Study: Economic Mobility in America is a Myth

With more news of strikes in the fast food industry and concerns about low wages in other retail industries, economic inequality continues to emerge as a growing issue heading into 2014. According to results of a new study, there's good reason for concern:

It's easier to rise above the class you're born into in countries like Japan, Germany, Australia, and the Scandinavian nations, according to research from University of Ottawa economist and current Russell Sage Foundation Fellow Miles Corak.

Among the major developed countries, only in Italy and the United Kingdom is there less economic mobility [than in the United States], according to Corak.

The research measures "intergenerational earnings elasticity" — a type of economic mobility that measures the correlation between what your parents make and what you make one generation later — in a number of different countries around the world…

..If why Americans have a harder time making it into the middle class is a bit of a mystery to economists, why Americans cling to the belief that it's still easy to do is even more baffling.It could be because, during the late 1800s and early 1900, the United States was a much more mobile country than Britain, said Jason Long, an economist at Wheaton College in Illinois.

"It's clear that Americans still believe that America has exceptional mobility, and that's not true," said Long. He calling it "vexing" that "lots of people could be systematically mistaken about verifiable, factual information."

This gap between what Americans believe and what research shows to be true is apparent in recent comments by Republican Sen. Rand Paul, who wants to end extended unemployment benefits. From The Washington Post:

“When you allow people to be on unemployment insurance for 99 weeks, you’re causing them to become part of this perpetual unemployed group in our economy,” he said on Fox News Sunday. If the unemployed stopped receiving benefits sooner, they would be back to work sooner, he suggested.

Extended benefits expire at the end of the year, meaning job-seekers in most states will only get 26 weeks of unemployment insurance, instead of 43 or more in most. That deadline represents an immediate cutoff for 1.3 million people, according to the National Employment Law Project. Paul's comments came in response to President Obama's call for an extension of those benefits.

In other words, Sen. Paul apparently believes that there are plenty of jobs out there — people just don't bother trying to get them.

23 Community Comments, Facebook Comments

  1. BlueCat says:

    Thanks. This info, that we are no longer the land of opportunity we used to be in terms of upward mobility, has been out there for a long time but few are aware of it. This is what the growing gap between a few at the top and the rest of America, the gap the GOTP claims is of no concern, means in concrete terms. Such an increasingly yawning gap is simply not consistent with the upward mobility that once made us the envy of the old world, anecdotes about the few who still rise from rags to riches aside. 

    Such a gap is consistent only with a society ruled by an elite that that seeks to increase and maintain its absolute security of position in terms of spectacular wealth and power by slamming the door on everyone else.  The top fraction of a percent talk of trickle down and peddle comforting patriotic lies to distract the masses with false hope while doing everything they can to hang on to every drop. 

    A combination of trickle down and jingoism (we're number one even though in the areas that affect most peoples everyday lives we're far from it) is their chosen opiate of the masses. Stagnation and loss is the new reality they hope we'll continue to blame on whatever look over there culprit that can manage to conjure. Reagan started it with his welfare queens and unions line of bull and it's been a great success ever since. Is a tipping point coming?  

  2. Duke CoxDuke Cox says:

    This comment by the wannabe Obergruppenfuhrer of the TeaParty displays the derangement of this coddled little rich boy who grew up believing himself to be better than all those black and brown people he was forced to integrate with as a child.

    It is hard to say if his remarks are more ignorant than they are cruel or more cruel than they are ignorant.

  3. ModeratusModeratus says:

    It's an unpleasant fact that risk motivates higher performance, but it's still a fact. There's no nice way to tell someone that they are becoming dependent on a handout when they don't have to be, but the continued handout will only encourage further dependency. There needs to be a safety net, but it need to be of last resort.

    I do believe it's too easy to get public assistance in America. Pillory me all you want. I want people to work.

    • Duke CoxDuke Cox says:

      Consider yourself pilloried then, you jerk.

       

    • Ralphie says:

      I want people to work too.

      Unlike you, I want them to get paid for it.

    • Diogenesdemar says:

      Thanks man, this X-mas season it's great to be reminded that in America one can still be a complete maroon without wearing a Santa suit . . . opportunity, indeed?!?

      http://www.nytimes.com/2013/12/09/opinion/krugman-the-punishment-cure.html?src=me&ref=general

      The Punishment Cure

      " . . . Ask yourself how, exactly, ending unemployment benefits would create more jobs. It’s true that some of the currently unemployed, finding themselves even more desperate than before, might manage to snatch jobs away from those who currently have them. But what would give businesses a reason to employ more workers as opposed to replacing existing workers?

      You might be tempted to argue that more intense competition among  workers would lead to lower wages, and that cheap labor would encourage hiring. But that argument involves a fallacy of composition. Cut the wages of some workers relative to those of other workers, and those accepting the wage cuts may gain a competitive edge. Cut everyone’s wages, however, and nobody gains an edge. All that happens is a general fall in income — which, among other things, increases the burden of household debt, and is therefore a net negative for overall employment.

