Socioeconomic mobility in the United States

Socioeconomic mobility in the United States refers to the upward or downward movement of Americans from one social class or economic level to another, through job changes, inheritance, marriage, connections, tax changes, innovation, illegal activities, hard work, lobbying, luck, health changes or other factors.

This vertical mobility can be the change in socioeconomic status between parents and children (" inter-generational"); or over the course of a lifetime ("intra-generational").

Socioeconomic mobility typically refers to "relative mobility", the chance that an individual American's income or social status will rise or fall in comparison to other Americans, but can also refer to "absolute" mobility, based on changes in living standards in America.

In recent years, several studies have found that vertical intergenerational mobility is lower in the US than in some European countries.Harder for Americans to Rise From Lower Rungs
, By JASON DePARLE , January 4, 2012] US social mobility has either remained unchanged or decreased since the 1970s. A study conducted by the Pew Charitable Trusts found that the bottom quintile is 57% likely to experience upward mobility and only 7% to experience downward mobility.

A study published in 2008 showed that economic mobility in the U.S. increased from 1950 to 1980, but has declined sharply since 1980.

A 2013 Brookings Institution study found income inequality was increasing and becoming more permanent, sharply reducing social mobility.

A large academic study released in 2014 found US mobility overall has not changed appreciably in the last 25 years (for children born between 1971 and 1996), but a variety of up and down mobility changes were found in several different parts of the country. On average, American 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.

Popular perception

Many Americans strongly believe the U.S. is a "Land of Opportunity" that offers every child an equal chance at social and economic mobility. The idea of Americans rising from humble origins to riches has been called a "civil religion", "the bedrock upon which the American story has been anchored", and part of the American identity (the American Dream) This theme is celebrated in the lives of famous Americans such as Benjamin Franklin and Henry Ford, and in popular culture (from the books of Horatio Alger and Norman Vincent Peale to the song "Movin' on Up").

''The American Dream Report'', a study of the Economic Mobility Project, found that Americans surveyed were more likely than citizens of other countries to agree with statements like:
* "People get rewarded for intelligence and skill",
* "People get rewarded for their efforts";
and less likely to agree with statements like:
* "Coming from a wealthy family is 'essential' or 'very important' to getting ahead,"
* "Income differences in my country are too large" or
* "It is the responsibility of government to reduce differences in income."

In the US only 32% of respondents agreed with the statement that forces beyond their personal control determine their success. In contrast, a majority of European respondents agreed with this view in every country but three (Britain, the Czech Republic and Slovakia).Ever higher society, ever harder to ascend
Whatever happened to the belief that any American could get to the top? economist.com December 29, 2004 The Brookings Institution found Americans surveyed had the highest belief in meritocracy—69% agreed with the statement "people are rewarded for intelligence and skill"—among 27 nations surveyed.

Another report found such beliefs to have gotten stronger over the last few decades.

Intergenerational mobility

Current state

The correlation between parents' income and their children's income in the United States is estimated between .4 and .6.

If a parent's income had no effect on a child's opportunity for future upward mobility, approximately 20% of poor children who started in the bottom quintile (in the bottom 20% of the US range of incomes) would remain there as poor adults. At the other end of income spectrum, if children were born into wealthy families in the top 20%, only 20% would stay in that top income category if their mobility opportunities were equal to every other child's in the country.

But long-term income statistics show this isn't happening. Mobility opportunities are different for poor and wealthy children in the US. Parental incomes and parental choices of home locations while raising children appear to be major factors in that difference. According to a 2012 Pew Economic Mobility Project study 43% of children born into the bottom quintile (bottom 20%) remain in that bottom quintile as adults. Similarly, 40% of children raised in the top quintile (top 20%) will remain there as adults. Looking at larger moves, only 4% of those raised in the bottom quintile moved up to the top quintile as adults. Around twice as many (8%) of children born into the top quintile fell to the bottom. 37% of children born into the top quintile will fall below the middle. These findings have led researchers to conclude that "opportunity structures create and determine future generations' chances for success. Hence, our lot in life is at least partially determined by where we grow up, and this is partially determined by where our parents grew up, and so on."

Economic mobility may be affected by factors such as geographic location, education, genetics, culture, race, sex, and interactions among these, as well as family wealth.

Famous historical cases

Famous instances of great economic and social mobility include Benjamin Franklin and Henry Ford. Additional popular examples of upward social mobility between generations in America include Abraham Lincoln and Bill Clinton, who were born into working-class families yet achieved high political office in adult life. Andrew Carnegie arrived in the U.S. as a poor immigrant and rose to become a steel tycoon, perhaps the wealthiest man in America, and its leading philanthropist.

