The Mobility Myth and Other Income Inequality Surprises
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The Fiscal Times
January 24, 2014

A child born into poverty in the U.S. in 1993 was just as likely to ascend the economic ladder as a child born into similar circumstances in 1972, according to a study released on Thursday by researchers at Harvard University and the University of California at Berkeley. Citing work by other social scientists, the authors concluded that economic mobility in the U.S. has been stagnant since 1950, despite increased education and opportunities for women and minorities. 

Stagnant economic mobility between generations – roughly defined as movement between income quintiles, e.g. from the bottom 20 percent to the top 20 percent in total income – comes as little surprise to academics who study the issue. But a more telling finding of the study is that the distance between the quintiles has increased dramatically.

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In a useful metaphor, the authors describe the income distribution in the U.S. as a ladder on which the rungs are getting ever further apart, meaning that while the rate of people ascending the ladder may not have changed, the disparity in income between people at the top and people at the bottom had increased dramatically.

The study adds a new dimension to the ongoing national discussion of inequality that began with a major speech by President Obama in December, and was recently taken up by Rep. Paul Ryan (R-WI).

In a comment on the study’s findings, economist Jared Bernstein, former executive director of the White House Task Force on the Middle Class and now a senior fellow at the Center on Budget and Policy Priorities, warned that stability in economic mobility ought not to be seen as good news.

“It is human nature to assume that stability is what we want, and in this regard, the finding of this paper could be misconstrued. While stable mobility is unquestionably better then declining mobility, as the rungs of the ladder become more distant, it takes bigger steps to climb. And given the disinvestment in less advantaged kids, the risk of diminished mobility is real.”

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The largest factor in determining where an individual ends up on the income scale is what the authors of the study referred to as the “birth lottery” – meaning that the children of the poor are most likely to remain poor, and the children of the rich likely to remain rich.

The findings also suggest that the storied “American Dream” of working one’s way up from poverty to prosperity has not only remained difficult to realize, but is now harder to accomplish in America than in other developed countries.

“Intergenerational mobility is significantly lower in the U.S. than in most other developed countries, especially in some parts of the country such as the Southeast and cities in the Rust Belt,” the authors found.

Conventional wisdom has been that economic mobility has been on the decline in the past few decades, and the authors note that, in a sense, the fact that mobility has remained steady is a success story.

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“The stability of intergenerational mobility is perhaps more surprising in light of evidence that socio-economic gaps in early indicators of success such as test scores…parental inputs…and social connectedness,” they write.

Citing a 2012 study that predicted a steep drop in mobility in the same cohort they studied, the authors conclude, “An important question for future research is why such a plunge in mobility has not occurred.”

Follow Rob Garver on Twitter @rrgarver

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A longtime reporter on the intersection of the federal government and the private sector, Rob Garver is National Correspondent, based in Washington, D.C. He has written for ProPublica, The New York Times and other publications.