The acid test of the American Dream is whether people can rise beyond the circumstances of their birth.
With Occupy Wall Street doing for income inequality what the Tea Party did for debt, the state of the American Dream is more and more central to the political debate. Are we divided between the top 1 percent and a vast wasteland of the dispossessed, as many of the Occupy Wall Street protesters have it? Or are we still the land of opportunity, as top House Republican Paul Ryan insisted in a recent speech at the Heritage Foundation?
The answer is that we are still a mobile society, although not as much of one as we might wish. If the nihilistic despair of the Occupy Wall Street crowd is detached from reality, neither is self-congratulation in order. If Paul Ryan is right to say that “class is not a fixed designation in this country,” it is much too fixed at the bottom of the income scale. The American Dream is alive, but ragged around the edges.
Advertisement
Are we better off than our parents? Yes. According to Scott Winship of the Brookings Institution, data from the Pew Economic Mobility Project show that two-thirds of 40-year-old Americans are in households with greater incomes than their parents had when they were 40. Adjusting for the size of the households — they are smaller than previously — four fifths of Americans have surpassed their parents. Nearly everyone has been on an up escalator.
Then there’s the question of how Americans are faring relative to everyone else. If they are born in the bottom fifth of the income distribution, do they get out? Winship notes that if it were a matter of random chance, 20 percent of people would remain in the bottom fifth. Instead, about 40 percent stay in the bottom. That means 60 percent make it out (the good news), but most don’t move up very far (the bad news). Only a third make it into the top three fifths. “Picking the right parents,” as Winship puts it, has an enormous impact. A child born to parents in the bottom fifth has about a 17 percent chance of making it to the top two fifths, while a child born to parents already in the top two fifths has a 60 percent chance of staying there.
It is humbling that we seem — although comparisons get very complicated — to lag other advanced countries in mobility. If he were writing today, Horatio Alger might set his stories in Finland. “Research shows,” Winship writes, “that most Western European and English-speaking nations have higher rates of mobility than does the United States.” When considering how much of an effect parental earnings have on the eventual earnings of their children, Winship reports, “we are definitely worse off than Canada, Australia, and the Nordic countries, and probably worse off than Italy, France, Germany, and the United Kingdom.”
We are particularly bad at getting people, especially males, out of the bottom. One study Winship cites showed that 23 percent to 30 percent of sons and daughters of fathers in the bottom fifth of Nordic countries and the United Kingdom remained there as adults; in the United States, 42 percent of sons stayed there.
This stagnation is less a statement about the structure of America’s economy than about its culture. As Ronald Haskins, also of the Brookings Institution, wrote in an essay for National Affairs, “economic mobility is constrained above all by personal choices and behaviors.” He argues that society’s leaders “should herald the ‘success sequence’: finish schooling, get a job, get married, have babies.” If Americans finished high school, worked full-time at a job that matched their skills, and married at the rate they did in the 1970s, the poverty rate would be cut by 70 percent.
These old-fashioned bourgeois virtues, and particularly marriage, rarely figure in the public debate. Everyone is more comfortable talking about taxes or the banks, as the America Dream frays.
Lowry: "If Americans finished high school, worked full-time at a job that matched their skills, and married at the rate they did in the 1970s, the poverty rate would be cut by 70 percent."
These days, how many jobs are there for a man with just a high-school diploma and no college?
As more and more American men and women plow on through college and even graduate school, they're marrying at later ages. And since most young Americans finance their college tuition with big student loans, they start their careers already in debt totalling tens of thousands of dollars.
The cost of tuition has risen so high that your average working-class family has no other way to pay for their children's college education except by going deeply into debt. Their debt or (as is increasingly the case) their children's debt. They're already risking poverty and bankruptcy, whenever an economic slump worsens employment prospects for new college graduates (as is the case now).
In the past, blue-collar jobs in manufacturing were the entry-point into the middle class for poor but hard-working Americans. But since World War II, there has been a long-term decline in manufacturing employment (down about 80%). Robots and automation have replaced these workers.
How does this situation compare with Finland? Anyone know?
