Does rising inequality mean the American dream is dead? Is income mobility declining? Scott Winship has spent the last few years attempting to answer these questions, first as a researcher with the Pew Center on the States' Economic Mobility Project and more recently as a Brookings Institution economic policy fellow. In a recent series of articles in a variety of publications, Winship argues that the widespread perception that America's upper and lower classes are drifting apart is wrong and explains why people mistake growth in income inequality for decreases in economic mobility. reason online and reason.tv Editor in Chief Nick Gillespie spoke with Winship in June.
Q: Everybody seems to be interested in income inequality: the gap between the wealthiest and the poorest. People also talk a lot about income mobility: the ability of a person to move from one end of the income spectrum to the other. Everybody seems to agree that income inequality has risen and that income mobility is over. But you take issue with that.
A: Researchers and journalists talk offhandedly about the American dream declining and mobility [declining]. The research is much more ambiguous than that. It's not clear at all that mobility has declined. People are wedded to this idea that it has declined because there is a consensus that inequality has increased. So people talk about this idea that the rungs of the income ladder are [moving] farther apart.
Q: They're basically saying that because the richest 10 percent are much richer than the poorest 10 percent, mobility between these sections has to be harder.
A: That's right. Where inequality is really taking off is at the very top of the ladder. The top rung has flown away from everybody else. But there's no reason that makes it any more difficult to climb the bottom two-thirds of the ladder, for instance.
Q: So what you're finding in your research is that, while not everybody has an equal shot of becoming a bazillionaire, mobility rates in 1970 were roughly the same as they are now.
A: Yes. You can be concerned that there's not enough mobility or enough opportunity, but you don't have to also believe that things are getting worse.
Q: Let's say you were born right at the poverty line. What are your odds of becoming fully middle class or upper middle class or rich?
A: If you're born in the bottom fifth, you have about a 40 percent chance that you're going to stay there when you're an adult. Some people get that, and they think, "Oh, that's great! Sixty percent make it out." Other people look at it and say, "This is a travesty."
The way that I tend to put it in context is: If you start in the bottom, what are the chances that you'll end up in the top two-fifths—the solid middle class, upper middle class? It turns out you have about a 17 percent chance.
Q: So how do we jack up that 17 percent?
A: There is a small revolution that is starting to happen with randomized controlled trials: really trying to find out what works, pursue those policies, and abandon ones that don't, including some relatively popular ones.