Barack Obama

Obama Is Wrong: Income Mobility Has Not Declined Over the Past 50 Years

|

Obama at CAP
White House

In December, in a speech at the Center for American Progress, President Barack Obama asserted that "we've seen diminished levels of upward mobility in recent years," further declaring that "a dangerous and growing inequality and lack of upward mobility" is "the defining challenge of our time."

The president is wrong about "diminished levels of upward mobility" according to a new study by economists from Harvard University and the University of California, Berkeley. Parsing data from the 1950s and 1970s, the researchers involved with The Equality of Opportunity Project find that…

…measures of social mobility have remained stable over the second half of the twentieth century in the United States.

In 2012, President Obama's former chairman of his Council of Economic Advisors, Alan Krueger, introduced the concept of the "Great Gatsby Curve." Krueger compared income inequality and income mobility across countries and found that …

…children from poor families are less likely to improve their economic status as adults in countries where income inequality was higher – meaning wealth was concentrated in fewer hands – around the time those children were growing up."

In other words, as income inequality increases income mobility decreases: the poor stay poorer and rich stay richer.

The new study reports that it can find no evidence for the existence of a "Great Gatsby Curve." Instead the researchers find that income inequality has indeed increased in the United states, which means that "the rungs on the income ladder have grown further apart," nevertheless, "children's chances of climbing from lower to higher rungs have not changed."

MIT economist David Autor is surely right when he tells the Washington Post that the new results will serve as…

…"a sort of Rorschach" test that will support many economists' preconceived notions about the effectiveness of government programs in providing opportunity.

Some could view the results as a failure of programs such as Pell grants, Head Start and nutritional supplements for children that are intended to promote mobility. Or, he said, "you can view this as: Social policies have fought market forces to a draw."

What factors do retard upward income mobility? Among other things, being located in the Southeastern United States, greater residential segregation by race and ethnicity, poor public schools, residing in areas with lower social capital, and living in neighborhoods with higher percentages of single-parent families.

For example, the researchers report…

…the strongest predictors of upward mobility are measures of family structure such as the fraction of single parents in the area. As with race, parents' marital status does not matter purely through its effects at the individual level. Children of married parents also have higher rates of upward mobility if they live in communities with fewer single parents.

As Brookings Institution analysts Isabel Sawhill and Ron Haskins pointed out more than ten years ago, if a person wants to stay out of poverty and move up the income brackets, do three things: graduate high school, get married, and then have kids. My Rorschach blot test tells me that expanding welfare programs have barely made up for the deleterious social and economic trends they have exacerbated over the past 50 years.

For more background, see my recent column, "Why President Obama is Wrong on Inequality."

NEXT: Appeals Court Prohibits North Kansas City From Seizing Burger King Via Eminent Domain

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. Oh come on! There’s only so much wealth out there! It’s a fixed pie! Not only that, but wealth and money are the same thing! Once you understand that, then it becomes clear that concentrations of wealth represent money taken from the poor! The rich haven’t paid their fair share because if they did then they wouldn’t be rich! Aaaauuuggghhh!

    /progtard

  2. My income has been a sinusoidal wave over Obama’s presidency. While not ideal, it is certainly mobile!

  3. I almost wish it were true, because –

    “we’ve seen diminished levels of upward mobility in recent years,”

    Recent years? As in, the ones where you’ve been President?

    Moron.

    1. I do think blaming personal economic woes on the Federal government is counterproductive to getting personal finances in order. However, this asshole administrations has perpetuated polices that give real disincentives for work. The most troubling thing is workforce participation. It really bothers me.

      1. Workforce participation isn’t a thing. I know this because it’s issue number 17,349 that my Obot acquaintances refuse to acknowledge.

      2. Hmmm…you wouldn’t think that persistently high unemployment, a drop in labor force participation due to discouraged workers, and consistently high long term unemployment, combined with a “quantitative easing” monetary policy that has fueled a rise in stock prices and thereby increased the wealth of those who own stock, not to mention landmark health insurance legislation that all but begs employers not to hire more than 49 employees, has anything at all to do with rising inequality of income?? Would you? Nah.

