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

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. 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.