Money

The Myth of Economic Immobility

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

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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.

Out of technology and global commerce a kind of Commons 2.0 has arisen, a vast, market-driven ecosystem where an astounding proliferation of information resources, services, and even hard goods are free or nearly free, improving our lives in mostly uncharted but increasingly substantive ways. Surely it is a mark of genuine progress that we no longer have to buy a $50 classified ad to sell a $40 couch. Surely we are both economically and psychologically richer because we can Skype with friends and family in distant continents for hours on end without racking up four-figure phone bills.

Perhaps what's most encouraging about America's mobility renaissance is how widely distributed it is. You don't have to negotiate your way past a series of velvet ropes to catch Donald Trump's eye on Twitter. Facebook didn't stay a privilege of the Harvard elite for long-128 million Americans use it on a daily basis. According to the Pew Internet & American Life Project, 56 percent of American adults now have smartphones.

And yet in the midst of all these developments, our reigning preoccupation is a false narrative about dwindling economic mobility. Apparently the breakthroughs and benefits accrue in such dizzying but routine fashion now that even our most fervent potentates of hope and change have trouble keeping track of our progress.