The decline of US manufacturing jobs is more complex than robots and automation. Those are just a result of Leftist policy choices and unionism both of which drove up the cost of US labor and the operating costs of US manufacturers.
Much of manufacturing is automated with a very small labor component so when manufacturers relocate outside the US it isn't for better labor rates but, among other reasons, due to a much lower regulatory burden and friendlier political climate.
Just look at the Leftist obstructionism of the XL pipeline project. It's a perfect example of a politically hostile environment destroying potentially 200k plus jobs.
We could have a substantial manufacturing revival if we could close down a few bureaucracies in DC and enact nationwide right to work laws.
Poverty isn’t what it used to be. In college I was an ice cream man in a projects, where I used to give ice cream to children who had no shoes.
I had a friend for 37 years. She has lived in the same project since the day I met her. She has had 2 apartments in that time. Her first was typical project fare, 2 bedrooms, 1 bath.
She is a remarkable woman. Her place was always the cleanest, despite her lack of things. She treated what she had with gratitude and respect, and let me tell you, 37 years ago, she had nothing, a destroyed couch covered by a sheet, a ratty kitchen and bath, with old appliances and broken tile, as well as a bedroom set that consisted of a bed and a headboard.
She has not moved from the bottom fifth, having become disabled at an early age. She survives on $800 a month Social Security, and whatever money her girlfriend of many years provides.
She moved into her new apartment 15 years ago, also 2 bedrooms and 1 bath. Yet, this is the nicest project apartment I have ever been in, and I’ve been in them all, but that’s another story. With 3 sides of the building and tons of light and air, she has AC, 3 LCD TVs, leather furniture, carpets, plants, a dog, free electricity, the latest cell phone, full cable, full internet, a car (with her girlfriend), new appliances and a nice kitchen set. She has full medical and full dental. The counters and cabinets could be nicer, but she is poor and this is the projects.
Her life is a gazillion times more comfortable than when I first met her. Yet, she believes she is worse off.
I said I “had” a friend because I published an article on racism, where I called Barack Obama the worst President ever, prompting her to call me a racist and I refuse to speak to her now.
a sad commentary on American life, we have a generation of parents who try to be friends with their kids, not parents. you have to make them do work, make them get up and go, but with the disposable income, lack of energy with a lot of kids, and of course way too much video/tv/computer face time, the reality of the outside world escapes them. Sigh.
We know what the problem is but refuse to acknowledge it and push the solution because we seemingly want a world in which people can do as they please without any consequences.
As a result, we are far from promoting those "old-fashioned bourgeois virtues" that would help address income disparity because doing so implies that we expect a degree of personal responsibility on the part of those who want to improve themselves.
Anyone voicing such expectations is attacked for, "blaming the victim", by those who seemingly think that giving things to people who have done nothing to earn them is the way the world should operate. Then we act surprised when another generation remains mired in the bottom 20%.
One characteristic of physics is that it identifies natural laws that allow prediction of the outcome of relevant actions. If you drop something in a positive gravitational field, ignoring wind resistance, it falls toward the local center of mass (typically down to the ground).
Social sciences can also identify such laws, but absent equations, they always sound like "guidelines". Moynihan identified decades ago the effect welfare would have on black families, fragmenting them and increasing the tendency to poverty. Lowry's rule about finish high school, etc., works for everyone regardless of race. Yet the advice is generally ignored in favor of income redistribution. Perhaps it needs to be rendered as an equation, so it can get the respect that hard sciences enjoy.
Maybe then, people would believe. Or we could try calling it "settled science", start talking up Anthropogenic Global Poverty, demand that nations take steps to ensure their citizens finish high school before having sex (or at least children) and promote marriage. It seems to be working for the dubious climate change adherents. Perhaps the technique could be put to good use for something that really happens.
To the extent that intelligence is heritable and income is positively correlated with intelligence (nature), and/or to the extent that those with the talent and discipline to earn higher incomes pass along those values to their children (nurture), then there is zero probability that income-quintile mobility will look like a random draw (e.g., only 20% of those born into the bottom quintile will wind up there in the long run).