      3. I think a lot of them work for cash under the table, doing things people actually want instead of pushing papers around. Workforce participation is real bad news for welfare state that relies on tax revenues from legal businesses, but for big picture economy, might be a plus, if the state will be poor, but people rich.

        1. I think this has to be a big part of it. Not all of the people who have dropped out of the officially counted workforce are on disability or retired early and they have to support themselves somehow. A lot of them must be working under the table. Which in a lot of ways is a good thing.

          1. In every way, it is a good thing.

    2. No, the years that started with Bush, or Reagan, of course!

  4. “economists from Harvard University and the University of California, Berkeley.”

    It is obvious you are just using studies from right wing crackpot universities to support your fairy tale corporatist-Koch-run Darwinian utopianism propaganda!!!

    1. Give Koch a chance, not like you know what you’re doing, proggies.

  5. “we’ve seen diminished levels of upward mobility in recent years,” further declaring that “a dangerous and growing inequality and lack of upward mobility” is “the defining challenge of our time.”

    If he talks about it and makes it an issue, it becomes a political reality, and in that sense, it’s true.

    And isn’t that what’s really important, you racists?

    1. He wasn’t just bragging about the impact of the regulatory tsunami his Administration has unleashed?

  6. so not even Harvard or Cal/Berkeley could jimmy the results to fit their preferred hypothesis.

  7. Let’s say income mobility had declined over the last fifty years, just for the sake of argument.

    In 1964 we had no war on poverty, no EPA, our national debt was much smaller, we were less heavily regulated, the states had more power than they do today, Congress had more power relative to the president, and we spent approximately 1/20th as much money on education adjusted for inflation.

    Isn’t it possible that those changes could have resulted in income mobility declines? I mean, we’ve had capitalism the entire time, so capitalism clearly couldn’t be at fault.

    1. I: I agree: My Rorschach blot test tells me that expanding welfare programs have barely made up for the deleterious social and economic trends they have exacerbated over the past 50 years.

      1. and the proof of that is where again?

      2. and the proof of that is where again?

    2. it just means govt has not spent enough.

      /krugs

    3. Importing tens of millions of poor South Americans might have had a little to do with it, too.

      1. I didn’t know there were tens of millions of South Americans living in the US.

        1. There’s 12-15 million illegal immigrants of all origins in the US right now, by most estimates. 3 million illegal immigrants got legal status (they actually called it “amnesty” back then, but it’s such a dirty word today) with the Immigration Reform and Control Act of 1986. That’s 18 million total, and we’re still 2 decades shy of 1964. Presuming a third hail from Central and South America, it’s not implausible.

          1. And of course you didn’t specify illegal immigrants, but I’ll presume that’s what the both of you were talking about. Including legal immigrants, I wouldn’t have much trouble at all believing that with 53 million Hispanic residents, the number from Central and South America is north of 10 million.

          2. There’s pretty good demographic information about people in this country. 60% of Hispanics are of Mexican descent, and the next largest groups (IIRC) are Puerto Rican, Dominican, Cuban, Salvadorean, and Guatemalan. None of those countries are in South America. I believe Colombians are the biggest SA group in the US, and there’s barely a million of them here. I don’t even know if there are 5 million South Americans (if you want you can check Wiki for information on every group) in the US, and I’m 99% sure there’s not 10. And of course, not all of those people were “imported,” many are native born.

            This is all pretty much beside the point, I was just giving PapayaSF a hard time because I assume he meant Latin America instead of South America.

            1. Yes, you are. I meant “Central and South Americans,” but I didn’t get much sleep last night.

              1. Central America is extremely small. Mexico is part of North America. Just say Latin America. That’s what you are talking about.

                1. Oh, Jeebus. If only all publications had fact-checkers and editors this diligent.

      2. I don’t know. I would imagine that very poor immigrants would have quite a bit of income mobility.

        1. When i got off the boat, i got started as a cashier at Toys R Us for minimum wage. It was a very important job for me at the time, just to get started somehow. I now cook crystal (for liquid crystal displays) – much more lucrative. I’ve done polymers for photonic waveguides and radomes for cruise missiles as well.

