Fading mobility troubles Americans

Analysis
By Steve Schifferes
Economics reporter, BBC News

Wage growth for average workers has been stagnant

The US has always prided itself on a rising standard of living and a fair chance for those at the bottom of the economic pile to rise to the top.

And it has tolerated a higher degree of inequality than many European countries, as long as the chance of social mobility remained strong.

What is new and striking about the findings is the amount of stickiness at the bottom for American males Brookings Institution report

But new research suggests that the belief that poor Americans can rise to the top is increasingly a myth.

And the changes to social mobility may help explain why concerns about the economy have become such a pressing issue in the US presidential election.

See how rich and poor get on in America

No rags-to-riches

According to research by the Brookings Institution, a respected Washington think-tank, social mobility is less likely in the next generation than it was in the 1950s and 1960s.

It is harder to rise from the bottom now

The study finds that 42% of children whose parents were in the lowest 20% of the income distribution were likely to remain there, while only 6% moved up to the top 20%.

In contrast, children born to the richest fifth of parents had a 40% chance of staying in that group, and 60% stayed in the top two-fifths of the income distribution.

Because incomes have generally risen across the population, the Brookings study found that around one-third of families were downwardly mobile, one-third were upwardly mobile, while most of the rest stayed in the same place in the income distribution, but had an average income that was higher than their parents.

Trends

Family income, however, grew much more strongly in the early post-war years, between 1945 and 1973, than in recent years.

And the incomes of those higher up the income scale have grown faster, leading to greater inequality in the overall income distribution.

There has been less social mobility among blacks over generations

Most studies point also to a levelling-off of income mobility for children who entered the labour force in the 1970s and 1980s compared with earlier cohorts.

Although records are still incomplete, as more recent generations have not yet completed their work career, some studies have suggested that mobility may have fallen by as much as half for the younger cohorts of adults.

There are also strong racial and gender elements in these trends.

Women have recently improved their relative mobility as opportunities, especially in higher education, have increased.

Black families, however, show lower mobility at all levels of income.

Education the key

The key to future mobility among American citizens appears to be education.

Those with college degrees can increasingly enjoy a higher level of income than those who have not finished college or who just have a high school education.

CHILDREN WITH COLLEGE DEGREE Bottom 20%: 11% Second lowest 20%: 20% Middle 20%: 25% Fourth highest fifth: 38% Top fifth: 53% By Quintiles of parental income source: Brookings

But just 11% of children whose parents were in the lowest 20% of the income distribution had a college degree, as opposed to 53% of children whose parents were in the top quintile.

Students from poor backgrounds are also less likely to complete their studies at four-year colleges, rather than smaller two-year community colleges, and to get help in applying for college and for financial aid.

The growing expense of education, which has led some elite institutions to provide financial aid even to parents with incomes over $100,000 a year, has also inhibited poorer students from attending college.

"There is good evidence to suggest that education will continue having only a moderate impact on economic mobility until... schools are more effective in imparting basic skills... and until more poor students enter and complete college," said Ron Haskins, the Brookings scholar who authored this section of the report.

International comparisons

Americans are most optimistic than people in most other countries about the possibility of upward mobility.

Americans have always been more optimistic about getting ahead

More agree with statements such as "people get rewarded for their effort" and disagree with statements such as "it is the responsibility of government to reduce differences in income" than in most other developed countries.

But the reality is that children's incomes are more closely linked to those of their parents in the US (and the UK) than in many other industrialised nations.

"What is new and striking about the findings is the amount of stickiness at the bottom for American males," the report states.

Men who were born into poor US families in the 1950s had a 42% chance of staying poor - a worse outcome than in Denmark, Finland, Norway, Sweden and the UK, where the comparable percentages range from 25% to 30%.

When compared to some developing countries, however, such as Mexico, Brazil or Pakistan, US social mobility is in the same range.

The differences may reflect the greater welfare expenditure by those European countries whose governments have often aimed to reduce inequalities, as well as the more rapid expansion of educational and job opportunities in European economies in recent years.