« Link of the Day | Main | The French Health Care System »

April 26, 2006

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.

April 26, 2006 | Permalink

TrackBack

TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d8341c572d53ef00d83426cc1c53ef

Listed below are links to weblogs that reference Brave New Economy, With Such Immobility In It:

» Wanting Pleasure, Living Poor, Spending Anyway from PunkAssBlog.com
Nothing pisses off privileged folks like a poor person spending money on something that makes her happy. It costs to be broke. Many people go to the bank to cash their checks. You put some money in savings, you open that account, and you cash your ... [Read More]

Tracked on Apr 27, 2006 11:21:31 PM

» phentermine from phentermine
phentermine online casino online... [Read More]

Tracked on May 25, 2006 4:23:06 PM

» adipex from adipex
adipex order viagra cheap drug online viagra order viagra cheap drug online phentermine viagr medica... [Read More]

Tracked on May 26, 2006 1:59:38 AM

Comments

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.

This is misleading. The issue is not how many change stations, but can it be done through hard work. *THAT* is the issue.

There are tons of reasons why people don't aspire to be better than they are. Lots of folks just don't have the desire to change through hard work. Others are trapped, not by our society, but by their own culture. Others will take it, if it's easy.

Posted by: Fred Jones | Apr 26, 2006 4:01:06 PM

Right, which the data on working extra hours specifically contradicts.

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.

The point here is that it cannot be done through hard work, at least not reliably, and certainly not without an enormous amount of luck. Read the whole piece before you fly off the handle in comments.

Posted by: Ezra | Apr 26, 2006 4:05:41 PM

"The issue is not how many change stations, but can it be done through hard work. *THAT* is the issue."

So you're arguing that Americans are less motivated than people of other nationalities? This stuff can be measured, you know.

Posted by: pantomimeHorse | Apr 26, 2006 4:07:56 PM

Stalinism ever and always admits no fact to trump the party line. Our interpid interlocutor is in the position of being theologically unable to refer to actual numbers.

By the way, thanks for singing the anecdote-is-not-data chorus so promptly. It was a beautiful thing to see.

Posted by: wcw | Apr 26, 2006 4:24:55 PM

I think there's several reasons for the data, none of which have anything to do with actual obstacles to those who are really willing to work at changing their status.

See, lots of people just don't value the family enough. As the bedrock of society, it is important to have a strong family, one where the dad works and the mom stays home in order to impart values to the children. Many poor families refuse to do this, with mom and dad both working full time and the kids being raised by someone else. Why should the kids grow up into responsible adults if their parents aren't taking responsibility for them?

Another key factor is the laziness of many poor people. There are actually families that expect the government to help them with things like food or money for heating oil, when they have 2 able-bodied adults able to work outside the home and only one actually is. I don't see why it should be so hard for poor women to go ahead and shoulder their fair share of the burden - and don't get me started on the single welfare queens that want the government to pay them to stay home with their kids!

Culture, of course, plays heavily into this. It may be uncomfortable to read this, but the whites in this country come from a culture that values hard work. That Mexican immigrant you see working at Taco Bell after his job mowing lawns and before he cleans your office at night? If he would just buckle down, I'm quite sure that he would be able to move up in society.

All those white kids going to college, getting grants and scholarships and low-interest deferred loans from the federal government - that's the epitome of hard work. Look at George Bush! His family paid his way into Andover, Yale and Harvard, and made sure that when he was bankrupting his oil company that it was bought by a larger company. His family's friends have bankrolled every venture he's gone into, and when they have all failed, they've made sure there was another job waiting for him. Are you actually trying to say that this had more to do with his last name than the back-breaking hard work he has done all his life? HA!

Silly liberals. Hard work is when you have to go to 2 networking events on the same night during your vacation to Martha's Vineyard. Hard work is finding the right balance between the amount of partying vs. attending classes you do during your all-expenses-paid tenure at an elite school.

Oh, when will you liberals learn?

Posted by: Stephen | Apr 26, 2006 4:26:06 PM

ah, Fred, check this from Brad Plumer today: According to OECD data, French workers are, on average, 6 to 16 percent more productive than American workers. The rest of Brad's post on a new study by EPI on French/US comparisons shatters some other myths as well.

