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June 01, 2007
Your World in Graphs: Social Mobility Edition
From Brookings' new report, Is The American Dream Alive and Well?
Our absolute mobility is low, too:
Household incomes are still increasing, as ever more women enter the workforce and families put ever more hours into their jobs. But the trends are poor, and the social mobility data is striking. But can it really be a surprise given the way income is being distributed? Look at the graph below, then explain why you'd expect this society to demonstrate any mobility at all:
There's mobility, to be sure, but it's mainly the rich proving themselves ever more capable of upward movement.
Update: It occurs to me that the main news in this report is that Brookings and Pew are finally arriving at -- or at least emphasizing -- conclusions EPI and CEPR have been highlighting for years. I'm glad to see this filter into the mainstream, but if the relevant funders could have put the money into publicizing and distributing The State of Working America, we'd all be in better shape.
June 1, 2007 in Charts | Permalink
Comments
Ah, the income wars again. Take it all with a huge grain of salt. The study is based on the deeply flawed Census Bureau income data, which fails to take into account the effects of, among other things, taxes, non-cash government benefits, and non-cash employment benefits like health insurance. It also uses the highly controversial CPI deflator, which most economists believe overstates the rate of inflation and therefore understates real income growth, a defect that produces huge errors when compounded over many years and makes intergenerational comparisons highly problematic.
I would suggest a more common sense test. Does anyone really believe the typical American man in his thirties--single or married--has a lower standard of living now than he did in the 1960s or 70s? He probably lives in a bigger and better house, drives a much better car, has a much more sophisticated diet, has much better communication and entertainment services, takes much better vacations, gets much better health care, has a much better education, starts working later in life and retires earlier, and has a longer lifespan. Yeah, those men in their thirties are real losers.
Posted by: JasonR | Jun 1, 2007 2:35:57 PM
BUT, although family wages are increasing, the wages of fully-employed males are stagnant and slightly down. Increases in family wages are due to second earners. So much for "family" values.
http://farm1.static.flickr.com/244/524887961_4a42321f49_o.jpg
Posted by: Robert P. | Jun 1, 2007 4:20:13 PM
What Jason said. In addition, any report that relies on Census data without any adjustment, and without even bothering to mention that there is some controversy about the reliability of the data, deserves to be thrown in the trash.
Posted by: ostap | Jun 1, 2007 5:10:15 PM
JasonR
The "highly flawed" Census Bureau income data and the "highly controversial" CPI are, well, pretty much the gold standards in the economics profession for measurement.
Seriously, what other income data do you see commonly used in arguments about the trajectory of household incomes?
While i grant people argue about the CPI, it should be noted that the Pew group used the CPI-U-RS, an experimental series that knocks about .4 annually
off of the more generic CPI measure as a result of extensive changes (mostly for quality adjustments), so, this actually leaves not a lot of room for the "CPI is understated" argument that is overblown on the merits and pulled out of partisans' backpockets whenever it is convenient.
Robert P. rightly points out (as does the Pew group in the report) that the average 30-something man lives in a family with more income than their fathers did, but, this is because of a huge increase in working hours in the typical household.
The inequality trends would not be helped by including non-cash employment benefits (trust me, the bottom 2 quintiles are not awash in cadillac health care plans and gold-plated pensions), and, there's a million cites documenting a huge increase in after-tax inequality as well. here's one, but, i don't think you're actually interested - " who are you gonna believe, the data literally everybody in the profession uses for measurement, or my own common sense?"
http://www.cbo.gov/ftpdoc.cfm?index=7718&type=2
anyway, a disclaimer - i work for EPI
Posted by: josh bivens | Jun 1, 2007 5:19:12 PM
josh bivens,
The "highly flawed" Census Bureau income data and the "highly controversial" CPI are, well, pretty much the gold standards in the economics profession for measurement.
No, they're not. The Census Bureau itself admits that there are serious problems with its definition of income, and has developed a set of alternative "experimental" income definitions that address some of the criticisms of the official "money income" definition.