Comparisons with other countries

Several large studies of mobility in developed countries in recent years have found the US among the lowest in mobility.CAP:
Understanding Mobility in America
' – April 26, 2006 One study (“Do Poor Children Become Poor Adults?")Economic Mobility Project
/ref> found that of nine developed countries, the United States and United Kingdom had the lowest intergenerational vertical social mobility with about half of the advantages of having a parent with a high income passed on to the next generation. The four countries with the lowest "intergenerational income elasticity", i.e. the highest social mobility, were Denmark, Norway, Finland, and Canada with less than 20% of advantages of having a high income parent passed on to their children. (see graph) Nobel Prize-winning economist Joseph Stiglitz contends that "Scandinavian countries changed their education systems, social policies and legal frameworks to create societies where there is a higher degree of mobility. That made their countries more into the land of opportunity that America once was."

According to journalist Jason DeParle:

In 2012, a graph plotting the relationship between income inequality and intergenerational social mobility in the United States and twelve other developed countries—dubbed "The Great Gatsby Curve"—showed "a clear negative relationship" between inequality and social mobility. Krugman, Paul (January 15, 2012
"The Great Gatsby Curve"
''The New York Times'' Countries with low levels of inequality such as Denmark, Norway and Finland had some of the greatest mobility, while the two countries with the high level of inequality—Chile and Brazil—had some of the lowest mobility. The curve was introduced in a speech by chairman of the Council of Economic Advisers Alan Krueger, and the President's Economic Report to Congress.

Philip Alston, the United Nations special rapporteur on extreme poverty and human rights, asserted in a 2017 report on an investigation of extreme poverty in the United States that "The American Dream is rapidly becoming the American Illusion since the US now has the lowest rate of social mobility of any of the rich countries."

Absolute mobility

Even though mobility has gone down, most Americans still have more income than their parents. A 2007 study "Economic Mobility Project: Across Generations", using Panel Study of Income Dynamics, found 67% of Americans who were children in 1968 had higher levels of real family income in 1995–2002 than their parents had in 1967–1971 Economic Mobility of Families Across Generations
Julia B. Isaacs. November 13, 2007. Economic Mobility Project, Washington, D.C. (although most of this growth in total family income can be attributed to the increasing number of women who work since male earnings have stayed relatively stable throughout this time) As to whether this figure is higher or lower than other countries is difficult to say as this type of measure has not been done for other countries.

Intragenerational mobility

Another form of mobility—" intra-generational"—is the change in class and/or income experienced by individuals during their lifetime. Intra-generational mobility renders the meaning of "short-term" inequality ambiguous, since high intra-generational mobility suggests that those who are currently less well-off (for instance the young) will move up the class or income scale later in life.

How strong Intra-generational mobility is in the US is disputed. Supporting relatively high levels of intragenerational mobility, Thomas A. GarrettThomas A. Garrett
U.S. Income Inequality: It’s Not So Bad
Inside the Vault. Spring 2010. Federal Reserve Bank of St. Louis. reported on a US Treasury study of income mobility from 1996 to 2005. This found "There was considerable income mobility of individuals in the U.S. economy during the 1996 through 2005 period as over half of taxpayers moved to a different income quintile over this period"; 80 percent of taxpayers had incomes in quintiles as high or higher in 2005 than they did in 1996, and 45 percent of taxpayers not in the highest income quintile moved up at least one quintile. Fewer than half (between 40 and 43%) "of those in the top 1 percent in 1996 were still in the top 1 percent in 2005. Only about 25 percent of the individuals in the top 1/100th percent in 1996 remained in the top 1/100th percent in 2005." The study reassured Americans "the opportunity for upward mobility" in America despite their concern about the "long-term trend of increasing income inequality in the U.S. economy" After-tax income of the top 1% earners has grown by 176% percent from 1979 to 2007 while it grew only 9% for the lowest 20%.

However others describe the data as reflecting less mobility. A 2007 inequality and mobility study by Wojciech Kopczuk and Emmanuel Saez found the pattern of annual and long-term earnings inequality "very close", and the population at top income levels in America "very stable" and had "not mitigated the dramatic increase in annual earnings concentration since the 1970s." A 2011 CBO study on "Trends in the Distribution of Household Income Between 1979 and 2007" also found multi-year household income distribution in America "only modestly" more equal than annual income.

