Tag Archives: Sweden

Stalled upward social mobility in America [UPDATED 2/14/12]

Flickr photo by AtleBrunvoll

Rana Foroohar’s cover story in TIME (Nov. 2011) is entitled What Ever Happened to Upward Mobility? Her answer is that it has stalled in the US and fallen behind rates of upward mobility in the US, Sweden or Denmark.  According to Foroohar (and based on a Pew study), a male born in the 1970s into the bottom fifth of the wealth distribution had only a 17% chance of making it to the top wealth quintile.  And while 50% of young males in this low-wealth quintile remained stuck there in the US, it was only 30% in UK or 25% in Denmark and Sweden, so upward mobility was much higher in those nations.  [Swedish economist Markus Jantti led the research project that uncovered these numbers.]

Foroohar (after consulting experts from places like Goldman Sachs) says that China and other emerging countries are driving inequality by taking away good middle class US jobs.   Foroohar believes that the answer lies in more progressive tax rates (with fewer loopholes) and greater investments in public education (which is the engine of economic mobility).

Fareed Zakaria also has three pieces on this: “The Downward Path of Upward Mobility” (Wash. Post op-ed, 11/10/11), a CNN video entitled “Fix Education, Restore Social Mobility” (about how lack of investment in education causing stagnating upward mobility is at heart of Occupy Wall Street movement), and “When will we learn” (TIME, 11/14/11).

Bhaskar Mazumder, of the Chicago Fed, highlights research that he believes shows a decrease in US social mobility from 1980-1990 and then growing less rapidly from 1990-2000 (based on studies of brothers). Mazumder notes that mobility measures are by methodological approach “backward-looking” since they impose a several decade lag before one learns of corrosive influences in society for social mobility; he  notes  that “the gap in children’s academic performance between high- and low-income families has widened significantly over the last few decades. If this trend persists, it would point to reduced intergenerational economic mobility going forward.”

We have been doing work on the connection between income inequality and social inequality among youth (that exacerbates the test score gaps) and will report on that later, but suffice it say that we find a connection between the “blue inequality” (income inequality) and “red inequality” (the ability of college graduates to pass on advantages from a generation to another) that David Brooks writes about.

In November 2011, a variety of non-profit, corporate, academic and media leaders convened to discuss social mobility in the Opportunity Nation summit.  Opportunity Nation has released an Opportunity Index that enables you look state by state or county by county to see how that locality is doing in terms of economic opportunity. And you can see videos of some of the speakers here.  Rick Warren cited an eye-opening statistic: 25% of Anglo kids, 50% of Hispanic kids, & 75% of black kids are growing up today without a stable father in the home (these are out of wedlock births).  This work is picked up in Charles Murray’s Coming Apart and in Nick Kristoff’s “The White Underclass“.

And interestingly, even conservative media venues like the National Review and the FrumForum (here and here) are discussing the decline of social mobility as noted in “Harder for Americans to Rise From Lower Rungs“, citing Republican experts like John Bridgeland.  Even Presidential candidate Rick Santorum has admitted that social mobility up into the middle class is higher in Europe than in the US. Excerpt from Scott Winship’s piece in the National Review here:

The Economic Mobility Project/Brookings analyses break the parent and child generations into fifths on the basis of each generation’s income distribution. If being raised in the bottom fifth were not a disadvantage and socioeconomic outcomes were random, we would expect to see 20 percent of Americans who started in the bottom fifth remain there as adults, while 20 percent would end up in each of the other fifths. Instead, about 40 percent are unable to escape the bottom fifth. This trend holds true for other measures of mobility: About 40 percent of men will end up in low-skill work if their fathers had similar jobs, and about 40 percent will end up in the bottom fifth of family wealth (as opposed to income) if that’s where their parents were.

