Brave New Economy, With Such Immobility In It

This post of Andrew Sullivan's reminds me of a point I've been meaning to make for awhile now. Memory jogged by a book on world opinions towards America, he rhapsodizes, "twenty-one years ago, six weeks after arriving here, I wrote to tell my parents: no offense, but I've found a home. Two key characteristics that distinguish Americans are religious belief and the notion that the individual is responsible for his own destiny." True enough. Though, it's worth saying that the Middle East is pretty heavy on religious belief, and Andy never seems too sold on that. In any case, this is going to be sort of wonky, but bear with, it's important stuff.

The Center for American Progress just released a comprehensive study of economic mobility and income volatility. And, according to its data, Andy's right about the American lack of fatalism, the belief in opportunity and mobility. When asked if people get rewarded for their effort, 61 percent of Americans agreed, versus 49 percent of Canadians, 33 percent of the British, and 23 percent of the French (weirdly, the Philippines win this one, with 63 percent agreeing). But of all these societies (save the Philippines), America is one of the least mobile, which is to say the least dependent on hard work rather than social station. In Denmark, the relationship between your parent's income and yours is 15% percent or so. In Canada, it's 19% percent. In France, it's 41 percent. And in America, it's 47 percent. The only country more hidebound and hierarchal is Andy's native England (50 percent), also the country most closely approximating the American economic model.

As it is, if you're born in the lowest income quintile, you have a 1 percent chance of reaching the top 5 percent. If you're born rich, you've a 22 percent shot at remaining there. For the middle class, hard work and productivity have begun to count far less. In 2003 and 2004, years when the GDP saw strong growth, the median household was no more upwardly mobile than in 1990-91, during a deep recession. Think about that for a second: inequality has reached such a height that the average household is actually worse off during today's expansion than yesterday's recession.

There's been a serious increase in downward mobility, too, with only 13 percent of families seeing $20,000 (in real terms) loss during the 1990-91 recession, while nearly 17 percent experienced such a drop during the 2003-04 expansion. Households in the top 10 percent have, by contrast, seen a reduction in downward mobility during the same period. And while it used to be the case that you could combat stagnation through hard work, even that's dying out. Households where the adults worked more than 40 hours a week were able, during 1990-91 and 1997-98 able to translate their labor into upward mobility. Now, the correlation has disappeared.

Americans may believe that hard work ends up offering great rewards, but the data shows that that's simply not the case. Remember that next time you hear some conservative flack -- maybe one named Tony Snow? -- trumpeting the economy's underreported strength. Why should folks appreciate a musclebound economy if it's using those biceps to pummel the working class?

Cross-posted from Tapped, because I think this important.