Posted by: JimPortlandOR | Apr 26, 2006 4:27:06 PM

Stephen, we need to get you some

Posted by: JimPortlandOR | Apr 26, 2006 4:32:11 PM

some (snark)... (/snark) tags. I thought you had been overtaken by the wicked witch of the right as I was reading along.

Posted by: JimPortlandOR | Apr 26, 2006 4:34:33 PM

There's a lot of numbers in your post Ezra, and I think they're confusing. Nor do I sort of understand your jumping off point - Andrew Sullivan finds America better than Britain, and he's... wrong? Just asking.

I think there are two forces at work here - one is that there certainly is no deus ex machina magic mobility in America for a large numbers of folks. That after all is the fantasy that the media sells best. But most of us will not become models, actors, strippers or win the actual lottery. Many people have modest, achievable ambitions and are not necessaily uncomfortable with their financial status or social position. But it is clearly a part of the fiber of American thought that we believe people who apply themselves can succeed, that we are a place of opportunity for anyone who wants to try.

Are there structural barriers to this? Absolutely. Are they getting worse? Most definitely. That's why I'm a Democrat. But I do think what's wonderful and amazing about America (and why I think conservatives, ultimately, can never prevail with their downbeat worldview) is that we have a society where success is defined in many different ways, most of them perfectly valid, and we tolerate a wide array of ways to live. That is not what you see in many other cultures and societies. And it is the allure of American life.

So, yes I think there are inequities and divisions and some class rigidity that may be growing. I don't find the statistics at all convincing that Western Europe has greater mobility (or, perhaps it that I doubt that they have quite the breadth of strata to begin with). I would believe that it's possible, in England, say, that people can improve their income more than here. I'm not sure that will change the class perception for them in that culture. And that, I think, may be the difference, and it's hard to quantify.

Posted by: weboy | Apr 26, 2006 4:54:05 PM

Gotta tell you Weboy, i don't think these numbers are confusing at all. They may be jarring, but the picture they paint is perfectly clear. In America, your station in life is increasingly determined by the luck of your birth. Moving up is hard, and rare. Moving down is becoming ever more common. And working more has stopped paying the financial dividends it used to. You mention that in America, we definie success in many ways (do we though? More than other countries?). I hope so. Because for too many, the tradition definition -- income growth -- is becoming less and less achievable.

Posted by: Ezra | Apr 26, 2006 5:01:01 PM

ARGH - the untimate point is not the noodling in minutia, but the fact that a MAJORITY of Americans perceive something that is incorrect - that is if they work hard, save, buy their own business/stay loyal to a company that they have an large chance of fulfilling the 'American Dream'...which is usually somewhat modest - not being a famous movie star. This is becoming increasing fantasy here - especially between generations. Cubicle jobs are the new working class with many other skilled jobs either gone or now resembling basic service jobs due to mass corporate-ization.....To say this is just the fault of lazy Americans is about the stupidest excuse I've heard on this topic in a while.

Posted by: Zedd | Apr 26, 2006 5:10:28 PM

Two thoughts:

If you want things to improve, I'd focus on the positives, not the negatives. I think this is a question Democrats, especially rich Democrats, back into with all of the "there's no mobility" talk... okay, but do you want greater mobility? Because that has implications for a lot of folks in the Upper Middle and Highest brackets. There is a finite set of resources in this equation, ultimately. And if you want people to agree that increased mobility is better, I'd focus on the upside and the benefits, not the hectoring of people who are successful now.

Second, and this goes back to the numbers question, and the finite resources - a lot of people (admittedly nowhere near all) are doing quite well, many better than they have in the past. How much success is success, in this equation? You speak of 1% only being able to rise to the to... okay, but do they rise at all? where do they go? And if only 22% stay in the top, where are they going, and doesn't that show some siginificant mobility, or am I missing something? That's what I mean - I get what you're trying to show with your stats, but they seemm incomplete, and that there's more story here than just what you mention.