Is 40 percent a good or a bad number? On first reflection, it may seem impressive that 60 percent of those starting out in the bottom make it out. But most of them do not make it far out. Only a third make it to the top three fifths. Whether this is a level of upward mobility with which we should be satisfied is a question usefully approached by way of the following thought experiment: If you’re reading this essay, chances are pretty good that your household income puts you in one of the top two fifths, or that you can expect to be there at age 40. (We’re talking about roughly $90,000 for an entire household.) How would you feel about your child’s having only a 17 percent chance of achieving the equivalent status as an adult? That’s how many kids with parents in the bottom fifth around 1970 made it to the top two-fifths by the early 2000s. In fact, if the last generation is any guide, your child growing up in the top two-fifths today will have a 60 percent chance of being in the top two fifths as an adult. That’s the impact of picking the right parents — increasing the chances of ending up middle- to upper-middle class by a factor of three or four.

See somewhat related Social Capital blog piece on increased residential income segregation.

Read Paul Krugman’s excellent “We are the 99.9%” (NYT, 11/24/11)

Read Nick Kristof’s excellent piece “Occupy the Agenda” (NY Times, 11/19/11)

Listen to Steven Haider (Michigan State Univ. economist) on Michigan Public Radio (11/18/11) discussing the myth of upward mobility in America.

Other pieces on this topic:

TIME Magazine: “The Land of Opportunity” by Richard Stengel, 11/14/11

Washington Post-ABC News Poll: http://www.washingtonpost.com/wp-srv/politics/polls/postabcpoll_110311.html   [see questions 16-18]

December 2011 OECD report Divided We Stand: Why Inequality Keeps Rising on how inequality among OECD countries is at a record high over the past 30 years and demands action.

The reports that Zakaria uses to show that mobility is lower in US than in Europe are:
- OECD 2010 report: http://www.oecd.org/dataoecd/2/7/45002641.pdf
- German Institute for the Study of Labor report (2006): http://ftp.iza.org/dp1938.pdf

- Professor Miles Corak (economist at Univ. of Ottawa) compared rates of mobility in a review of over 50 studies spanning nine countries.

- See Scott Winship’s testimony to Senate Budget Committee (Feb. 9, 2012) on inequality and social mobility, and see Jared Bernstein’s and Heather Boushey’s as well.

Two of most startling charts of testimony were one by CBO showing how the income of the top 1% is the one cohort that has done well over the last 40 years in the US economy:

And one showing that, unlike in most countries where progressive taxation is used to curb the excessive inequalities of the market and ease the distribution somewhat, the tax and transfer system in the US actually make inequality WORSE.

Upward Mobility Gap

Flickr photo by Herve Demers

Doyle McManus (of the L.A. Times) has a nice piece citing Robert Putnam on some of our unpublished research evincing “canaries in the coalmine” that are likely to block upward mobility in the US in the decades ahead if unremedied.

Opportunity in America isn’t what it used to be either. Among children born into low-income households, more than two-thirds grow up to earn a below-average income, and only 6 percent make it all the way up the ladder into the affluent top one-fifth of income earners, according to a study by economists at Washington’s Brookings Institution…. Children born into poverty in Canada, Britain, Germany or France have a statistically better chance of reaching the top than poor kids do in the United States….

[In addition to the decline of public schools,] Harvard sociologist Robert Putnam argues that thanks partly to the rise of two-income households, intermarriage between rich and poor has declined, choking off another historical upward path for the underprivileged….”We’re becoming two societies, two Americas,” Putnam told me recently. “There’s a deepening class divide that shows up in many places. It’s not just a matter of income. Education is becoming the key discriminant in American life. Family structure is part of it too.”…

“Success in life increasingly depends on how smart you were in choosing your parents,” Putnam said. “And that flies in the face of the fundamental American bargain — that every kid ought to have access to the same opportunities.”…Most Americans accept inequality in the economy as long as the ladder of opportunity is accessible to anyone who wants to work hard. The best way for America to reclaim its self-image as a land of opportunity is to ensure that every kid has access to a decent education — now more than ever the first step onto the ladder. That’s why bipartisan education reform isn’t just about fixing schools; it’s about repairing the fabric of American society.

