Working Economics Blog
Posted April 10, 2015 at 10:00 am by Lawrence Mishel
We think of America as the land of opportunity, but the United States actually has low rates of upward mobility relative to other advanced nations, and there has been no improvement in decades. Creating more opportunity is therefore a worthy goal. However, when the goal of more opportunity is offered instead of addressing income inequality, it’s a dodge and an empty promise—because opportunity does not thrive amid great inequalities.
It is important to distinguish between opportunity (or mobility) and income inequality. Concerns about mobility relate to strengthening the chances that children who grow up with relatively low incomes will attain middle-class or higher incomes in their adulthood. To address income inequality, on the other hand, is to focus on whether low- and middle-income households improve their share of the economic growth generated in the next two decades. Rising inequality is best illustrated by the fact that while the top 1 percent only received 9 percent of household income in 1979, this group gained either 38 percent (using the CBO’s comprehensive measure) or 60 percent (using tax data on market-based incomes) of the income growth between 1979 and 2007. That is, the top 1 percent received four to six times its expected share of all the income growth.
The opportunity dodge is popular with centrist and conservative politicians. Conservatives, for the most part, consider income outcomes to be the result of meritocracy. “I don’t care about income inequality per se; I care about opportunity inequality,” Arthur Brooks, head of the American Enterprise Institute recently said. “I want everybody to have a chance to be mobile, to rise, for everybody to have a chance to earn success.” Likewise, Jeb Bush’s highly touted speech to the Economic Club of Detroit keyed in on “the opportunity gap.” Left unsaid is that groups losing out from income inequality are judged to have not exerted sufficient effort, to have inadequate skills, or to have pursued counterproductive behaviors (such as not getting married).
Centrist Democrats sometimes address opportunity instead of income inequality to avoid confronting the top 1 percent’s capture of the lion’s share of income growth. After all, addressing runaway executive pay and a runaway financial sector—the main causes of the top 1 percent’s income gains—smacks of redistribution; and besides, those folks are their donor base. Talking about opportunity also allows a politician to avoid confronting ongoing wage suppression and the imbalance of bargaining power that has led to stagnant wages for college graduates and non-college graduates alike over the last dozen years. As Representative Scott Peters of the House New Democrat Coalition recently said, “To the extent that Republicans beat up on workers and Democrats beat up on employers—I’m not sure that offers voters much of a vision.”
Improved early-childhood education or access to college—the opportunity agenda—will enhance the upward mobility of today’s children (especially if coupled with policies that improve the availability of good jobs), and help them prosper as adults. However, it will do nothing to enable today’s families to share in economic growth. That’s what makes it a “dodge” to pursue opportunity but ignore income inequality: It is at best changing the subject and, in Larry Summers’s characterization, it is evading the tougher issue of who has bargaining power in the economy.
The opportunity dodgers also ignore that income inequality and intergenerational mobility are closely linked. The so-called Great Gatsby Curve comparing opportunity with equality shows that mobility is less in countries with the greatest inequality. So we will not be able to foster more opportunity and mobility without also addressing income inequality. Policies to increase mobility usually focus on more and better education, including starting earlier (quality early-childhood education) and extending education through community college or a four-year degree. Yet one of the most robust and long-standing social science research findings is that family background—the circumstances in which children grow up—greatly shapes educational advancement. So, promoting education solutions to mobility without addressing income inequality is ultimately playing pretend.We can’t substantially change opportunity without changing the actual lived circumstances of disadvantaged and working-class youth.
Success in school is not as easy for someone facing poverty, especially the concentrated poverty that racial segregation produces. These are children who frequently change schools due to poor housing; have little help with homework; have few role models of success; have more exposure to lead and asbestos; have untreated vision, ear, dental, or other health problems; have parents with the greatest stress; and live in a chaotic and frequently unsafe environment. For them, opportunity is not enough unless the foundations of success are established.
Acknowledging that income inequality and poverty greatly affect schooling success means we need to improve the circumstances of poor children’s lives by providing stable, adequate housing and healthy, safe environments. Decent income for their parents is essential. If we fail to improve these circumstances, promoting mobility and opportunity through more and better education is a false promise and is simply posturing.
Last, it is important to recognize that some people are always going to end up on the bottom and middle rungs since—except in Lake Wobegon—somebody has to be below average. Economic policy must also be concerned that low- and moderate-income families have decent incomes, health care, and retirement. The opportunity dodgers are really saying they do not care how low- and middle-income families actually live.
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