          While my current gig is awesome, it would have been impossible without that first starting point at Toys R Us (the whole customer service thing and ability to interact with American natives). So yeah, as long as the leftists don’t outlaw entry points to careers of people through labor regulations, immigrants can still contribute greatly to the wealth of this country.

          1. There’s no question that immigration can do that, but unfortunately, years ago we dropped a lot of requirements that immigrants be educated, etc. in favor of “family reunification” and de-facto open borders. One result is that we get a much higher percentage of people who are basically Third World peasants. Importing some of the poorest and least educated Mexicans is not going to help the economic mobility averages in the US.

            1. De-facto open borders? Are you mad? And incoming poor people, regardless of origin, have nothing to do with another individual’s economic mobility, or even averages, unless the researchers were counting in a stupid way.

              1. If tens of millions can get in illegally, it’s close to de-facto open borders. A bit of hyperbole.

                Poor people who often don’t speak English (or even Spanish!), who exist in the economic margins of society, often working under the table, are going to have less-than-optimal economic mobility, yes.

            2. All true. However, your biggest problem is with welfare state – yes, in a welfare state immigration can be a negative, but if you reduce it, then they will come for jobs, and not be on the dole. And yes, importing peasants will increase inequality in short term, but this fact overlooks the increase in welfare of said peasants (and their employers, and customers, and so on), and their further economic outlook. They do much better here than in Mexico (otherwise, they wouldn’t come). And they provide valuable goods and services in the process (picking lettuce etc). Long run – more lettuce picked, the better off we all are.

              I understand your concerns, but your beef is not with Mexicans. If it with welfare state and current political discourse. United States was not intended to be a ‘democracy’ where the largest political mobs gets to steal whatever it wants. United States is a Constitutional Republic with clearly outlined separation of powers – US needs to act like one for a change.

            3. All true. However, your biggest problem is with welfare state – yes, in a welfare state immigration can be a negative, but if you reduce it, then they will come for jobs, and not be on the dole. And yes, importing peasants will increase inequality in short term, but this fact overlooks the increase in welfare of said peasants (and their employers, and customers, and so on), and their further economic outlook. They do much better here than in Mexico (otherwise, they wouldn’t come). And they provide valuable goods and services in the process (picking lettuce etc). Long run – more lettuce picked, the better off we all are.

              I understand your concerns, but your beef is not with Mexicans. If it with welfare state and current political discourse. United States was not intended to be a ‘democracy’ where the largest political mobs gets to steal whatever it wants. United States is a Constitutional Republic with clearly outlined separation of powers – US needs to act like one for a change.

          2. You work for NDK? You know there is a significant chance you will blow yourself up at some point?

            1. I don’t work for NDK, but yes, there’s a significant chance i’ll blow myself up at some point. It comes with the territory. But my job is to prevent it from happening. The worst was probably carrying a 5 gallon bucket of sodium metal covered in plastic on a nice winter day. Anyway, part of my job is to make sure things are safe. I’m an R&D chemical engineer working on pilot plants for novel materials.

              1. You just carry that shit around in a Home Depot Homer Bucket?

                1. In pilot/development stage it’s what you have to do. In production, it’s easy to spend $$$ for feed system – you are a making valuable product. In pilot stage nobody cares about you and your crazy unproven ideas. And you really don’t want to – time is of an essence too. So you pick a low humidity day, and roll with it. 🙂

                  And i think it was a Lowes bucket 🙂 But it’s really not that bad if you know sodium metal kinetics with water, and what it’ll do. Hint: there are different rates for oxidation process, you just need to make sure then one you want don’t get overwhelmed.

      3. The problem is, as always, the welfare state. The welfare state is a lie: we can steal from people who add value and give to people who add no value, and the system will sustain itself forever. Immigration simply exposes the lie faster. The regulations exacerbate this further, since it’s easier for people to get on the dole than get a job or start a business.