Read “The Upward Mobility Gap” (Doyle McManus, L.A. Times, 1/2/11)

See also some interesting recent articles in NY Times on how pay of superstars stifles everybody else, and another article that attempts to reconcile Americans’ dislike of equalizing income with declining mobility by showing how in America being middle class is more driven by aspirations than income.  And finally, research conducted at Harvard Business School that ironically shows that most Americans would prefer an income distribution more similar to Sweden’s (far more egalitarian than in the US) over the current American income distribution.

Paul Krugman in “A Tale of Two Moralities” (NY Times Op-Ed, January 15, 2011) writes: “…I’ll also have a lot to say about how far we really are from being a society of equal opportunity, in which success depends solely on one’s own efforts.”

Michael Gerson (Washington Post columnist) also had a very thoughtful column on this issue, indicating that this issue (upward mobility) should be the issue that Republicans should be discussing.  See “The economic debate that we should be having” (Dec. 14, 2010)  Gerson writes:

“…the main reasons for inequality are failing schools, depressed and dysfunctional communities and fragmented families. For the most part, inequality does not result from a lack of consumption by the poor but from a lack of social capital and opportunity.

This does not release conservatives from responsibility because the distribution of social capital and opportunity is dramatically unequal. Economic inequality can be justified as the reward for greater effort – so long as there is also social mobility. In the absence of mobility, capitalism becomes a caste system. And this is what America, in violation of its self-image, threatens to become. The United States has less upward economic mobility among lower-income families than Canada, Finland or Sweden. Americans who are born into the middle class have a roughly equal chance of ascending or descending the economic ladder. But Americans born poor are likely to stay on its lowest rungs.

Addressing the actual causes of inequality should be common ground for the center-left and center-right – and politically appealing to American voters, who are generally more concerned about opportunity than income equality. A mobility agenda might include measures to discourage teen pregnancy; increase the rewards for work; encourage wealth-building and entrepreneurship; reform preschool programs; improve infant and child health; increase teacher quality; and increase high school graduation rates and college attendance among the poor. Children of low-income parents who gain a college degree triple their chance of earning $85,000 a year or more. If America had the same fraction of single-parent families as it had in 1970, the child poverty rate would be about 30 percent lower.”

Across countries, where social trust is high, crime and corruption are low

A Pew Global Attitudes Study found markedly different rates in social trust across countries of the world (ranging from 79% in China down to 25% in Kenya or 27% in Kuwait or 28% in Peru). The U.S. was 5th at 58% trusting, behind the Chinese, Swedish (78%), Canadian (71%), and British (65%). [The question is an agree-disagree item: "Most people in this society are trustworthy."]

They found that trust had noticeably fallen in formerly Communist, Eastern Europe, down to levels of Southern Europe (like Spain, Italy). Russia showed the highest levels of trust at 50% but its Eastern European neighbors had levels of trust between 42% and 48%.

Crime: They also found a connection of trust with crime. “In countries with high levels of trust, people are generally less likely to say crime is a very big problem for their country (the correlation coefficient for responses to the two questions is -.56). Most of the countries surveyed fit the overall pattern, including the United States, where concerns about crime are about where one would expect, given the relatively high degree of social trust.

Trust and Crime

“There are, however, some outliers. For example, South Africans — who have been plagued by crime in recent years — are more concerned about crime than would be expected, based solely on their level of social trust. Meanwhile, crime fears are even less common in Sweden and China than their high levels of trust would have predicted.”

Corruption: “[T]he relationship between trust and corruption resembles the one between trust and crime. The percentage of people rating corrupt political leaders as a very big problem tends to be lower in countries that have high levels of trust such as Sweden, Canada, and Britain (the correlation coefficient is -.54). On the other hand, in nations such as Nigeria and Lebanon, trust is rare and concerns about political corruption are widespread.

Trust and Corruption

“Again, there are outliers. Kuwait is both a low trust and low corruption society. Indonesia is a high trust, high corruption country. And the Swedes are once again even less concerned about corruption than their high score on the trust measure would predict (the question about political corruption was not asked in China, the only country to top the Swedes on trust). Meanwhile, Americans — who have witnessed more than a few high profile political scandals over the last few years — were slightly more concerned about corrupt politicians than would have been expected, based on their reasonably high degree of social trust.”