The circumstances of birth, whether rich or poor, tend to persist in the United States, but new policies could remove barriers to poor strivers improving their lot, as this economics expert shows.
Research findings show that here in the United States, income, wealth, and opportunity are significantly correlated across generations.
A child of a low-income father has only a small chance of achieving very high earnings in adulthood. Almost two-thirds of children of low-income parents (those in the lowest quintile) will themselves have wealth levels that place them in the bottom two quintiles. And while there is some disagreement in the literature, some of the research shows that we have become considerably less mobile over time. This finding is important, because it means there has been no increase in mobility that might serve to offset the higher levels of cross-sectional inequality.
One of the most surprising findings of this research is that the United States has less mobility than other advanced economies, even those in Scandinavia. Certainly these results belie a simplistic story of a favorable trade-off between less regulation and social protection and greater mobility. These other countries manage to provide far more extensive safety nets, and families there appear to face fewer class barriers. An important question for future research is whether these two features are causally linked: do more elaborate social protections clear mobility pathways that are blocked in economies that operate in a freer market framework?
What should we do to diminish these correlations and boost mobility, especially among those who are disadvantaged at the starting line? It’s an important question, because equal opportunity at the start is a core American value. We generally reject notions that support equality of outcomes; ours will always be an economy and a society with some degree of inequality. But if this inequality results not from a meritocracy wherein the most able “win the race,” but from a rigged race where too many contestants are running with weights strapped on their backs, we sense that economic injustice is in play.
Thus, a primary concern of public policy in this area is to remove the weights—that is, lower the barriers created by economic, racial, or political differences that stand between people and their ultimate potential.
Obviously, education is key, and the fact that “smart” poor children access college at the same rate as lower-performing rich children suggests an economic barrier. Programs that identify high-performing students in low-income settings could help in this area, but thinking more broadly, perhaps any student who has the ability should be able to go to college. In other words, would it not make sense to promote full access to higher education for anyone who is interested and able? Costing out such a program is beyond the scope of this chapter, and, of course, budgetary trade-offs need to be considered. But given the role of college education in boosting economic mobility, this is worth considering.
Of course, educational disadvantages start way before college. State-based programs that provide access to college for disadvantaged but high-performing students have found that remediation is an important part of the process, because some of these students need extra services to help them adapt to college.
Better social safety nets and greater work supports—any work-related subsidy provided to low-income workers—are also part of the solution to raising mobility.
Especially in the low-wage U.S. labor market, there is a significant gap between what low-income workers earn and what they need to make ends meet. While such supports are associated with current consumption, and thus may sound less relevant regarding mobility, it is difficult for such persons to get ahead without these supports. Child care is a good example. Research has shown that the absence of affordable child care has led to either interruption in labor-market participation, inferior child-care provision, or both. Clearly, this dynamic works against building mobility-enhancing experience in the labor market and a head start for children.
Finally, the data suggest that the persistence of wealth across generations gives a leg up to the haves relative to the have-nots. Offsetting this mobility blocker is at the heart of the asset-building movement, a broad set of programs designed to increase wealth among the poor. Often, these programs have operated at too small a scale to make much of a dent in the historical persistence of wealth accumulation. But larger initiatives, such as sizable demo grants for all children, have also been proposed. In fact, the “college for all who are able” idea can be viewed in this light as well, as an ambitious investment in building human capital assets for the disadvantaged.
Adapted from All Things Being Equal: Instigating Opportunity in an Inequitable Time, ed. Brian D. Smedley and Alan Jenkins.