It also admits that there are serious problems with its methodology for measuring income, which it discusses in this document, for example.
The use of the CPI as a deflator has been widely criticized since at least the Boskin Commission, a decade ago. Last year, the head of that commission, Robert Boskin, published a retrospective report in which he concluded that the CPI was even more inaccurate than the commission concluded, and that despite adjustments made to the measure in response to criticisms, it still has an upward bias (i.e., it overstates inflation) of at least 1 per cent a year. Compounded over decades, this is a huge error.
Robert P. rightly points out (as does the Pew group in the report) that the average 30-something man lives in a family with more income than their fathers did, but, this is because of a huge increase in working hours in the typical household.
The "common sense" test I described applies to both married and single men, both single-person households and multi-person households. In virtually every area of life--housing, food, transportation, communications, leisure, health care, travel, education, etc., etc.--Americans enjoy a standard of living today that is far superior to that of their counterparts in the 1960s and 1970s.
Posted by: JasonR | Jun 1, 2007 5:59:44 PM
Make that "Robert Gordon," not "Robert Boskin."
Posted by: JasonR | Jun 1, 2007 6:02:14 PM
Shorter JasonR:
"Don't believe this data. Instead, let's all focus on this thought experiment which, just handily, confirms my preconceived notions."
Posted by: Freshly Squeezed Cynic | Jun 1, 2007 6:09:21 PM
The inequality trends would not be helped by including non-cash employment benefits (trust me, the bottom 2 quintiles are not awash in cadillac health care plans and gold-plated pensions), and, there's a million cites documenting a huge increase in after-tax inequality as well.
As you can see from this table, in 2003 (the most recent year for which figures are provided) after accounting for the effects of government transfers, capital gains and losses, health insurance supplements to wages, federal and state income taxes, payroll taxes, the EITC, Medicare, Medicaid, school lunches and imputed return on home equity, the percentage share of income received by the lowest quintile increases from 3.4 to 4.7 (an increase of over a third), and by the second quintile increases from 8.8 to 10.8. The share received by the highest quintile falls from 49.8 to 44.1.
This is an illustration of the extent to which the official Census Bureau income figures overstate income inequality.
Having examined a number of EPI reports, I have absolutely no confidence that it is interested in an honest and fair-minded presentation of economic facts and figures, rather than one that is intentionally distorted to support its political agenda.
Posted by: JasonR | Jun 1, 2007 6:19:35 PM
Cynic,
It's not a "thought experiment," it's the undeniable conclusion from everyday observations so simple and clear you have to be walking around in a coma to deny them. What is it that you are denying, exactly? That housing has been getting larger and better appointed? That more people than ever own their own homes? That cars have been getting safer, more reliable, more luxurious, and more efficient? That travel, especially air travel, has been getting cheaper? That the variety and availability of food and beverages have grown enormously? That more people than ever have a college education? That health care is vastly better? That people are living longer? That ordinary Americans now enjoy a huge range of consumer electronics products and services, from cell phones to the internet to iPods to satellite TV, that either didn't exist at all twenty or thirty years or were largely confined to the wealthy? The idea that ordinary Americans are worse off or no better off materially than their parents' generation isn't just wrong, it's preposterous. If this enormous increase in standard of living is not reflected in certain common income data, that's a reflection of how bad the data is, not a denial of reality.
Posted by: JasonR | Jun 1, 2007 6:38:10 PM
I especially like the graph that says only 33% of Americans believe "It is the responsibility of government to reduce differences in income." Sadly, 33% of the country fails to see the tension between freedom and equality.
Posted by: Jason | Jun 1, 2007 11:43:54 PM
Here's selected results from studies over the last few years.
Posted by: Robert | Jun 2, 2007 7:24:00 AM
Jason, you really should back up most of the claims you make in your first and next-to-last comment. Second, it is less important whether all these improvements have taken place (which they undeniably have, and would likely have taken place if there were less income inequality) than is the question of ACCESS to them.
For example, the same house that may have only needed one income to purchase back then could well require two incomes nowadays, or a higher income altogether (adjusted for inflation)... even if it is 'bigger and better.'