    4. And no Dept of Ed.

  8. being located in the Southeastern United States,

    if that’s a great negative, perhaps someone can explain the migration from other – presumably better – parts of the country to the sunbelt.

    1. Wouldn’t it depend on which side of the ledger the migrants were on? If they were already in the top half, maybe it’s too late for their mobility mojo to trickle down to the natives? Or maybe they move after their kids have left?

      I would suspect that generally, migration effects would be hard to isolate.

      1. Yeah. Are people migrating to the sunbelt because they can make more money there, or for other reasons?

        1. The same ballpark amount of money but with better income security is probably the reason why, while people still move to the southeast, mobility itself may be low. In fact, I could see the amount of people people moving causing dilution of the mobility statistic.

        2. They’re warmer in the winter. It’s a big deal…speaking as a Canadian.

  9. Obama Is Wrong

    But you repeat yourself.

    1. Is there anything he says that isn’t a lie or just completely wrong or both?

      1. Yes, when he said “We’re going reward our friends and punish our enemies”, that was completely 100% truthful. Same thing when he said “We’re going to fundamentally transform the United States of America.”

        Other than those two statements, I can’t really think of anything else.

        1. And when he told Joe the Plumber that he was going to “spread the wealth around” he was telling the truth. So we have three instances.

          1. “I’m good at killing people”

            1. He’s really more good at ordering people killed. I doubt he’s killed anyone himself.

              1. I wouldn’t be too sure.

  10. Boomburg journalist finally just admits it, Obamacare is a complete disaster and everyone is always going to hate it. But it will never change because fuck you that is why.

    http://www.bloomberg.com/news/…..tinct.html

    They really have just stopped even pretending anymore.

    1. Nor are future 25 year olds on their parents’ health care plan courtesy of Obamacare going to be aware that only a few years ago they might have been uninsured.

      They might have been uninsured, or they might have been adults. Who could say, really.

      1. And every future 27 year old is going to know it when Obama fines the living shit out them for the crime of not being able to afford insurance.

        1. J: Don’t you mean “tax the living…”? See Chief Justice Roberts for details.

          1. LOL I have never been big on legal terms of art Ron. I prefer plain language to the majesty of the law.

            1. Considering that most Constitutional jurisprudence consists of pre-drawn conclusions reasoned backwards to some gauzy justification.

  11. Rich people who do rich people things (like get educated, establish a career or business and get married BEFORE having children and work their asses off) get richer. Poor people who do poor people things (reverse of the above parenthetical) get poorer. The corollary is also true: Rich people who do poor people things get poorer and poor people who do rich people things get richer.

    1. ^^THIS^^

      Poverty is a moral and cultural condition not a monetary one. If it were a monetary condition, giving poor people money would have solved poverty long ago.

      1. See Vince Young, who was given a $26 million signing bonus just seven or eight years ago, which is an assload of money even after taxes, and is now broke.

        1. Over 90% of NFL players who have made 15 million or more during their careers ended up bankrupt. That is an astounding statistic.

          1. That is a damning stat to the idea that poverty is a monetary issue. Other than a Michael Lombardi tweet, I can’t find where that stat came from. Are you able to direct me in a better direction?

            1. Can’t find that statistic. And I am pretty sure I heard Lombardi say it. So I can’t vouch for its truth. But, I will vouch for this.

              The average professional athlete in the U.S. will make more in one season than most Bankruptcyof us earn in our entire lives?.[yet,] despite those staggering salaries, 78% of NFL players, 60% of NBA players and a very large percentage of MLB players (4x that of the average U.S. citizen) file bankruptcy within five years of retirement.

              http://www.munknee.com/78-of-n…..n-5-years/

              And that is just as damning.

            2. There was an ESPN special (30 for 30 maybe) about bankrupt athletes. Sad and funny how some of these idiots blew through millions with nothing to show for it. Like Brewster’s Millions on a loop.

