Should We Care About Relative Mobility?

by Reihan Salam

My latest column draws on Scott Winship’s excellent “Mobility Impaired” to advance the argument that relative mobility is overrated as a social policy goal (a view that, I should stress, Scott doesn’t necessarily share):

One reason America has less relative mobility than many other rich countries is that the gap separating the top fifth from the bottom fifth is very large. To illustrate, compare a four-person household in Denmark, which has a high level of relative mobility, to one in the United States, which has a low level.

In 2004, Danish households at the 10th percentile earned $25,500, considerably more than the $19,968 income of American households at the 10th percentile. Danish households at the 50th percentile earned around $45,340 against around $53,344 in the U.S. And Danish households at the 90th percentile earned around $70,838 against just under $113,474 in the U.S. Making it from $25,500 to $70,838 is, for obvious reasons, easier than making it from $19,968 to $113,474.

The income distribution in the United States is a bit like an accordion that keeps stretching out as the highest earners do better and better. The accordion is stretching out in most rich countries, but America, and a few other rich countries like Britain and Israel, is at the stretchier end of the spectrum. Though this stretchiness has troubled many observers, it is far from obvious that encouraging well-off Americans to earn less money would somehow strike a blow for social justice.

There are other reasons why Americans born at the bottom of the income distribution tend to stay there. For example, a Pew study found that past incarceration reduces annual incomes by 40 percent. This wouldn’t be a problem if the U.S. incarcerated very few people. But in fact, the U.S. has an extraordinary 715 prisoners for every 100,000 people, compared to 72 per 100,000 in Denmark. And these numbers don’t count the far larger number of ex-offenders who have served their sentences. Though we don’t have good data on the impact of having an incarcerated parent on a child’s future economic prospects, partly because incarceration rates really took off in the 1980s and 1990s, it is hard to imagine that the impact wouldn’t be considerable.

Perhaps the biggest reason why Americans at the bottom get stuck in relative terms is that those who are better off do everything they can to better the lives of their children and to protect them against economic risk. Increasing relative mobility doesn’t just mean that more kids at the bottom will work their way to the top. It also means that more kids at the top will tumble down the economic ladder. To prevent that from happening, affluent families invest heavily in educating their young, since education is seen as a hedge against economic risk. Moreover, parents who have achieved some success tend to be part of social networks that can give their children access to valuable economic opportunities. Even the most committed egalitarian won’t deny her daughter the opportunity to take an internship with a beloved friend and colleague just because other children won’t get the same leg up.

Interestingly, the Pew Economic Mobility Project has found that black children are much more likely to be downwardly mobile that white children. The New York University sociologist Patrick Sharkey attributes this to the fact that black families in the top three-fifths of the income distribution were far more likely than their white counterparts to live in high-poverty neighborhoods. Suffice it to say, it seems far more sensible to try to reduce downward mobility among African-Americans than to try to increase it among whites.

To be sure, there might be an incumbent-protection story here, as Scott has suggested. That is, it is possible that non-black families in the top three-thirds of the income distribution are giving their children advantages that protect them from scrappy upstarts in ways that might damage our growth prospects. That really is a legitimate concern. Yet it doesn’t alter my view that what we should really be concerned about are the sources of stickiness at the bottom, e.g., mass incarceration and the extreme inefficiency of public sector service delivery.