That a significant percentage of those born into the bottom quintile wind up in a higher one tends to validate the proposition that discipline and hard work will be rewarded.
Also, for every person who moves to a higher quintile, there is necessarily a person who moves to a lower one (by definition of quintile).
So if we lament a "low" rate of quintile mobility, we ought to have a normative standard to aspire to. What is it? I don't think we can answer that question any better than what is the right ratio of CEO pay to janitor pay. Once we start down that road, we're conceding the game to the income redistributionists.
The conservative or libertarian position ought to be that Federal government should butt out of trying to "manage" such issues as distribution of wealth and income mobility. It should simply establish and enforce just ground-rules (e.g., strong property and contract rights, maintenance of free markets, and predictable administration of justice) for the game of life and let the chips fall where they may.
I agree, by definition if someone moves "up" then someone else has to move "down", because at the "end" of the comparison, you're still just looking at the "bottom fifth" even though they may all have a higher standard of living. And people are better off today at all income levels. (You can see that in the stats of the number of TVs, A/C units, etc. in poor households.) Because someone is in the bottom fifth isn't a tragedy.
I keep trying to figure out the point of the article. I guess if people choose not to move "up", that's their choice, and according to Rich's statistics, more people in the US choose not to move up. Not everyone has grand ambitions. The opportunities should be there. I've seen some people who are very mobile (building up a business, re-educating themselves, losing their businesses, etc.), and many who are content with their status or class and not particularly ambitious. Is that such a tragedy to be content with a more simpler outlook on life?
I guess the implication that Rich is trying to counter is that there is something artificial about the US that is holding people back. I'd be curious as to the lowest quintile of the US compared to the lowest quintile in other countries -- who's better off? Who has more cars, larger living spaces, etc? Once we have enough stuff, do we keep pushing for more or is it OK if some of us decide to ride life out with "enough"? I guess I wonder where the inspiration for this article came from, and like the previous responder, it sounds like it's too easy to fall into a Leftist agenda worrying about what's "fair" or "equal". The Left should be happy so many people are content with enough, but it's like they envy that some are ambitous and earn so much more. Why should that bother me or them?
I think Scarlatti's observation is the critical one. It will always be the case that someone is in the bottom quintile (in fact, the shocking truth is that a full 20% of our fellow Americans are doomed to reside there!). The idea that those who are there should move out is simply the idea that someone else should move in.
So bottom line, Rich Lowrey's position is that all is well... head out to the mall and buy more Chinese made junk you don't need on credit you can barely afford to pay the monthly minimum on.
Wow... amazing that Americans who used to trust the GOP no longer do.
Lowrey is no fan of the "Tea Party" philosophy... meaning... he's no fan of the Constitution.
Lowrey is no fan of Ron Paul... meaning... he's no fan of the Constitution or individual liberty.
Perhaps when Brooks retires over at the NYT...
(*SHRUG*)
Greener, higher pay pastures!
Oh... btw... did you folks happen to watch his "debate" with that lib chick - Goldman... Goldsmith... Goldsomethingorother - found via today's "in the news" list of links?
Pathetic.
Both Lowrey and the lib favor a system where the federal government demands income taxes from 53% of the population while allowing 47% of our peers to simply siphon our hard earned dollars into their pockets and for their benefits.
Folks... we're in trouble. Deep... deep... trouble.
Mathematically there will always be a bottom fifth. The question is whether or not our bottom fifth is better than the rest of the world's bottom fifth. I believe it is often better than the "middle class" in many European cities in terms of living quarters and other measurements.
So, what's the real issue? Money? Maybe. But I propose another issue - responsibility, personal responsibility. We've raised two generations and are on our way to a third generation thinking they can have whatever "stuff" they want with no effort. "Earn" does not exist in their vocabularies. Building families doesn't either b/c we've made it too easy for the government to take control of families.
A key answer is - get the government out of the way, out of our college and mortgage loan business, out of our medical care, promote families, and even belief in something bigger than one's self (not the government) etc. Teach kids to think (versus feel good).
Most people have no clue how fast we can lose so much. We simply need to return to basics.
Follow
