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January 24, 2014
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A flurry of
recent headlines
proclaims that climbing the income ladder has not grown harder in
America in recent decades. Referring to a study published by the
National Bureau of Economic Research, many pundits have concluded that
the widespread belief that a widening gap between rich and poor has made
it harder to get ahead is wrong.
Not so fast. It is true that the
study found that the rate of mobility has pretty much remained constant
over the last couple of decades. But that doesn’t mean we don’t have a
problem. If you’re born to poor parents, you still have a terrible time
bettering yourself economically in America, especially if you happen to
be born in the wrong place.
The researchers, an impressive group
including Harvard's Raj Chetty, Nathaniel Hendren, Emmanuel Saez,
Patrick Kline of UC Berkeley, and Nicholas Turner of the Treasury
Department, looked at people born from the '70s to the '90s to
determine how they are doing relative to their parents. Last summer, the same researchers from Harvard and Berkeley released a
study on income mobility at the local level. You have to put these two studies together to get an understanding of what’s going on.
The
researchers have found that it’s still harder to move from poverty to
affluence in the United States than in most other wealthy countries,
like Denmark. "In some sense, how could it have gotten worse?" Hendren
asked the Huffington Post. "It's not like we're losing the American Dream. We never really had it."
What
you really find in the research is a tale of two Americas—one where
dreams can happen, one where they tend to fizzle. You have a decent shot
at getting ahead if you live in certain areas of the country, but if
you were born in others, you’re chances are pretty slim.
Remember
George and Louise Jefferson from the popular sitcom? They wouldn't have
been able to “move on up” if they were from Atlanta rather than New
York. The researchers found that lower-income children living in cities
in the Northeast, upper Midwest and the West Coast have much greater
odds of reaching higher rungs on the economic ladder than those from
cities in the Southeastern or the industrial Midwest. Geography is
destiny
, the research shows.
Your odds of reaching the top fifth starting from bottom fifth are
better than 10 percent in San Francisco, New York and Boston, but lower
than 5 percent in Charlotte, Columbus and Atlanta. In Memphis,
your chances are just 2.8 percent.
The
key issue, the researchers say, “is not that prospects for upward
mobility are declining in the U.S. as a whole but rather that some
regions of the U.S. persistently offer less mobility than most other
developed countries.”
Also, if there’s a big gap between rich and
poor in your community, your chances of moving up the ladder are getting
worse. As the
researchers put it,
“Because inequality has risen, the consequences of the ‘birth
lottery’—the parents to whom a child is born—are larger today than in
the past.”
One question we might ask is that, given the fact that
more Americans are going to college, more women are working and
minorities are facing less discrimination than several decades ago, why
hasn’t the overall mobility gotten better?
While the
research finds that people in their 20s and 30s are doing about as well
as their parents, it doesn’t look at current trends that may hold you
back or knock you down to a lower rung going forward. For example, if
you’re a 30-year-old, your salary may be as high as your dad’s was at
your age, but you’re also less likely to have a pension, and you’ll
probably face higher medical costs in the future. Kids born after 1970
were lucky to have parents whose incomes were boosted by postwar
prosperity, and thus reaped the benefits of this economic investment in
their children. Kids may not be able to count on this going forward.
These factors may suggest that a mobility plunge could be already in the
making if we don’t make certain smart moves, like expanding Social
Security, as Sen. Elizabeth Warren has urged.
But most of all,
your luck depends on where you grow up. The research reveals five
factors that influence your chances of climbing the economic ladder.
1. Less segregation:
Areas that have high African-American populations face lower mobility,
and whites living in predominantly African-American communities also
have lower mobility. Translation: it’s the geography that matters rather
than your individual race. In addition, areas where poorer people are
residentially segregated from middle-income individuals also suffered
decreased mobility.
2. Less income inequality:
Areas with a smaller middle-class had lower rates of upward mobility.
Interestingly, a high concentration of income in the top 1 percent was
not highly correlated with mobility patterns. The researchers aren’t
sure what this means, but suggest that shrinking the middle-class is a
bigger impediment than increased income at the tippy top.
3. Better primary schools:
Looking at such indicators as test scores and high school dropout
rates, the researchers found, unsurprisingly, that you have a greater
chance of climbing the economic ladder if you had access to high-quality
primary schools growing up. More spending per student correlates to
greater social mobility.
4. Greater social capital:
High upward mobility areas tend to have strong social networks and
community involvement, which can range from religious connections to
more participation in local civic organizations. Clearly, voter
supression is not a recipe for reaching the American Dream.
5. Greater family stability:
Places where kids are being raised more often by single mothers show a
lower rate of mobility— and even the children of two-parent households
who live in areas where there are a lot of single mothers tend to have
less mobility. This suggests that it’s not the status of the parents per
se that matters, but rather the geography.
All in all, the
research shows a picture that helps us understand both what we're doing
right and what we're doing wrong. A country that looked more like San
Francisco and less like Charlotte would offer more children the chance
to grow up and realize their dreams.
Lynn Parramore is an
AlterNet senior editor. She is cofounder of Recessionwire, founding
editor of New Deal 2.0, and author of "Reading the Sphinx: Ancient Egypt
in Nineteenth-Century Literary Culture." She received her Ph.d in
English and cultural theory from NYU. She is the director of AlterNet's
New Economic Dialogue Project. Follow her on Twitter @LynnParramore.
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