The Myth of Economic Immobility

Americans are actually more mobile than we've ever been.

In early December, President Barack Obama delivered a major speech at a packed $27 million arts-and-culture complex in one of the poorest neighborhoods in the nation's capital. His subject? The American Dream, whose future, to hear the president tell it, was even more uncertain than that of Popcorn and Caramel, the two Thanksgiving turkeys he'd pardoned six days earlier.

Addressing an audience that included members of Congress, the mayor of D.C., and various other Beltway bigwigs, Obama decried the nation's "diminished levels of upward mobility in recent years." As the president continued-the speech lasted 49 minutes-he used a wide variety of adjectives to illustrate the problem. Mobility was "decreasing," "reduced," and "declining." For the wonks in the audience, "less mobility between generations" got a shout-out as well.

The president is hardly alone in considering this an urgent American problem. In November 2013, Gallup found that only 52 percent of the 1,000 adults it surveyed believed that there is "plenty of opportunity" to get ahead in today's United States. In 2011, that number was 57 percent; in 1998, it was a whopping 81 percent. "Many political leaders and other observers believe economic mobility in the United States is declining," the Gallup researchers noted. "It would appear that a significant portion of the population agrees."

Yet a month after Obama's speech, two Harvard economists, two Berkeley economists, and one U.S. Treasury economist failed to find decreasing economic mobility in a working paper they jointly published via the nonpartisan National Bureau of Economic Research.

"Contrary to the popular perception," the authors wrote, "we find that percentile rank-based measures of intergenerational mobility have remained extremely stable for the 1971-1993 birth cohorts." According to their research, a child born into the bottom quintile of income distribution in 1971 had an 8.4 percent chance to reach the top quintile as an adult. For a child born in 1986, that chance had risen to 9 percent. If anything, they concluded, "mobility may have increased slightly in recent cohorts."

To anyone who has been following the work of the Pew Charitable Trust's Economic Mobility Project (EMP), this conventional wisdom-shattering conclusion wasn't particularly surprising. "The evidence shows that patterns in Americans' income changes have been similar [from 1967 through 2004] and that the economy propelled most Americans upward, setting them back temporarily, if at all," the EMP concluded in 2009. "Eighty-four percent of Americans have higher family incomes than their parents had at the same age, and across all levels of the income distribution, this generation is doing better than the one that came before it," the project reported in 2012.

The fact that America is as economically mobile now as it was in the days when the top marginal federal income tax rate was 70 percent doesn't mean that the country is as economically mobile as it can or should be. Nor does the extremely stable nature of U.S. economic mobility negate the fact that individuals on the high end of the income spectrum are getting richer faster than anyone else.

But Obama's widely shared misconception also misses the greater cultural context. Economic mobility is not the sole measure of national well-being or progress. It's not even the sole measure of mobility.

In the American cosmos, mobility is indeed important, because mobility is freedom of action, the way that we exercise our ability to plot our own courses, to choose this path over that path, to reverse direction when need be, to associate with whomever we want wherever we want. Along with economic mobility there is cultural mobility that provides entrance to various institutions, goods, services, and practices. Social mobility gives us access to specific people and groups.

And of course there's plain old physical mobility. According to the Bureau of Transportation Statistics, America added approximately 1.1 million miles of paved roads between 1970 and 2008. In that same time frame, the Interstate Highway System expanded from 30,000 miles to 47,182 miles. In 1990, there were 17.6 million passenger departures from U.S. airports. By 2006, that number had risen to 31.4 million.

But while our capacity for physical mobility has improved dramatically over the last half-century, physical mobility is actually less important than ever. FedEx, UPS, Amazon Prime, and a wide array of other delivery services bring the physical world to our doorsteps. The Internet has turned us all into information nomads, able to traverse vast oceans of data in a single evening. Social networks are providing detailed maps of power and influence across formerly opaque realms of American life, making it easier for anyone to navigate its myriad industries, institutions, subcultures, and demographics.

What's the value of being able to track Alec Baldwin's meltdowns in real-time? Of choosing from 300 different models when you need a new coffeemaker, or having every syllabus of every class that MIT offers in one convenient directory? Today, most Americans have access to resources that were once inconceivable, and that access lets us cover more cultural and social ground than humans had ever previously been able to manage.