BTW, it's not at all unreasonable to 'contribute' to the tension between freedom and equality, in light of the fact that government already contributes to income inequality, and could thus do more to reduce differences in income, if nothing else but simply by making the playing field more fair. In other words, the 'tension's' already there, it just needs to be tweaked in a better direction.
As much as I'm getting a laissez-faire vibe from the content of your comments, surely you could defend the elimination of these advantages for the well-off?
Posted by: Paul | Jun 2, 2007 7:43:47 AM
Paul,
I'm just as critical of the pro-corporation nanny state (agriculture subsidies, overextended patents, other subsidies, etc.). Farm subsidies, in particular, are horrible since they are practically a regressive tax on the poor.
It is a false dichotomy to claim the economy is either laissez-faire or "fair." I'm for rules and regulations that protect others from hurting me. But I don't think the government should ensure certain outcomes, or infringe on one group's freedom because another group is struggling with change. It sounds good rhetorically to say you are making the playing field more fair. But most of the time, solutions designed to "fix" inequality end up making the rest of us worse off.
Posted by: Jason | Jun 2, 2007 11:05:04 AM
Paul,
I don't understand your comment about "access." The improvements in standard of living I described have occurred across the board. Even most Americans officially classified as living in "poverty" enjoy a material standard of living that is in many ways superior to that of Americans who would have been considered middle-class or middle-income in the 1950s or 1960s.
The point I am making here is that the claim certain liberals make--on the basis of their devotion to the narrative of the downtrodden proletariat, and justified with appeals to carefully-selected income statistics that we have good reasons to believe are deeply flawed and misleading--that the typical American today is no better off or only slightly better off than the typical American of thirty years ago is just utter nonsense. You don't need to consult any statistical data to see the absurdity of this claim, you only need a basic familiarity with the material circumstances of people's lives now (i.e., the quality/quantity/variety of housing, food, cars, health care, entertainment, education, travel, communications, etc. that they consume) vs. the material circumstances of people's lives in previous decades. There's just no comparison. In fact, it's easy to think of just a few kinds of goods and services that are now common or even universal, that have a big impact on people's lives, and that either didn't exist at all thirty years ago or were largely confined to the wealthy. Cell phones. The internet. Heart bypass surgery. MRI machines. "Miracle" drugs for everything from high cholesterol to impotence. Air travel. Home theater. Exotic vacations. An enormous variety of foods and beverages and dining options. Central heat and air conditioning. Houses with almost as many bathrooms as bedrooms. And so on.
Inequality is a separate issue, but as I explained in an earlier post there is good reason to believe that standard income data substantially exaggerates the degree of inequality, and there is no consensus on the question of what level of inequality is optimal or fair or appropriate anyway. Liberals keep shouting "Inequality is rising! Inequality is rising!" as if that change (if it's even really happening) is self-evidently A Bad Thing. I challenge that assumption, too.
Posted by: JasonR | Jun 2, 2007 5:05:30 PM
I don't know JasonR...I think the others must be right. I earn more dollar-wise than my father (not sure if I do adjusted for inflation) and am much more highly education (MA vs. HS diploma), but I own a smaller, much more expensive house. I am desperately trying to save money to send my kid to a private school because public schools here have gotten so frightening and underserved. My father would change cars every three or so years, I try to keep mine at least ten years to save money. Add to this the fact that my wife also has to work full time while my mom was able to stay a home with my siblings (we have, by necessity, limited ourselves to one child so my wife can afford to keep her job and we can still pay for daycare). We also now have to send some money to my wife's parents because her father is in a nursing home and only has Medicare. My parents were able to afford one parent with Alzheimer's for more than a decade because he had a wonderful pension. But my life is so much better because I can get a friggin' iPod, thanks for nothing. I think my anecdotal evidence is much more compelling than your story of exotic vacations and Red Bull. (I only get 12 days of paid vacation a year, where the hell exotic am I going?)