Given the fairly substantial movement of households across income groups over time, it might seem that income measured over a number of years should be significantly more equally distributed than income measured over one year. However, much of the movement of households involves changes in income that are large enough to push households into different income groups but not large enough to greatly affect the overall distribution of income. Multi-year income measures also show the same pattern of increasing inequality over time as is observed in annual measures.Congressional Budget Office: Trends in the Distribution of Household Income Between 1979 and 2007
October 2011.

In other words, "many people who have incomes greater than $1 million one year fall out of the category the next year—but that’s typically because their income fell from, say, 1.05 million to 0.95 million, not because they went back to being middle class."

Economist Paul Krugman complains that conservatives have resorted to "extraordinary series of attempts at statistical distortion" in claiming high levels of mobility.

Studies by the Urban Institute and the US Treasury have both found that about half of the families who start in either the top or the bottom quintile of the income distribution are still there after a decade, and that only 3 to 6 percent rise from bottom to top or fall from top to bottom. Krugman, Paul (December 19, 2001
"The Rich, the Right, and the Facts: Deconstructing the Income Distribution Debate"
Prospect.org

While in any given year, some of the people with low incomes will be "workers on temporary layoff, small businessmen taking writeoffs, farmers hit by bad weather"—the rise in their income in succeeding years is not the same 'mobility' as poor people rising to middle class or middle income rising to wealth. It's the mobility of "the guy who works in the college bookstore and has a real job by his early thirties."

Causes and issues

Explanations for the relatively low level of social mobility in the US include the better access of affluent children to superior schools and preparation for schools so important in an economy where pay is tilted toward educated workers; high levels of immigration of unskilled laborers and low rate of unionization, which leads to lower wages among the least skilled; public health problems, like obesity and diabetes, which can limit education and employment; the sheer size of the income gap between the rich which makes it harder to climb the proverbial income ladder when the rungs are farther apart; Noah, Timothy (January 13, 2012
"White House: Here's Why You Have To Care About Inequality"
''The New Republic'' poverty, since those with low income have significantly lower rates of mobility than middle and higher income individuals. The factors which affect social mobility vary across the United States as does social mobility which in favored areas is much higher than in less favored areas.

Education

Multiple reports have found that education promotes economic mobility. The report “Pursuing the American Dream: Economic Mobility Across Generations” found that a four-year college degree promotes upward mobility from the bottom and prevents downward mobility from the middle and top. For instance, having a four-year college degree makes someone born into the bottom quintile of income three times more likely to climb all the way to the top as an adult.

Wages and earnings correlate with education. A 2009 survey of young adults who worked full-time throughout a full year found the median income of whose without a high school diploma ($21,000) was below the poverty level for a family of four ($22,050) and less than half of what whose with a bachelor's degree earned ($45,000).

The difference has worsened since 1979 when the average college graduate made 38% more than the average high school graduate. By 2011 college graduates averaged made 75% more income. "Mobility" to the "class" of college graduates has declined. Those born with parents who graduated from college have far better odds of graduating from college than those born to high school graduates.

Some scholars (such as Isabel Sawhill) have complained about the effect of education on mobility

“At virtually every level, education in America tends to perpetuate rather than compensate for existing inequalities. The reasons are threefold. First, the K through 12 education system is simply not very strong and thus is not an effective
way to break the link between parental background and a child’s eventual success. ... Second, because K–12 education is financed largely at the state and local level, resources devoted to education are closely linked with where people live and with the property wealth of their neighbors. For this and other reasons, poor children tend to go to poor schools and more advantaged children to good schools. ... Finally, access both to a quality preschool experience and to higher education continues to depend quite directly on family resources.”

Others (Robert M. Hauser) have defended educational attainment as also freeing "individuals from the constraints of their social origins."

Poverty

Comparing the US with one high-mobility state (Denmark), journalist Kevin Drum concluded that lack of mobility for the poorest children in the United States seems to be the primary reason for America's lag behind other developed countries.Kevin Drum (January 5, 2011)
"Social Mobility in America: It's All About the Poor"
motherjones.com A study from the Economic Mobility Project found that growing up in a high-poverty neighborhood increases Americans’ risk of experiencing downward mobility and explains a sizable portion of the black-white downward mobility gap. The report's analysis also showed that black children who experience a reduction in their neighborhood's poverty rate have greater economic success in adulthood than black children who experience poverty rates that increase or are stable.

Gender and race

Reports analyzing the economic mobility of African-Americans compared to that of whites have found stark differences. One report found that 53 percent of blacks born in the bottom income quintile remain there as adults, while only 33 percent of whites do. Research has also found that the children of black middle-class families are more likely to fall out of the middle class.