In a matter of decades, our mobility has increased by orders of magnitude, but the increases we enjoy are often hard to measure, at least using standard econometrics. The idea that Gross Domestic Product (GDP) and other economic indicators of well-being don't tell the whole story has become increasingly popular. New tools for assessment-like Bhutan's Gross National Happiness Index, or the Genuine Progress Indicator-are being championed as ways to present more accurate and holistic portraits of human progress.

For one thing, GDP does a poor job of capturing the negative externalities of increased industrial output and commerce. It says nothing about the Amazon rainforests that are destroyed to ensure a steady supply of Big Macs, or the individual misery that comes along with higher gaming industry revenues.

But it isn't only the negative effects that aren't being sufficiently measured by GDP. In the last 20 years especially, the market has begun to generate an increasing number of positive effects that go uncounted by traditional economic measures. GDP can assess Google's ability to sell ads, but it has never put a dollar amount to the collective gain in well-being that results from YouTube's ever-growing stockpile of cat videos. It makes no attempt to figure out how much happier we all are now that we can read The New York Times for free or pre-qualify potential soulmates by height, educational status, alcohol consumption patterns, and smartphone operating system preferences.

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  • UnCivilServant||

    Yay! the 404 went away, now I can read the article.

  • UnCivilServant||

    I was born into either the bottom quintile or the penultimate quintile (I don't have data on how much my parents made back then, or the size of those income bands, but we were poor)

    By the metrics laid out in the article, I've moved far, landing in the second quintile thusfar (yet I can't afford a middle class lifestyle because I strive for fiscal responsibility).

    Strangely, I feel poorer, when objectively I am not. I think it's the toxic social environment in this part of New York. It might be the radiating waves of contempt from the downstate transplants, or the way the state has waged war on everything I value.

    If only I could build up a reserve of cash to take advantage of geographic mobility and ditch the bastards who've ruined New York. (I'm not optimistic by nature, so I do my best to hdge my bets)

  • prolefeed||

    Sell most of your shit, pack up the rest in your car, and start driving away. I did that recently.

  • UnCivilServant||

    That'd get me $50. It wouldn't cover the cost of gas to get to Dakota. (Or even Past Chicago)

  • Rasilio||

    I see the same thing, at various points in my childhood my family ranged from the bottom to the 4th quintile, right now my salary alone is well into the top quintile add in my wifes and we are into the top 15%. However, even though I am nominally "richer" than my parents were I cannot afford anywhere near the same level of lifestyle spending

  • thesis_ascendant||

    Depending on your field, start trolling Craigslist for jobs in cities you'd consider. Employer relocation is a thing.

  • Rasilio||

    So SugarFree has taken control of the squirrels now?

  • Rasilio||

    So SugarFree has taken control of the squirrels now?

  • LynchPin1477||

    GDP can assess Google's ability to sell ads, but it has never put a dollar amount to the collective gain in well-being that results from YouTube's ever-growing stockpile of cat videos. It makes no attempt to figure out how much happier we all are now that we can read The New York Times for free or pre-qualify potential soulmates by height, educational status, alcohol consumption patterns, and smartphone operating system preferences.

    No, GDP doesn't measure self-reported levels of happiness. But the money advertisers spend on YouTube ads tells you something about how much traffic YouTube gets, and how much added revenue the advertising generates for sellers through increased sales. And the money people spend buying those products tells you something about the relative value they place on those products compared to everything else they could have spent their money on, presumably because those products improve their lives in some way. Similarly for the advertising dollars the NYT uses to support it's free content, or the money people spend signing up for E-Harmony.

    GDP may be a single number that lacks fine grained detail, but the amount of money people have to spend and the things they spend it on tells you an awful lot about their preferences.

  • LynchPin1477||

    an astounding proliferation of information resources, services, and even hard goods are free or nearly free

    Maybe this is part of the reason for the confusion. Those things aren't free. It's just that we aren't the customers. We are the product.

  • R C Dean||

    Bingo. I like the term "data cattle", myself.