Posted by: Ricky | Jun 4, 2007 11:36:04 AM
I think my anecdotal evidence is much more compelling than your story
Oh yes. The (unsubstantiated) anecdote of one person in a nation of 300 million. Very compelling, that.
Posted by: JasonR | Jun 4, 2007 11:57:16 AM
JasonR,
That is exactly my point. Your 'evidence' is just as anecdotal as mine! Other than calling into question the data used in the original post, you have only presented anecdotes as your evidence for how much better life must be now.
Muscle-cars suck today compared to their 1950's and 60's counterparts. This says just as much about the state of the average American's existence then and now as does an iPod or Viagra (I don't have an iPod and don't use Viagra, what the hell does it matter to me and quality of my life?).
I won't deny that there is inevitable progress due to technology, but to equate that progress with real progress in our standard of living isn't that compelling when considering feeding and maintaining a family. My life is much more complicated and unsecure financially than my parents and this is the case with a majority of the people I know in my cohort.
Posted by: Ricky | Jun 4, 2007 2:33:06 PM
Jason always posts his idealogy. I find it amusing people waste time arguing with him about it. Pretty much he always denies whatever evidence is given by saying he doesn't believe it. Then the normal progressives come out to refute him by trying to show him "but look there is this evidence, and logically speaking Jason you are wrong because of these facts." This isn't about facts. It's about idealogical perspective. Nothing you say will convince Jason because he decided what he thought before he ever read the data. But, please feel free to continue the wonky approach of arguing with an idealogue.
Posted by: akaison | Jun 4, 2007 8:21:25 PM
Ricky,
That is exactly my point. Your 'evidence' is just as anecdotal as mine!
Considering that I haven't described even a single anecdote, I'm not sure how you think this could possibly be true. I'm curious: In which of the areas I described (housing, food, cars, travel, health care, entertainment, etc.) do you claim the material standard of living of the typical American today is lower than it was thirty or forty years ago?
Muscle-cars suck today compared to their 1950's and 60's counterparts.
Muscle cars constitute a tiny fraction of the automotive market, so even if this claim were true it would be completely irrelevant to the question of whether cars in general are better now than they were in the past. But I have no idea what basis you think you have for making the claim, anyway. Cars today much safer, much more reliable, much easier to maintain, much more efficient and much better appointed than cars of even just 20 years ago. Numerous features that either didn't exist at all or that were confined to luxury vehicles are now commonplace. Fuel injection. Computerized engines. 75,000-mile tires. Electronic stability control. Anti-lock brakes. Air bags. Sophisticated audio systems. Cruise control. Power windows/ seats/ mirrors/ everything. Navigation systems. Etc., etc. An engine that could go for 100,000 miles before its first scheduled maintenance was science-fiction in the 1970s. And these advances apply to every segment of the market, including muscle cars.
I won't deny that there is inevitable progress due to technology, but to equate that progress with real progress in our standard of living isn't that compelling when considering feeding and maintaining a family.
On the contrary, it is highly compelling. Feeding a family has never been cheaper, thanks in large part to scientific and technological advances that allow food to be produced, processed and distributed much more cheaply than it was in the past. The quality and variety of food commonly available today also greatly exceeds that available to previous generations. Even ordinary grocery stores now carry a large range of foods and beverages that were almost unknown to most ordinary Americans thirty or forty years ago, from salsa to sushi to cappuccino.
Posted by: JasonR | Jun 4, 2007 10:07:43 PM
An anecdote is something based on personal observation. You haven't provided any real evidence that increased car safety has substantial improved the lives of a majority of citizens. Most people don't get into accidents. The tiny percentage that do in turn probably only tangibly benefit from those new features. Same with food, sure they are more choices but I am not sure I believe you when you say food is better quality than it was 40 years ago. I would say the only correct part of your argument is that food is processed more cheaply and there is a wider variety. The problem today is that the food that is cheaper is not very nutritional. There is evidence that shows that obesity is highest amongst those in poverty, not because they cram their pieholes like pigs, but because they have such limited options on the foods they can purchase which ends up being mostly overprocessed crap.