      The point is that employment in today’s American economy is limited by demand, not supply. Businesses aren’t failing to hire because they can’t find willing workers; they’re failing to hire because they can’t find enough customers. And slashing unemployment benefits — which would have the side effect of reducing incomes and hence consumer spending — would just make the situation worse. . . . "

    • BlueCat says:

      So you believe on the one hand the service jobs that have replaced the lost industrial jobs should not pay enough to even pay rent and buy enough to eat but you also believe that it's the government assistance that enable the masses of people working at those jobs to have shelter and enough to eat that's causing them to rely on that assistance. No living wage and no assistance to live will somehow create self reliant prosperity.  Perfect.

      Great thinking, Moderatus. I suppose your math challenged solution would be for everybody to pull themselves up by the boot straps into the top 1% or at least the top 10%.  That way we could all be winners. Nobody would be in any lower percentiles, working but still without enough to live. 

      As silly as the many new maths that have been hailed as the next big thing in our schools over the years may be, that doesn't make sense according to any of them. There will always be a top 1% which can contain no more than….duh…1%, a top 10% that can contain no more than 10% and so on no matter how much we compete, strive, retrain, educate and no matter how much opportunity is created. It's just arithmetic. The jobs available to the majority have to provide a lving wage for the majority to live without government assistance. Period.  

      The question will never be how do we do the mathematically impossible. The answer is too obvious. No need to ask. We don't. The question will always be what kind of society do we want.  Do we want to be a majority middle class society where a few do exceedingly well, most of the rest do pretty well and only a few require and receive much assistance or do we want to to be a society of great wealth for the tiny few who beat the odds, mostly with the aid of their privileged backgrounds, and misery with little hope of significant upward mobility for the majority? 

      Please remember that huge gap, low mobility societies can become blood baths for the elite when the miserable majority is desperate enough so probably not a great option even for the top .01% from an entirely selfish, compassion free, common sense point of view.

      I don't expect any answer containing anything but discredited talking points if you answer at all.

    • MADCO says:

      Surely you must have data for such an obvious conclusion.

      What other developed economy makes it harder to get public assistance and shows better outcomes ?

      (take yor time and consider your sources.  the CIA World Factbook is pretty good. I like the World Bank and our own US Federal Reserve has some awesome data.  But you choose.)

       

    • BlueCat says:

      "Conservatives say if you don't give the rich more money, they will lose their incentive to invest. As for the poor, they tell us they've lost all incentive because we've given them too much money."

       

      http://politicalhumor.about.com/od/funnyquotes/a/george-carlin.htm

    • notaskinnycooknotaskinnycook says:

      Nice try, Mod but some of the biggest recipients of social assistance are farmers and ranchers who vote reliably Rpublican  (a nod to MichaelBowman.You're the exception that tests the rule). They don't think of it as social assistance; it's a "subsidy". But at the moment, with Congress literally taking money from hungry children to give it to Big Ag, I don't know what else to call it. And as for "dependency", the ag folks sure do holler loud enough that they can't survive without those handouts to make me believe they're dependent upon them. Now, who are the "welfare kings"?

  4. ClubTwitty says:

    In Defense of Scrooge, from the Ludwig von Mises Institute (with a name like that you know its going to be all compassionate conservative in that friendly Austrian sort-of-way).  

    It's Christmas again, time to celebrate the transformation of Ebenezer Scrooge. You know the ritual: boo the curmudgeon initially encountered in Charles Dickens's A Christmas Carol, then cheer the sweetie pie he becomes in the end. It's too bad no one notices that the curmudgeon had a point—quite a few points, in fact. 

     

  5. Urban Snowshoer says:

    I wouldn't go as far to say that economic mobility is myth (i.e. doesn't exist). However, I think it's fair to say that it has gotten harder over the years.

    • BlueCat says:

      The myth is that America, as most Americans assume, is number one or even notable among modern industrialized nations for upward mobility. Used to be. As is the case by so many objective standards such as objective measures of quality of health care for the average person, infrastructure and education, to name a few, number one status is myth. There are also many citizens of many countries who are just as free.

      Mainly, when we cheer about being number one these days, it's pretty much confined to military might and even that hasn't proved be doing us a whole lot of foreign policy good lately. Maybe it's time to try something besides the rightie crap that's brought us to this diminished state.

      • MADCO says:

        USA is #1 in many measures.

        We have the biggest ecnomy. 

        We heve the most trusted currency and financial markets.

        We have the best baseball.

        We have zero monrchy.

        We have the most universally accessible public edcution k-12.

        We have the best space, computer, pure science, entertainment, advertising, aviation, communication and internet industries,

        I could go on- but for all our shortcomings, this place is great.

        • BlueCat says:

          May be a great place but in many very important and historically significant categories it is objectively no longer number 1.

