Inequality

Great News: Economic Mobility Has "Remained Remarkably Steady" For Decades

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For all the talk about growing income inequality, it turns out that a far more important issue - the ability of individuals to move up the economic ladder - has "remained remarkably stable over the second half of the twentieth century in the United States." This is self-evidently good news in an economy that is dominated by bad news.

As the Washington Post puts it

Children growing up in America today are just as likely — no more, no less — to climb the economic ladder as children born more than a half-century ago, a team of economists reported Thursday.

That's according to Harvard's Raj Chetty and others, whose work is often used to bolster arguments that economic prospects are worse for people today than they were a generation or two ago. The paper is online here. While noting large variations in mobility based on geographic location and other factors, they conclude "a child born in the bottom fifth of the income distribution has a 7.8% chance of reaching the top fifth in the U.S. as a whole." They also note that "the strongest predictors of upward mobility are measures of family structure such as the fraction of single parents in the area."

Here's a chart laying out the odds of kids born in the lowest, middle, and top income quintiles of reaching (or staying at) at the top. The watchword is constancy.

This latest data should be surprising only to those who have ignored a steady stream of research that's been showing the same basic trend for a very long time (Matt Welch and I discussed this topic in The Declaration of Independents). For instance, former Pew and Brookings scholar Scott Winship, now at the Manhattan Institute, has found

that upward mobility from poverty to the middle class rose from 51 percent to 57 percent between the early-'60s cohorts and the early-'80s ones. Rather than assert that mobility has increased, I want to simply say — at this stage of my research (which is ongoing) — that it has not declined. If I include households that reported negative or no income, the rise in upward mobility I find is only from 51 percent to 53 percent, which is not a statistically meaningful increase. But the data provide absolutely no evidence that economic mobility declined, whereas the president said it had fallen by ten percentage points.

Don't expect the latest findings to make much of a dent in public discussions of economic policy. President Obama will talk about inequality as the defining issue of our time in his State of the Union address, and he regularly conflates growing inequality with reduced mobility. So do most observers, whether on the right or the left. 

That's because inequality is easy to grasp as a concept and ostensibly easy to rememdy. You just have take some money from one group and give it to another and the problem in solved, right?

A lot of Winship's work is gathered here [note: link is fixed]. He is right, I think, to argue that "we should wage a war on immobility instead of inequality" and that increasing rates of mobility has in fact proven very difficult. 

Reason TV taked with him a year ago about why scholars and pundits are slow to admit that mobility hasn't declined over time and the difficulties of increasing mobility rates for all Americans.