A Philosopher's Blog


Posted in Business, Philosophy, Politics by Michael LaBossiere on July 11, 2012
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The United States has significant economic inequality, but it has been part of the American narrative that upward mobility is not only possible but actually the normal order of things. This narrative has many components. One is the idea that each generation will (or should) do better than the previous generation. Another is that individuals can use their talents, gumption and a bit of luck to rise upwards from humble beginnings to great success. This general narrative is typically accompanied by specific anecdotes, such as the popular tales of Steve Jobs, Bill Gates and Mark Zuckerberg.

While narratives and anecdotes can be rather interesting, they are not a proper substitute for adequate evidence. After all, anecdotes might be (and often are) about cases that are unusual or exception rather than what is supported by the weight of statistical evidence. This is why there is a fallacy of anecdotal evidence. This fallacy is committed when a person draws a conclusion about a population based on an anecdote (a story) about one or a very small number of cases. The fallacy is also committed when someone rejects reasonable statistical data supporting a claim in favor of a single example or small number of examples that go against the claim.

Unfortunately, the statistical evidence seems to be that the United States is a high inequality and low mobility country. Esmé Deprez appeared on CNN to discuss a Bloomberg report on this fact and other researchers have been discussing the matter for some time.

42% of the men raised in the bottom 20% income remained there as adults, which matches poorly against Britain (30%) and Denmark (25%). 8% of the men in the bottom 20% were able to reach the top 20% while this rate was 12% in Britain and 14% in Denmark.

65% of those born in the bottom 20% stay within the bottom two-fifths. Of those born in the bottom 10%, 22% remain there. In Canada, the number is 16%.

The news is, as always, better at the top: about 62% of those raised in the top 20% remain in the top two-fifths. For those in the top 10%, 26% of American men born there stay there. Canada fares worse here: only 18% of Canadian men born into the top 10% remain there.

This mobility from income class to income class is called relative mobility.  It is considered relative in that the movement is defined relative to the person’s class of origin. So, for example, a person being born in the bottom 10% but moving on up to the top 10% would be upward relative mobility.

Another type of mobility is called absolute mobility. This measure involves a comparison of incomes rather than economic class. Looked at in terms of absolute mobility Americans seem to be doing well: 81% of Americans have a higher income than their parents because the United States is richer now than it was then.

One of the main focuses of concern in recent years has been the core of the United States, the middle class. About 36% of Americans born in the middle 20% move up, about 23% stay there, and 41% move down.  Looked at positively, about 58% of the middle class will do as well as or better (relatively speaking) than their parents. Looked at negatively, 64% of the middle class will do no better or will do worse than their parents. In any case, the largest percentage will do worse than their parents, relatively speaking.

As far as why the United States seems to be weak in regards to mobility (especially upwards mobility), this is a matter of considerable dispute which is often tainted with competing political ideologies.

One factor, pointed out by Rick Santorum, is that the poor in the United States are more likely to be raised by single mothers relative to other countries. This is taken by some to be a factor in the lower mobility and as something to be utilized as a premise in arguing in favor of the traditional family.

Another factor is that the United States leads the world in the percentage of its citizens who are in prison. As is obvious, being imprisoned is a major economic impediment that tends to endure throughout a person’s life. As such, the high incarceration rates (mostly resulting from the war on drugs) tend to reduce economic mobility by trapping people in poverty.

A third factor is the high economic inequality in the United States which means that the distance between economic classes is rather large. To use an analogy, the lowest economic class starts out at the base Mt. Everest while the top class begins at the summit. Working up from the bottom or even in the middle requires an incredible change in income and wealth.

A fourth factor is that the economic playing field is not level. Some people possess considerable advantages (such as starting wealth, family connections, political influence, and race). To use a sports analogy, moving up is rather like running a marathon in which some people start at various miles along the course, with the poorest starting at the very beginning and the rich starting miles closer to the end. Catching up to folks who have such a huge lead is not impossible, but clearly very difficult.

One of the key advantages is education. While people in the lower classes can attend college, this is obviously more difficult in terms of paying for college, being prepared for college (wealthy areas tend to have the best K-12 schools while poor areas have the worst), and having the connections needed to get into the better schools. The current trend is to cut education spending which will obviously hurt poorer families more than wealthy families and this will only serve to lower mobility.

A  Fifth and very controversial factor is unionization or the lack thereof. While the narrative from the right is that unions are job killers and economy destroyers, lower rates of unionization tends to lead to lower wages and reduced benefits, thus reducing the ability of workers to work their way up. Interestingly, the lowering of wages is sometimes regarded as a good thing since it increases profits and it is claimed that this leads to more jobs. However, some see the creation of more lower paying jobs to be less than ideal.

A sixth factor and one that might seem odd is the obesity epidemic in the United States. While the exact impact of modern obesity will not be known for some time, it is known that being obese increases health care costs and generally has a negative impact on success. Some of this impact is due to the health impact of obesity which can cause a person to miss work and be less productive. Weirdly enough, the United States might be less mobile because it is getting too fat to move.

Naturally, none of the above addresses the ethics of the matter—that is a matter for another essay.