But as I say, generally, I agree with you - I think we're less mobile now than we were, and it's concerning.

Posted by: weboy | Apr 26, 2006 5:15:43 PM

See, I think that would detract from the point. I figure you're in a high bracket (based on this post and yesterday's on celebrity chefs, which you also took personally in a class warfare sense), which is fine. But yes, I do want greater mobility. I don't think your kids' incomes should have a near .5 correlation with your own, largely because I don't think poor kids should be locked in like that. As for where folks end up, nearly half who begin in the bottom quintile stay there. 65 percent remain in the bottom two. Only 6 percent make it to the top quintile.

Moreover, I think you're gliding over the most worrying stats, those of middle class income volatility and downward mobility. This stuff isn't sunny, and I don't think we should pretend otherwise. When the media household is facing more risk and less gain during a orbust expansion than a deep recession, something is seriously wrong.

Posted by: Ezra | Apr 26, 2006 5:23:26 PM

How can you have mobility without volatility? Since the number of people in the bottom quintile must stay the same ( by definition), for everyone who rises out someone else must drop down. I agree with Ezra's desire for more income mobility but volatility is the inescapable counterpart of that. Volatility would seem to be a good thing.

Posted by: quietstorm | Apr 26, 2006 5:43:57 PM

I've uploaded Figure 2 (International Estimates of the
Father-Son Earnings Elasticity) to ImageShack. It can be found at,

http://tinyurl.com/ezbgn

Posted by: KP | Apr 26, 2006 6:18:48 PM

I am deeply worried about downward mobility and the highly uncertain prospects for many people... but I think some of this is just so American - if you live beyond your means (i.e. high debt load, heavy credit cards, student loans, and your favorite... health care costs etc), then you can beliving on that knife edge even if you are, theoretically "well off". How do you factor that in? How do you account for people who earn a decent living wage, never puts them in the high brackets, but they're satisfied, comfortable and achieving happily modest ambitions (the usual marry the right person, have kids, etc)? Is the macro picture unsettling? Again, absolutely. But I hestitate to use that to overgeneralize what people want. Yes, Americans believe in an upwardly mobile society. How much do they want for themselves? I'm never really sure. Your numbers don't help me get there.

Finally, I take none of this personally. I make less than my Mother did before she retired, and I may never see her salary (which made me, really, blanche when I saw it about 7 years or so ago). I'm not rich, but by the same token, for a single person with few expenses, I do quite well. I'm not a fan of class warfare, and I'm not going to be a combatant - I want everyone to do well. I think the question is, what defines "well." My definition - as you point out, for fine things like high end restaurants and other accoutrements - is not yours, or others. But I think it's key to understanding whether things are demonstrably worse than they were in the past. If people manage to achieve many of their wants, are they not doing well? If they don't, is the problem the system, man, or something more nuanced?

As quietstorm notes, and liberals tend to gloss over, someone has to be at the bottom of this discussion of mobility - some who start there and never move, and some who arrive there out of "volatility". You can fix some of this, but not all of it. That's the reality. You can make it somewhat better, but some people will still not be able to realize their (uniquely American) dreams. And, ultimately, you will have to live with that. Making people who are better off than you (or worse off, as well) the enemy in this won't get you very far. That, to me, is what class warfare is about. But I think we need to redefine what we're going to call success to help defuse that.

Posted by: weboy | Apr 26, 2006 7:04:01 PM

weboy's last comment made me think about what a really class-rigid society is about. In that vein, we had the pre-industrial age - take England, for example - where your class nearly completely defined your prospects for the future and for your children. The Lords, the land owners, and then 'the rest'.

The great upheavals brought about in the industrial age, and now the information age, ended up distributing wealth, knowledge and power such that rigid lines didn't prevent moving across class lines, not for all, but for many or most those who wanted it and worked for it. And the growth of a prosperus middle class was the hallmark of that change.

Many say that democracy depends upon that middle class. In all of this change, the important facts were individual ambitions and effort made possible by removal of societal, cultural and economic barriers. Many people were and are satisfied in some sense with their lives, but they are not limited if they want more.