          If the biggest economy doesn't work for the majority of the people I don't see that's something to brag about. Ditto financial markets. Ditto education since so many only have access to run down schools with few resources and we don't produce students who score anywhere near number 1 which ought to be the result of a number 1 educational system. 

          The most iconic number 1, besides our claim to being the most free which is just subjective patriotic nonsense, has always been that we are the number 1 land of opportunity. Losing that one so badly, coming in  behind  so many other countries on the upward mobility scale, is a devastating erosion, no matter how superior our baseball may be. 

          I'm not saying there's nothing to love about our country or to be proud of as an American. I just don't go in for mindless jingoism.  I've always thought our constant bragging about being the best period in every way is pretty obnoxious and other people who love and feel just as much patriotism for their own free and successful countries and heritage must get sick of hearing it. But then I'm the type who always found mandatory pep rallies at school a pain the ass.

      • notaskinnycooknotaskinnycook says:

        I'm with you, BlueCat. The movement to raise the minimum wage is a symptom of what you're talking about. Minimum wage jobs used to be kidstuff. A couple of hours at Micky D's after school to save up for a teenager's first car and to take his girl to a movie on a Saturday night. It wasn't that long ago. Now "grown-up jobs'" have gotten so scarce that adults are pushing kids out of the minimum wage market and trying to raise a family by stringing togethr two or three part-time minimum wage jobs. Does that sound like "upward mobility"?

        • MADCO says:

          In the 19th c. it was the move from farms to early industrialization.  The US was a volatile boom/bust cycle. The economy started to get really good at organinzing : extraction, refinement or milling, manufacture,  delivery, and etc.  After 1913 the boom bust volatility settled down some, and things really got going. 

          The 30's are well documented. Likewise, WWII and related production.

          And then we resumed making cars, and air conditioners and houses and etc and etc.  All the while the economists and thinkers were convinced that glabalization and increased specialization was a) always a good thing, and b) inevitable.

          But then … the rest of the world (or enough of the ROTW) started making cars, and airplanes, and air conditioners and etc. And so where are the new new jobs for us?

          I hear a lot of baloney - entrpreneurism ! everyone should start their own company. Aside from the obvious fallacy of observation ~ most new businesses fail ,  we only hear about or remember those that survive, we conclude that new businesses that don't fail are the thing to do.  But most do fail  and not for obviously bad or avoidable reasons.

          We'll all be programmers.  Well, no we won't. At least not as a paid employees or free lancers.  I know dozens of "programmers." None recommend it to the youth around them as a career move.

          But the lack of NEW INDUSTRY to absorb workers in big numbers is not the real problem.  The real problem is that once upon a time, way back in the 50's and 60's, the wage/life ratio was so much better.  Wages, real wages, have been declining for 30 years. Some defy that. Some fended it off by haveing two wage earner households. (or 3 or more).
          But the overall trend has hosed the working classes – lower level through waht used to be the middle class.

          A Harvard professer did a great talk ….Elizabeth Warren in Berkeley…I'll find it and post it later.
           

          • BlueCat says:

            All great reasons for raising the minimum wage to a real living wage as the foundation for recreating a broad middle class capable of being the engine, once again, of a broadly prosperous consumer driven economy.  Billionaires can only buy so much luxury stuff and services. We need a big fat middle bursting with ordinary people with enough income to buy lots of ordinary stuff and services.

        • MADCO says:

          http://youtu.be/akVL7QY0S8A

          (I've given up embedding.) 

          At the time, the speaker was on the faculty at Harvard. She had published and taught on the topic (there is another longer series- I thinkyou can get it at HU online, or …somehwere) of bankruptcy trends and consumer issues in law.  
          Her academic work is stellar. Not as quantitiative as most Economists would prefer, but solid.  If you can stomach the full hour in this one – go to her website and see whom she is supporting in other elections (3 key opportunities for sure.) Then  tell me who we can elect (I'm thnking 20 or 24) that can put an executive face on this approach. (I'd love to think it could be her – but I'm pretty sure the country would elect Barry Goldwater before they would elect Senator Warren. And I mean the dead guy.)

  6. DaftPunkDaftPunk says:

    As Bill Maher says:  The US places 30th for social mobility, you know, the American Dream that if if you work hard and apply yourself that you can be anything you want.  It's like Mexico coming in 30th in a Mexican Hat Dance contest.

  7. CaninesCanines says:

    I know this person who's doing real well in this economy. "He's" a multi-national corporation.

    Of course, that's just an anecdotal example…

    • horseshit GOP front grouphorseshit GOP front group says:

      That guy again.  The one who bitches about welfare and the poor and then encourages his minimum wage employees to enroll in government services just to live (McD's, Walmart).  The one who wants everything from the government NOW, and some years dosen't pay any income tax at all (GE).  The one who needs an instant government bailout because he fucked up our financial system all on his own (AIG), and then sues the government later for its largesse.

      I hate that guy.  The corporate freeloader.  He's ruining our country.

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