Let's end this by saying that I don't find compelling your argument that because there are iPods, anti-lock brakes, and sushi in the grocery store life must be so much better for everyone in America and those who feel that wages and living standards aren't perceptibly better, especially compared to those at the top of the spectrum, should shut up. Yes, there are many aspects of our lives to today that have been improved and indeed overall our existence is richer in choices than they were 40 years ago, but you will never prove that the past 40 years have been as efficient or effective for the average American as it could have been if our economic policy wasn't continually skewed to do more and more for the richest mostly at the expense of the rest of us.
Posted by: Ricky | Jun 5, 2007 8:39:01 AM
Ricky,
An anecdote is something based on personal observation.
Anecdote:
a short account of a particular incident or event of an interesting or amusing nature, often biographical.
As I said, I haven't described even a single anecdote.
You haven't provided any real evidence that increased car safety has substantial improved the lives of a majority of citizens.
I don't need to provide that. The dramatic improvement in car safety is a clear example of an improvement in the standard of living. The rate of motor vehicle accident injuries and fatalities has been steadily declining, even as the number of cars has increased. And as I said, cars are also much more reliable, much more luxurious, much more efficient, and much easier to maintain than they used to be.
Same with food, sure they are more choices but I am not sure I believe you when you say food is better quality than it was 40 years ago. I would say the only correct part of your argument is that food is processed more cheaply and there is a wider variety. The problem today is that the food that is cheaper is not very nutritional.
You're wrong about this, too. Food variety, safety and quality have all increased. The price of staples like bread, milk, and produce has declined as well as the price of processed and more exotic foods.
Let's end this by saying that I don't find compelling your argument that because there are iPods, anti-lock brakes, and sushi in the grocery store life must be so much better for everyone
Again, in which class of goods and services--housing, food, cars, travel, health care, entertainment, etc.--do you claim that most Americans today, or the typical American today, has a standard of living that is lower or only about the same as the typical American of the 1970s?
... you will never prove that the past 40 years have been as efficient or effective for the average American as it could have been if our economic policy wasn't continually skewed to do more and more for the richest mostly at the expense of the rest of us.
Since I haven't been trying to "prove" that, I don't know why you think this statement is relevant. The point of my posts here has been to counter the absurd notion implied by the income data that Ezra cited that men in their thirties today (and any other age group, of either sex, for that matter) are basically no better off than men in their thirties were 20 or 30 years ago. It's just utter nonsense.
Of course, if you believe that living standards could have grown just as much under policies that resulted in lower inequality, you are free to try and make that case. I don't think you'll be able to, though.
Posted by: JasonR | Jun 5, 2007 5:05:15 PM
Jason-
You seem to have gotten WAY off-track: Ezra, and the data above, are only addressing mobility. There are no comments nor implications being made about living standards that I can see. You basically shoehorned it in there, as if it would negate the main point of the post.
Posted by: Paul | Jun 5, 2007 8:41:36 PM
You seem to have gotten WAY off-track: Ezra, and the data above, are only addressing mobility. There are no comments nor implications being made about living standards that I can see.
Really? So you think there's no relationship between income and living standards? Fine. Then what do you think the implications are for people's lives of the income data Ezra cites?
Posted by: JasonR | Jun 5, 2007 10:17:14 PM
Jason,
I didn't say there was no relationship. It's obvious that there is.
But living standards and income are completely different concepts than mobility. I can't believe you can't wrap your brain around that simple concept.
Posted by: Paul | Jun 6, 2007 6:35:34 PM
Jason,
I didn't say there was no relationship. It's obvious that there is.
But living standards and income are completely different concepts than mobility. I can't believe you can't wrap your brain around that simple concept.
Posted by: Paul | Jun 6, 2007 6:36:22 PM
Paul,
You seem to have completely missed the point. The mobility in question is intergenerational mobility. The chart shows changes in income between generations. It implies that the living standards of men in their thirties are no better now (or, at least, as of 2004) than the living standards of men in their thirties in 1974. That's the nonsensical notion I have been rebutting.
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