Despite the increased presence of blacks and women in the work force over the years, women and non-whites hold jobs with less rank, authority, opportunity for advancement and pay than men and whites, a "glass ceiling" being said to prevent them from occupying more than a very small percentage in top managerial positions.

One explanation for this is seen in the networks of genders and ethnic groups. The more managers there are in an employees' immediate work environment, the higher the employees chances of interacting and spending time with high status/income employees, the more likely these employees are to be drawn on for promotion. As of the 1990s, the vast majority of all clerical and office workers are women, but made up less than half of all managers. Less than 15% of all managers were minorities, while roughly a quarter of all clerical and office employees were. The networks of women and minorities are simply not as strong as those of males and whites, putting them at a disadvantage in status/income mobility.

For women, another explanation for this "glass ceiling" effect in the American work force is the job-family trade off. While both men and women feel that a conflict exists between job and family, women with children, particularly married women, are more likely to either temporarily leave the labor force or cut back on employment by using flex time, working part-time or part of the year. Unfortunately, the outcome is lower mobility, since part-time employment is usually lower paying employment, with less chance of promotion into a higher status job or likelihood of a return to full-time employment for at least a few years.

Taking a leave from the work force tends to decrease human capital when it comes to finding a job. Women are also more likely than men to take leave from their jobs to care for others rather than themselves. Knowing this, employers are wary of hiring and promoting women in the work force.

Others have pointed out that men have statistically been willing to accept job conditions that women were not, such as working outside in extreme weather, working where you can become physically dirty on a regular basis, working more hours, etc. This is based on survey information, and shows that it is difficult to make direct comparisons ('apples to apples'). Conservatives also question the extent of gender discrimination arguing that competition between firms would lead them to bid up wages of any group if they provided the same or better value of work for less pay as employees.

Immigration

According to economist George J. Borjas, most immigrants to the US are at "a sizable earning disadvantage" compared to native-born workers, and the earnings of different groups of immigrants vary widely. Borjas found that intergenerational upward economic mobility averaging a 5% to 10% in increase in income from the first to the second generation of immigrants although there was wide variation among ethnic groups. Other research suggests that length of time resided in the U.S. narrows the occupational gap between Hispanic immigrants and non-Hispanic whites and U.S.-born Hispanic counterparts. Overcoming language barriers and adjusting to the new environment and culture to American society creates barriers for new immigrants, and "there is significant economic 'catching up' between the first and second generations" (second generation being defined as child with at least one parent not born in the United States). This intergenerational mobility includes poor as well as middle income groups, although among the high income Borjas noted a regression towards the mean or equalizing tendency in income/status, whereby children of very successful immigrants tended to have lower, not higher, incomes/status than their parents, becoming successful but not as successful.

In particular, children coming from low-income immigrant families struggle with the disadvantages of their legal status more than the average American due to the level of stress they are exposed to, most specifically through the manner in which they are perceived as well as the way in which they see themselves and their future. Scholars that have studied the social characteristics that arise from having an immigrant status have defined this state of struggle as the "master status" that anchors their decisions in every aspect of their lives, often serving as a crippling agent in their individual developments. When looking specifically into the Latino population, there is an immense hesitance in pursuing education post-high school. According to a study conducted by Abrego in 2006, Latino immigrants without a legal status were more reluctant in pursuing higher education levels, including college as compared to their legal brethren. Most immigrants suffer silently in this manner due to a lack of a healthy immigrant niche construction through which they are able to assimilate accordingly and take advantage of the educational and social opportunities. In Norway for example, the government was able to facilitate increasing levels of re-distributive policies that allowed for a functional welfare state in which the immigrant population were able to lower the gaps of social class differences and becoming increasingly affluent in their ambitions of maintaining better lifestyles. Hence, social mobility is the deferred offspring of many welfare states including the United States due to their low public spending incentives. Studies conducted on education spending in the United States have shown that as compared to the private funding of education, only 2.7% of the nation's total GDP is spent towards public education.

