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January 07, 2005

Declining Social Mobility in the US

All men are created equal.

The conceit of conservatives is that equal outcomes are not needed in the US, since vast opportunity means that everyone has the opportunity to succeed. The poorest child can become a billionaire.

Except social mobility is even less real in the US than in the past. As the Economist details in a long feature, the poor have less and less opportunity to see themselves or their children escape that status. That the rich have gotten richer as the poor have stagnated is well-known:

The Economic Policy Institute, a Washington think-tank, argues that between 1979 and 2000 the real income of households in the lowest fifth (the bottom 20% of earners) grew by 6.4%, while that of households in the top fifth grew by 70%. In 2001 the top 1% of households earned 20% of all income and held 33.4% of all net worth. Not since pre-Depression days has the top 1% taken such a big whack.
The hard fact is that few families move between class levels, as numerous studies show:
  • A classic social survey in 1978 found that 23% of adult men who had been born in the bottom fifth of the population (as ranked by social and economic status) had made it into the top fifth. Earl Wysong of Indiana University and two colleagues recently decided to update the study. They compared the incomes of 2,749 father-and-son pairs from 1979 to 1998 and found that few sons had moved up the class ladder. Nearly 70% of the sons in 1998 had remained either at the same level or were doing worse than their fathers in 1979.
  • In the 1990s 36% of those who started in the second-poorest 20% stayed put, compared with 32% in the 1980s and 28% in the 1970s.
  • A study by Thomas Hertz, an economist at American University, found that 42% of those born into the poorest fifth ended up where they started—at the bottom. Another 24% moved up slightly to the next-to-bottom group. Only 6% made it to the top fifth. On the other hand, 37% of those born into the top fifth remained there, whereas barely 7% of those born into the top 20% ended up in the bottom fifth.
  • Two economists at the Federal Reserve Bank of Boston analysed family incomes over three decades. They found that 40% of families remained stuck in the same income bracket in the 1990s, compared with 37% of families in the 1980s and 36% in the 1970s.

    What is interesting is that despite this overwhelming evidence, most Americans, even elite intellectuals, still hold onto the myth of meritocracy and the idea that it's hard work, not family class, that determines one's economic fate.

    The Economist explains this paradox by the experience of intense competition within the elite:

    Members of the American elite live in an intensely competitive universe. As children, they are ferried from piano lessons to ballet lessons to early-reading classes. As adolescents, they cram in as much after-school coaching as possible. As students, they compete to get into the best graduate schools. As young professionals, they burn the midnight oil for their employers. And, as parents, they agonise about getting their children into the best universities. It is hard for such people to imagine that America is anything but a meritocracy: their lives are a perpetual competition. Yet it is a competition among people very much like themselves—the offspring of a tiny slither of society—rather than among the full range of talents that the country has to offer.
    Intermural competition among the elite therefore creates the illusion of broader social competition and mobility.

    Posted by Nathan at January 7, 2005 07:39 AM