The one thing most people don't want is a structure that prevents them and their offspring from being able to have a different and better life, however they define it.

When we study the sort of statistics Ezra offers, we are really doing a diagnostic checkup to see how healthy the society overall is, as measured variously. When wealth is highly concentrated (and the power that often accompanies wealth), and mobility is reduced, then overall we are looking at an unhealthy society that dims individual choice and threatens a democratic society.

Trying to preserve and extend the possibilities of individual mobility and check the excesses that power gives to wealth and wealth gives to power is not class warfare.

We really are experiencing a situation, as measured by social statistics, that is somewhat foreign to us (especially since WWII): extreme wealth in the hands of a few percentage points of the population, and the use of that power to shut down the mobility of those below them by control over the tools of government. This is the actual class warfare being waged - the wealthy and powerful against those below them. That is the danger, to both our society and to our democracy. It is happening. We will regret it if we don't recognize it and take action. That is the importance of the data we are discussing.

Posted by: JimPortlandOR | Apr 26, 2006 9:08:25 PM

Absolutely what Jim says.

The question of volatility is not nearly as critical as weboy and quietstorm think. Yes, there must always be a bottom quintile, just as there must always be a top. But that does not mean that the bottom quintile is necessarily below the federal poverty line, or that it is necessarily 116% of the federal poverty line. The problem that Ezra points out is that not the stability of the number of people in each quintile, but the likelihood of the people themselves to move out of whatever quintile they may occupy. The fact that most of the movement is downward is cause for serious concern.

Also, this isn't about definitions of the "American Dream." It's not about assuming that all people want to be fabulously wealthy, or famous, or powerful. Whether those who make up America's middle class have an overpowering urge to enter the upper classes doesn't matter. It is safer to assume, however, that those who make up the bottom quintile would like to move upward instead of stay where they are at; it is much easier to be content with what one has when one has enough.

I suggest that everyone can agree on the beauty of the American Dream: that anyone, regardless of start or station, can accomplish great things with nothing other than drive and determination. If there is anything that shows this nation as something quite special - and I believe that it is - it is this belief. The numbers that we are discussing show nothing less than evidence of war waged against the American Dream itself.

Posted by: Stephen | Apr 26, 2006 9:54:38 PM

So if Dems are comitted to policies where the American Dream becomes more viable, where's the problem with understanding who you are and what you stand for : and saying so ? It isn't as if you can't point to proof.

Posted by: opit | Apr 26, 2006 11:54:51 PM

So if Dems are comitted to policies where the American Dream becomes more viable, where's the problem with understanding who you are and what you stand for : and saying so ? It isn't as if you can't point to proof.

Conservatives tend to organize their world according to clear categories, strict rules and strong beliefs. Anything that a conservative comes across can only have meaning once it is put into the proper category, checked against the rules and measured up to the beliefs. All of life is interpreted according to those things. This type of mindset lends itself to easily stated beliefs, stuff that works in a commercial or on a bumper sticker.

Liberals approach life in a different way. They have strong beliefs - comment threads on liberal blogs are a good example of this - but are open to other interpretations, other ways of seeing or doing things. Their categories a more flexible, their rules possible to change, and their beliefs open to development. Conservatives would have us believe that this makes liberals wishy-washy or without conviction. Nothing, of course, could be farther from the truth.

The last several decades have seen the Right coalesce and the Left - splinter is a bad word, how about "un-coalesce" - and the Right has started to win more elections.

Then comes Clinton. Biggest success we've had in a long while. But he's a "new type of liberal," someone who won because of his ability to "triangulate." In the face of this success, we've got groups like the DLC who now think that the "old" way of being a liberal just wont work anymore. We've all got to be - not like Clinton, rather like their interpretation of who Clinton was.

While all of this is happening, the Right is growing more sure of itself, louder, more obnoxious, more willing to claim prerogatives for itself at the expense of others. While it is not true that liberals are "weak" when it comes to argument and dispute, it is true that we will not jump to violence, whether physical or rhetorical, to settle disputes. And we will give our opponents a fair hearing and thoughtful discourse, something the Right simply feels no need to offer.