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9 Responses

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  1. T. J. Babson said, on July 11, 2012 at 7:28 am

    Nice discussion by several thinkers of the role of higher education in promoting economic inequality:


    I tend to agree with this guy:

    The Problem is Elsewhere

    By George Leef

    Higher education has only a little to do with the apparent decline in social mobility in the United States.

    The main reason for the decline is that an array of federal, state, and local policies has increased the cost and difficulty for poorer people to improve themselves. Our national arteriosclerosis is a result of the growing burden of regulations that make it more difficult for poor people to start businesses on their own or find job openings with good career paths. Local business regulations, state licensing mandates, and federal minimum-wage and other rules have all made our economy more rigid than it once was, with a strongly disparate impact on the poor.

    What role does higher education play in this? Only a minor one. Despite all the talk about how college education is supposed to add to a person’s human capital (sometimes it adds much, but often little or nothing), the educational level of the work force has nothing to do with the kinds of jobs created in the economy. No matter how high “educational attainment” reaches in our society, there will always be a great many jobs that do not require any advanced academic study or training—and won’t pay any better just because the worker has gone to college.


    On the other hand there is this:

    Growing Elitism

    By Thomas J. Espenshade

    On balance, elite higher education helps maintain social inequality in America, and the economic recession is magnifying that problem, especially at public institutions.

    During the past two decades, research that Alexandria Walton Radford and I conducted found that a rising proportion of students who are enrolled at selective colleges and universities has come from the top two social-class categories: upper-middle- and upper-class families. And at the private institutions we studied, there is a pronounced upward slope to the relationship between the probability of being admitted and the socioeconomic status of one’s family.

    When one considers the positive economic rate of return of a college education—and especially of a degree from a name-brand institution—it is easy to see how selective private higher education confers, concentrates, and consolidates privilege for students who have grown up in well-to-do circumstances.


    • Michael LaBossiere said, on July 11, 2012 at 4:15 pm

      People with college educations tend to make significantly more than people who do not have such educations and unemployment is generally lower for the college educated relative to those who lack such education. Education thus seems important to advancing or at least holding ground.

      Unfortunately, education costs have increased steadily and financial aid has declined in many states-thus making it more difficult for those with less wealth to attend college or send their kids to school.

      As such, it would seem that education is a relevant factor.

      While this oversimplifies things, one main problem has been the escalation in cost. Before he retired, a friend of mine did an analysis of the data at FSU and found that the largest increase was in administration. Roughly put, bureaucratic bloat is bloating the price of education. Interestingly, this has been partially the result of universities explicitly adopting certain business models of operation.

      Oddly enough, the attempts to address budget woes in education generally aim at cutting the meat-that is, getting rid of adjuncts, faculty and staff who do the work that makes the university function. This is, of course, not surprising: the people who handle the administration make the decisions about the money and control the flow of information from the university to the state.

  2. magus71 said, on July 11, 2012 at 7:38 am

    None of my friends or I moved down. We all stayed in our class or moved up. Maybe we should all be studied for our exceptionalism.

  3. magus71 said, on July 11, 2012 at 7:52 am

    But generally we’re becoming dumber as a people. Yes, I believe that.

    • Michael LaBossiere said, on July 11, 2012 at 4:17 pm

      It might be that we are just relatively dumber-that is, other countries have moved ahead of us.

  4. magus71 said, on July 11, 2012 at 8:04 am

    As evidence of our growing stupidity, I present this article in Foreign Policy magazine in which Gen.(Ret) McChrystal advocates a return to the draft in times of war. Then read the comments posted by readers. One would think FP would have intelligence comments, but as I say in my comment: Its like reading YouTube comments from people with college degrees.


    People should read this essay, “The Plague of Ideas”, for a plausible explanation for the dumbing down of America.


    • T. J. Babson said, on July 11, 2012 at 8:14 am

      Actually, some sort of draft or national service would be a great idea. No exceptions.

      • magus71 said, on July 11, 2012 at 8:31 am

        This is how the Romans and Greeks did it. And I think it would help with the 30 year old adolescent problem we have in America. In my opinion, this country was made by better people than we are now, and many of us are acting like Paris Hilton, the spoiled, idiotic inherite’ of millions.

  5. WTP said, on July 11, 2012 at 11:52 am

    From today’s Wall Street Journal:

    Critics today often point to the 1950s as the last years before American society became so divided between haves and have-nots. At the end of that decade, America’s “Gini coefficient”—the most common measure of income inequality, running from 0 (least unequal) to 1 (most unequal)—was 0.37. Today it is 0.45.

    But in 1959, more than 20% of families fell below the poverty line. In 2010 that figure was just over 13%. Real per capita GDP today is 270% higher than it was in 1959. A family in the bottom fifth of the income distribution today makes the same amount in real terms as a family earning the median income in 1950. So inequality might have increased, but so too—dramatically—has quality of life.

    Even over the last two decades, while real income has essentially stagnated for the bottom fifth of earners, basic conveniences have become far more affordable. In 1992, only 20% of American families below the poverty line had a dishwasher—50% had air conditioning and 60% owned a microwave. When the Census Bureau last surveyed these figures in 2005, those figures were 37%, 79% and 91%, respectively. Critics who minimize the importance of these conveniences likely have never had to do without them.

    Full article at: http://online.wsj.com/article/SB10001424052702303649504577492300632472284.html

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