              1. There was an ESPN special (30 for 30 maybe) about bankrupt athletes.

                Today’s professional athletes are essentially lottery winners, from an economic standpoint (not to say that they don’t work hard, on the whole, to be good performers)–so many of them came from lower-to-middle class backgrounds and aren’t emotionally or intellectually prepared for instant riches.

                Even the minimum-salaried guys tend to be given very good pay. The NFL practice squad guys get $6000 a week, or $96K a year if they last the whole regular season. That’s great money for someone who was dirt-poor growing up and might not even have a college degree.

                Now imagine that same dirt-poor (or even middle-class) kid, fresh out of college, making millions. Unless you got lucky with a decent agent and financial planner, the temptations are often difficult to overcome, especially once your “friends” and “cousins” start putting their hands out.

      2. I regularly get in trouble for saying that poor people are usually poor for very good reasons.

          1. black-hearted”

            Racist.

  12. …children from poor families are less likely to improve their economic status as adults in countries where income inequality was higher ? meaning wealth was concentrated in fewer hands ? around the time those children were growing up.”

    In a market economy, wealth is not concentrated – it is created and traded. Goods and services are created and, in the process of exchange, their value is discovered. This discovered value is wealth. (Soviet citizens, for example, did created goods and services, but they lacked market mechanism for value discovery, and thus were poor despite working hard and/or smart – they were working on the wrong things).

    It becomes a question then – not of why rich can outproduce the poor (aka ‘concentrate wealth’), but why production opportunities for the poor had not expanded over time. But to answer that question honestly, you’d need to say that the government had set up perverse incentives and barriers that limit those production opportunities. Of course, President’s Man can’t say that.

    1. The pervasive idea that rich people getting richer somehow takes away from everyone else is poison to any intelligent discussion about things like this.

      1. Sam has nothing, so he is poor. Sue makes something people want, so now she is rich. Sam, having nothing to lose, was not affected by Sue’s success.

        They cannot explain this, so always shift to “the middle class”, which is never defined in any strict way, lest they be held accountable to facts.

      2. I think international economics may be helpful to explain this problem. If a country has a current account deficit, by definition, it has a capital account surplus. Think US and China – US sends fiat dollars to China, China sends goods and services (real wealth) to the US. Given that US can print dollars at will (and it does), and China actually needs to work to produce goods and services, China is a real loser in this scenario.

        Same logic applies to people. Poor people print money at will (through welfare state, well, will of the state), and others must work for it to supply goods and services. Since poor people produce no goods and services to trade for, it is inevitable that they buy them from the productive. Thus productive end up with current account surplus, but capital account deficit. That is, they can stop working, because they are losing capital through work, to accumulate a worthless current account surplus.

        This mechanism is fundamental to all economic relations.

  13. This whole new “focus” for Obama is just battlespace preparation for the 2014 and 2016 elections. They’ve got little else beyond class warfare to rile up the base.

    1. Yup. This is Obama buying the base a diamond ring in hopes they forget about the beating he gave them in that little argument over the NSA and drones.

      1. And to shift the blame from his economic policies, which are making things worse.

  14. OT, but right up RBs alleyway —

    A New Physics Theory of Life

    http://goo.gl/OiFbr3

    1. This is why I love coming here. You never know what interesting article or link you’ll find.

  15. Speaking of income mobility, how much is a certain former community organizer worth, these days?

  16. Some could view the results as a failure of programs such as Pell grants, Head Start and nutritional supplements for children that are intended to promote mobility. Or, he said, “you can view this as: Social policies have fought market forces to a draw.”

    What in the fuck is that even supposed to mean?

    Is he so fucking dumb he thinks “market forces” make people poorer?

    1. He’s right, but has it backwards: social policies have fought market forces, which would have otherwise reduced income inequality, to a draw.

  17. No matter how much money someone earns, unless they know how to save they will end up right back where they started.

    http://www.youtube.com/watch?v=nVat9VBsSCg

    1. Isn’t it brilliant how the government has basically waged war on simple savings?

Please to post comments

Comments are closed.