I think that many of our politicians have strong beliefs and would like to enact progressive policies. But they have the full-scale assault from the Right telling them how "out of touch" they are, and then the softer, more insidious whispers of the DLC and their ilk who are basically saying that the GOP is right, America doesn't agree with us, and the only thing left to do is win elections. And the way we do that is by fooling Americans into thinking that we are basically the GOP without all the evil.

The Democratic party and its leaders need to be reminded that this is not about winning elections, not about passing legislation or confirming judges. There is a liberal vision for this country, one that includes equality for all, help for those that need it and reward for those that work hard. One where America is a powerful, peaceful leader among the nations of the world.

This is why this blog is important. This is why all the liberal blogosphere is important, because it is full of informed, impassioned, strong liberals who don't back away from their convictions, who refuse to cede ground to the Right and who are not afraid to engage the consultants, lobbyists and party leadership on a regular basis. I never wrote a letter to my Representative before last year. I never sent emails to my Senators before. I never volunteered for a campaign until 2004. All of this is due to the influence of the liberal blogosphere.

This may be a bit pie-in-the-sky, but I believe there will come a time when the Liebermans, Millers, Cuellars, Towns, Bidens and others will either be gone from Democratic politics or will learn to stop betraying the core principles of the party for their own gain. And this will come about because of the organization and inspiration that is coming from what we are doing right here.

A bit long, a bit off-topic. Sorry. But I really wanted to get this off my chest, and this is my forum. I'm sure someone could make a comment about my lack of a blog to call my own.

Posted by: Stephen | Apr 27, 2006 12:38:32 AM

I'm frankly a little appalled by some of the comments. I think Ezra's point here is perfectly clear, and has been made many times before, perhaps most notably by Paul Krugman. People want to believe that America is a socially mobile society, and at one time it was, in particular in comparison to then-stratified Europe. Unfortunately, what the numbers say is that is no longer the case; in fact, most of Europe is now more mobile than us. Europeans believe themselves to be less mobile, based on their past history, just as we overestimate our mobility based on our history. We need to confront this new reality, instead of running away from it, blaming workers, or insulting liberals.

Posted by: Rebecca Allen, PhD, ARNP | Apr 27, 2006 1:51:09 AM

All this talk about mobility is useful ONLY if the average american now is worse off than americans previously, or if we are worse off compared to our colleagues in Europe, Canada, etc.

The report directly answers this question:

Family income per person in 1968: approx $10k (2004 dollars)

Family income per person in 2004: approx $27k (2004 dollars)

So in other words, americans are SUBSTANTIALLY better off now in terms of income than we were in 1968. So who gives a damn about mobility

My theory is that "poor" people in America in 2004 are MUCH BETTER OFF than "poor" people in America in 1968. Therefore, the impetus for upwards class mobility is reduced.

Posted by: joe blow | Apr 27, 2006 2:39:52 AM

Sorry Joe, you can't just look at income. You also have to consider what things cost to live a decent life.

I don't have comparable figures on 1968-2004 cost comparisons, but I'm confident that the portion of income left over after essentials are paid may have grown in that 35 year period, but in the last 5 or 10 years it has decreased. Take one item: is there doubt that sending your children through college costs dramatically more today than 35 years ago, in constant dollars? And health care?

Posted by: JimPortlandOR | Apr 27, 2006 3:08:40 AM

The cost of living is included in the CPI, which was used to adjust those figures to 2004 dollars.

So all that stuff you talked about is ALREADY ACCOUNTED FOR in the income numbers

I have other data showing that "poor" people in the United States are actually middle class according to European standards

Posted by: joe blow | Apr 27, 2006 3:55:41 AM

I have other data showing that "poor" people in the United States are actually middle class according to European standards

This is an excellent point. Why, just the other day, I noted that people who claimed to be "rich" in New York city lived in small apartments while people who were supposedly "poor" and "middle class" in Ohio had much larger living spaces, thus showing that the "rich" in New York City are actually poor according to heartland America standards.

Posted by: Constantine | Apr 27, 2006 7:22:38 AM

The comments to this entry are closed.