Shifting the perspective to the effects immigration has placed on the existing economic status of the African-American population, there is yet even higher levels of economic bifurcations. While African-Americans occupied larger employment levels of at least 19 percent in sectors like transportation and hospital and social services during the 1990s, immigration caused a shift in this employment trend pushing them more towards private or self employment. One causing factor is the growing Puerto Rican and Mexican population who have increasingly found their employment niches in these specific sectors. Another pattern seen in the economic regression of African-Americans is the invisible role of education in expanding their career opportunities. Historical data shows that the African-American's future advances were highly discounted by scholars like Orley Ashenfelter (1977) and William A. Darity (1982). Consensus studies conducted in the earlier periods of 1940 through 1960 also led many people to argue that black economic mobility through the route of education was closed. Comparatively, the 1990 Census as conducted by the National Center for Health Statistics showed that African-Americans made 63 percent less than the average American due to poor health conditions driven by their unequal social status. Displacement is seen even in low wage sector jobs, including janitorial positions that have become increasingly taken over by Mexicans and while African-Americas have still held these positions in the government, their economic position in considerably diminishing in this area. Hence, the economic stability of African-Americans are not only challenged through their social state but by the growing migration patterns as well.

Impact of incarceration

According to some researchers, America's high incarceration (imprisonment) rate, and "War on Drugs" policies, have created an underclass with severely limited social mobility. Within the United States the prison population has been steadily increasing since the early 1970s and has now surpassed two million, making it the highest per capita rate in the world. This boom has been fueled to a large extent by the War on Drugs starting in the 1980s. In addition to the mobility handicaps of imprisonment, this "war" has effectively created a poor, immobile class by denying one of the most important tools for social mobility—education—in a number of ways

# The drug war has combined with public school zero-tolerance policies to remove tens of thousands of adolescents from their public schools.
# Denial of higher education funding has been adopted as an additional punishment for drug offenders.
# The war on drugs siphons drug users out of society and into prison.

The lack of education for convicted felons is compounded with difficulties in finding employment. These two factors contribute towards a high recidivism rate and downward social mobility.

Tax expenditures

Tax expenditures, partial exemption of the poor from taxation through reliance on progressive income taxes rather than sales taxes for revenue or tax rebates such as the earned income tax credit loosely correlate with income mobility with areas which tax the poor heavily such as the Deep South showing low mobility. The literature that supports this claim acknowledges that nontrivial confounds are inherent to this line of inquiry, however.

Other factors

Significant correlations have been found between intergenerational mobility and economic inequality, economic and racial residential segregation, measures of K-12 school quality (such as test scores and high school dropout rates), social capital indices, and measures of family structure (such as the fraction of single parents in an area)

History of study

Sociologists Blau and Duncan collected mobility data along with the U.S. Bureau of the Census in 1962. The data included information on occupational family backgrounds. In 1962, 56.8% of sons with fathers who had occupations in upper nonmanual ended up with occupations in the same level. Only 1.2% of sons with fathers who had farming occupations ended up in upper nonmanual occupations. In 1973, these differences increased. 59.4% of sons with fathers in upper nonmanual occupations achieved occupations of this same level and 0.9% of sons with fathers in farming occupations ended up in upper nonmanual occupations. However, the occupational structure is more rigid towards the top and bottom. Those in lower nonmanual occupations, and upper and lower manual occupations were more likely to be vertically mobile. Upper nonmanual occupations have the highest level of occupational inheritance. In the 1980s studies found that only 20 percent of the income gap persisted between generations in America, according to the Christian Science monitor. However, by 2003 improvements in econometrics showed that poverty could endure over several generations.Francis, David R."'Upward Mobility' In Real Decline, Studies Charge."
''The Christian Science Monitor''. January 27, 2003.

See also

*Income inequality in the United States
*First-generation college students in the United States
*Criticism of credit scoring systems in the United States

Notes

References

Notes

Bibliography

* Goldthorpe, John H. 1987 ''Social Mobility and Class Structure in Modern Britain''. New York: Oxford, Clarendon Press
* Jacobs, Eva E. (ed). "'Handbook of U.S. Labor Statistics: Employment, Earnings, Prices, Productivity, and other Labor Data.'" Lanham, MD. Bernam Press. 8th ed. 2005.
* Lareau, Annette. ''Unequal Childhoods: Class, Race, and Family Life.'' University of California Press, 2003.
* Levinson, Paul. "Cellphone". Routledge, New York, 2004
*
*
* Western, Bruce. Punishment and Inequality in America. New York: Russell Sage Foundation, 2006.

External links

*
* Boushey, Heather (2005)
Horatio Alger is Dead
Center for Economic and Policy Research Economics Seminar Series.
* The New York Times offers a graphic about social mobility, overall trends, income elasticity and country by country. European nations such as Denmark and France are ahead of the US


2006 Social Mobility


zmag.org, September 26, 2007.

America's Disappearing Middle Class: Implications for Public Policy and Politics
by Trevor Beltz, May 2012

{{United States topics

*
Economy of the United States
United States