecurity and volatility has increased markedly over the last generation: Americans are less protected by wages and benefits and more exposed to the business cycle. Over a quarter of all families reported that their 2010 income was “unusually” low, nearly double the share (14.4 percent) of just three years earlier.43
We also see this collapsing mobility in the labor market. In most European settings, the incomes of workers in the lower deciles rise more quickly over time than overall income growth. In the United States, just the opposite is true. Those who start in the lower deciles see little income growth over time (or actually suffers losses), while those at the highest deciles see rates of income growth sharply higher than either other Americans or their European peers.42 All of this reflects the deterioration in wages, job quality, and employment opportunity traced above: with deindustrialization and the parallel collapse of collective bargaining, we lost the jobs (decent wages, modest educational attainment) most likely reward hard-working families with better opportunities for their children.
Not only is mobility constrained, but—in the absence of a range of social supports and programs common in most other developed democracies—Americans also have far more volatile and insecure incomes. A child of modest means and background in the United States is less likely to surpass her or his parents, less likely to move up the labor market during their lifetime, and more likely to face dramatic blows to family income and family security. Alongside inequality, income insecurity and volatility has increased markedly over the last generation: Americans are less protected by wages and benefits and more exposed to the business cycle. Over a quarter of all families reported that their 2010 income was “unusually” low, nearly double the share (14.4 percent) of just three years earlier.43
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