  • mtrueman||

    "GDP may be a single number that lacks fine grained detail"

    True of any single number. It certainly tells us nothing of economic mobility; no more than the gallup poll results referred to in the article. I don't see how 'patterns in family income' reveal much about economic mobility either. In fact the author of this piece of hackery here doesn't even attempt to define what he's talking about.

  • prolefeed||

    In a matter of decades, our mobility has increased by orders of magnitude

    "Orders of magnitude" doesn't mean what you think it does Greg. I doubt our average mobility is at least 100 times higher than it was a few decades ago and possibly more.

  • prolefeed||

    or the individual misery that comes along with higher gaming industry revenues

    Are you telling me that people are voluntarily taking trips to Vegas, knowing they will be miserable afterwards?

    Does not compute with basic economics or my observations, despite a few outliers who are compulsive gamblers.

  • mtrueman||

    "Are you telling me that people are voluntarily taking trips to Vegas, knowing they will be miserable afterwards?"

    Miserable before and afterwards. I don't believe that individual misery 'comes along with' higher gaming industry revenues, rather the industry is founded on individual misery, boredom and fecklessness.

  • ||

    Economic immobility isn't a myth, it's a flat lie. The people making the claim don't actually refer to any actual, you know, facts, before making it. They just automatically spew the same socialist propaganda they always do.

  • mtrueman||

    "Economic immobility isn't a myth"

    Immobility may not be the best choice of phrasing. No person or group of people are immobile unless they are dead.

    Still, I don't think you'd have any trouble with the contention that some countries are less mobile than others. USA is ahead of Peru but behind Denmark according to those who study these things. From a CNN article:

    "This is especially true when it comes to education spending. Critics have long contended that the U.S. system for funding education -- where school funding is largely based on property taxes -- perpetuates inequality far more so than a system that taxes the whole country for schools, then redistributes that money to the districts that are most needy. "

  • ||

    Uh...

    A) US states are the size and equivalent of European countries

    and

    B) US states DO practice property tax redistribution among districts based on income. It isn't a universal levelling but it is an evening out.

    C) The US spends, on average, and including poor districts (see above) MORE than just about anyone else. We come in #5, behind Austria, Luxembourg, Norway and Switzerland.

    So... your point is false.

    And

    D) Higher spending is NOT correlated with better academic performance, no matter what the teachers' unions tells you.

    Who benefits most from that higher spending and the smaller class sizes that usually ensue? The teachers' unions...

  • mtrueman||

    Are you making a point about economic immobility? If so I missed it.

  • Christophe||

    Denmark only has higher mobility measured in quintiles, in raw $ amounts there's more mobility in the US.

    Basically the perception of more mobility in Denmark isn't due to actual mobility but to their much lower Gini coefficient.

  • abbey44||

    my roomate's mom makes $79 /hour on the laptop . She has been out of work for five months but last month her paycheck was $19158 just working on the laptop for a few hours. have a peek at this website.........
    http://www.Works23.us

  • WilliamsMaragret||

    my roomate's mom makes $79 /hour on the laptop . She has been out of work for five months but last month her paycheck was $19158 just working on the laptop for a few hours. have a peek at this website.........
    http://www.workbarr.com

  • Response||

    The wealth gap may be widening, but the luxury gap is definitely shrinking. There's no difference between the phones that the billionaires carry and the phones the bums on the street have. If a billionaire wants to play a video game, he's going to buy an xbox or playstation like everyone else because that is where the games are. A billionaire may have a home theater with every dvd ever made, but the average poor Joe has a 50" LED tv with a subscription to Netflix. The billionaire's top of the line computer is only a year ahead of what you will find at Costco. Yeah, a billionaire is going to be living large in his mansions and have a yacht and go on fabulous vacations, but the day to day entertainment luxuries that the billionaire uses is the same ones nearly everyone in the US (rich or poor) has.

  • rogerfgay||

    That's great that there are still opportunities for poor folks to find fame and fortune in Hollywood, but most people are trying to make it into the middle class, or from lower middle class to upper middle class. Yes, the US still owns the international entertainment industry, but that's far from the whole story on upward mobility. In addition, the period studied has been prime time for Affirmative Action and increased access to higher education for people in the lower brackets. The stats used provide a biased and misleading view of things.

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