Mobility Impaired
From the Nov. 14, 2011, issue of NR


The EMP/Brookings analyses break the parent and child generations into fifths on the basis of each generation’s income distribution. If being raised in the bottom fifth were not a disadvantage and socioeconomic outcomes were random, we would expect to see 20 percent of Americans who started in the bottom fifth remain there as adults, while 20 percent would end up in each of the other fifths. Instead, about 40 percent are unable to escape the bottom fifth. This trend holds true for other measures of mobility: About 40 percent of men will end up in low-skill work if their fathers had similar jobs, and about 40 percent will end up in the bottom fifth of family wealth (as opposed to income) if that’s where their parents were.

Is 40 percent a good or a bad number? On first reflection, it may seem impressive that 60 percent of those starting out in the bottom make it out. But most of them do not make it far out. Only a third make it to the top three fifths. Whether this is a level of upward mobility with which we should be satisfied is a question usefully approached by way of the following thought experiment: If you’re reading this essay, chances are pretty good that your household income puts you in one of the top two fifths, or that you can expect to be there at age 40. (We’re talking about roughly $90,000 for an entire household.) How would you feel about your child’s having only a 17 percent chance of achieving the equivalent status as an adult? That’s how many kids with parents in the bottom fifth around 1970 made it to the top two-fifths by the early 2000s. In fact, if the last generation is any guide, your child growing up in the top two-fifths today will have a 60 percent chance of being in the top two fifths as an adult. That’s the impact of picking the right parents — increasing the chances of ending up middle- to upper-middle class by a factor of three or four. 

Comparisons with other nations can also be helpful, though interpreting the evidence is surprisingly tricky. Research shows that most Western European and English-speaking nations have higher rates of mobility than does the United States. Cross-national studies of mobility typically consider the “intergenerational elasticity” of earnings — the amount of additional earnings that an extra 10 percent in parental earnings buys children in adulthood. By this third way of measuring mobility, we are definitely worse off than Canada, Australia, and the Nordic countries, and probably worse off than Italy, France, Germany, and the United Kingdom. An easy way to characterize how bad we look is to compare ourselves with our neighbors to the north. In Canada, a boy whose father earns twice as much as his friend’s dad can expect to have about 25 percent more in earnings as an adult than his friend. In the United States, he’ll have on average 60 percent more.

If the size of the boost that children get from greater parental income differs between countries, that could be either because parental income buys more access to the best opportunities in one country than it does in the other, or because the best opportunities are compensated more highly in one country than the other. It may be no more unusual for Americans from modest origins to become top executives than it is for similarly situated Danes, but American CEOs make a lot more money than Danish CEOs do. In this scenario, it’s not that opportunities to obtain the best slots in the United States are less fairly distributed than in other countries, it’s simply much more lucrative to occupy those slots here.

So, which is it? Research suggests that by the time they were in their 40s, American children born in the 1950s should have experienced the same earnings mobility as their Swedish counterparts if the economic payoff for additional schooling were not so much higher in the United States — and, more important, if that payoff had not grown so much between generations. And educational mobility in the two countries — the connection between parent and child schooling — was actually very similar for this generation. Opportunity for top slots may therefore have been as widespread in the United States as in Sweden.

However, evidence indicates that American children born since the 1950s have had lower educational mobility than children in Sweden and other Western nations. And recent research indicates that the link between parental income and educational advantages on one hand and child academic outcomes on the other is stronger in the United States than in other Western countries. So it may be that higher pay for better slots and narrower opportunities to occupy the best slots both now contribute to lower earnings mobility in the United States. Still, our country does not look particularly bad in terms of occupational mobility — the degree of similarity between the desirability of parents’ and children’s jobs. And in the broadest sense, that may be the best measure of opportunity for different slots.