Of all of our ideological disagreements in the U.S. over the state of the economy and how best to improve it for those struggling, one narrative has garnered consistent consensus: It's been getting harder and harder in America to climb the income ladder. President Obama has decried this trend. So has Marco Rubio.
They fear that the U.S. doesn't offer as much social mobility as it once did. A child who works hard today can't expect the same returns as her parents or grandparents once could. This suspicion is troubling – and politically potent – because it undercuts America's claim to be "the land of opportunity."
A groundbreaking study making waves today argues that this isn't true. A child born in the bottom fifth of the income distribution appears to have just as much chance reaching the top fifth in adulthood today as a child born a generation earlier. Combining these results with earlier research, it appears as if prospects for social mobility in America have remained relatively unchanged for half a century.
These findings come from the same researchers at Harvard and UC Berkeley who released last summer an equally exhaustive study of income mobility at the local level (they've just posted the full paper from that earlier work, too). Those earlier results, from Raj Chetty, Nathaniel Hendren, Patrick Kline and Emmanuel Saez, identified alarming differences in a poor child's chances of escaping poverty depending on where he or she lives.
Put these two papers together, and it appears as if we've been focusing on the wrong aspect of social mobility.
"The key issue in our view," Chetty and colleagues write, "is not that prospects for upward mobility are declining in the U.S. as a whole but rather that some regions of the U.S. persistently offer less mobility than most other developed countries."
We should be worried not that a child in Atlanta has worse prospects in 2014 than a child in Atlanta in 1970. We should be worried that this same child today has worse prospects than children growing up right now in Salt Lake City (or Sweden).
The historic data from the latest study is based on anonymized records on more than 50 million children born in American between 1971 and 1993, as well as earnings data from their parents. In 1971, for instance, the probability of a child raised by parents in the bottom fifth of the U.S. income distribution reaching the top fifth by their late 20s was 8.4 percent. For children born in 1986 (who are 28 today), it's 9.0 percent. The youngest children in the study aren't yet full-fledged adult earners. But the researchers looked at their rates of college enrollment, which closely correlate with future earning potential.
This chart from the paper plots the mean percentile income rank of children at ages 29-30, compared to the mean income rank of their parents (this income was taken when parents first claimed the child as a dependent, between the ages of 12 and 16):
Children raised by parents in the 20th income percentile were mostly clustered themselves around the 40th income percentile by their 30th birthday. And this trend holds for children born throughout this period. This second chart offers another way of viewing the stability of these trends across time. It shows the percentage of children from each parental income quintile who reach the top fifth of the income distribution by age 26. The triangles at right are estimates using population-based samples for the children born from 1980-86.
None of these trends waver much over time. And that consistency is in sharp contrast to the geographic variability in social mobility that these researchers earlier identified.
They do note, however, that one nationwide trend has changed, even as social mobility has not: Income inequality has widened, primarily as a result of rising incomes among the families at the top of the income spectrum. This means that a child at the bottom fifth has the same relative chances of reaching the top fifth today as 40 years ago, but he has much farther to climb. Chetty and colleagues offer the illustration at right to conceptualize the implications of this:
Hence, the consequences of the “birth lottery” – the parents to whom a child is born – are larger today than in the past. A useful visual analogy is to envision the income distribution as a ladder, with each percentile representing a different rung. The rungs of the ladder have grown further apart (inequality has increased), but children’s chances of climbing from lower to higher rungs have not changed (rank-based mobility has remained stable).
However, for a variety of complex reasons – having to do with the quality of local schools, the level of local income and racial segregation, even the extent of sprawl – this picture looks different when we zoom in to individual metropolitan areas. Social mobility may not vary much across time. But it does vary by geography.
"The U.S. is better described as a collection of societies," the researchers write, "some of which are 'lands of opportunity' with high rates of mobility across generations, and others in which few children escape poverty."
Top image: Fritza Lemitelamy, a student in the Culinary Job Training Program at the New Hampshire Food Bank, and her daughters Anastasia (L) and Elizabeth (R), look at a magazine while shopping for dinner which does not need be refrigerated or cooked because the power has been shut off at their home, in Manchester, New Hampshire. (Brian Snyder/Reuters)