A carefully woven narrative has emerged in Washington, one that seemed to resonate quite well in its New York City mayoral debut. This narrative directly links rising inequality with the troubling possibility that the American Dream is vanishing. In short, both opportunity and upward mobility are said to be on the decline.
However, a groundbreaking new study of upward mobility by renowned Harvard economist Raj Chetty and his colleagues confirm that, “children entering the labor market today have the same chances of moving up in the income distribution relative to their parents as children born in the 1970s.”
The authors explain that rates of upward mobility have remained “extremely stable” and show that, for example, “the probability that a child reaches the top fifth of the income distribution given parents in the bottom fifth of the income distribution is 8.4% for children born in 1971, compared with 9.0% for those born in 1986.” In fact, their results suggest “that mobility in the U.S. may be improving.”
The implications of this research cannot be understated. The conventional narrative, one that President Obama calls “the defining challenge of our time,” hinges upon the notion that it is now harder to move up in America than it was in the past – presumably when unions were thriving, taxes were more progressive, and economic security could mean simply “following in your old man’s footsteps at the local plant.”
Although previous research demonstrates that rates of upward mobility remained largely unchanged for children born between the 1950s and the 1970s, many populists like Robert Reich have forcefully asserted otherwise. For instance, Reich argued that anyone who would “question whether inequality is widening and upward mobility is declining in America shows you’re either a fool or a knave.”
Setting that kind of fierce opposition aside, here’s the key takeaway from all of this: just because the rates of mobility haven’t declined doesn’t mean we should be happy with them – nor is it an indicator that all is well. In terms of our ability to lift people out of poverty and into the middle class and beyond, our rates of upward mobility are still insufficient. The sad truth is that 70% of poor Americans fail to reach the middle class. This does call for a war on immobility.
But in this war on immobility and the subsequent search to find out what’s at the root of our mobility woes, it “will require cool analysis, bipartisan alliances, and a long-term strategy. It’s the wrong issue for knock-about politics,” as Richard Reeves, Policy Director at the Brookings Institution recently explained.
If there’s one clear trend that’s emerging from the study of mobility, we know that good schools, stable family environments, a culture of saving, and strong civic and social institutions are all strongly associated with better individual and community outcomes. Income inequality? Not so much.
Let’s just hope that in President Obama’s upcoming State of the Union address he attempts to bring the parties together on this issue – not divide us.