Reconciling perceptions and realities of economic mobility in America
By the time historian James Truslow Adams gave a name to the “American dream,” the Great Depression was already under way. The year was 1931, and his definition of the now-iconic phrase perfectly embodied the hopes of the working class of the time: “[It] is that dream of a land,” he wrote, “in which each… shall be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position.” Nearly eight decades later, the United States yet again faces a collapsing economy. The mythology that Adams described is worth reconsidering as a greater number of citizens wonder whether the American dream still exists.
Myth and Reality
Americans certainly believe that they live in a nearly classless society. In a 1999 survey of 27 middle and high-income countries, only 18 percent agreed that being born to wealth is very important in getting ahead, compared to 28 percent among all nationalities polled. A consequence of a strong belief in economic mobility is, often, greater tolerance toward present-day inequality. Only one-third of Americans polled believed that the government should actively reduce income disparities, in dramatic contrast to the more than two-thirds of citizens holding that belief in the other countries surveyed.
In the face of economic stagnation, that may be changing. “Today, there are two Americas,” declared John Edwards in his stump speech during the Democratic presidential primary: “One does the work, another reaps the reward.” Edwards’ populist themes, later incorporated into the Obama campaign, echoed a rising tide of anger among middle and lower-income Americans. As the Pew Research Center reported in a 2007 study, 73 percent of the population now agrees with the statement that in modern economic life, “It is really true that the rich get richer while the poor get poorer.”
But does reality match the new fears of the voting public? Paul Winfree, a policy analyst at the conservative Heritage Foundation, pointed out in an interview with the HPR that “Today, two peers whose parents have incomes 100 percent apart end up with incomes 60 percent apart.” But he conceded, “We can’t know if that rate will change until the current generation grows up.” Driven by wealth creation at the top, the gap between the richest and poorest Americans appears to be rising rapidly, while economic mobility remains stagnant at best.
Stickiness at the Bottom
This lack of economic mobility has been most pronounced among those who need it the most. Of those Americans whose parents earned incomes in the bottom quintile, 42 percent will find themselves in that quintile as well. In an interview with the HPR, Ron Haskins, a senior fellow at the Brookings Institution, offered yet another complication to that sobering reality. “Despite massive economic growth overall, wages for the so-called ‘working class,’ at the tenth percentile, have simply not increased in three decades,” he said.
Members of the bottom quintile tend to be stagnant not only in relative position but, also, in real income. The old truism that a “rising tide lifts all boats,” while not entirely false, does not accurately reflect the reality of recent decades. The combination of increasing inequality and declining economic mobility has meant that the poor did not, on average, make noticeable gains through years of rapid economic growth. As Isabel Sawhill, a senior fellow at the Brookings Institution, told the HPR, “If the rungs of the ladder are getting further and further apart, then it gets harder to climb from one rung to the next.”
It is this bottom quintile that has been targeted by the vast majority of government interventions in the past generation. After child health reforms, early childhood programs, welfare reform, and scores of other policies, if the government has failed in improving conditions for this group, it is not for lack of trying. “We spend more money on new programs each year than in the previous one,” Haskins noted.
Education First
On one point, the consensus among experts is clear: the single most critical factor in determining a child’s future earnings is his or her level of education. “In the old days you could get a job at GM [General Motors] and have a solid middle-class income, but that’s just not true anymore,” Haskins said. In a modern society, a college education is of paramount importance. That fact has played a critical role in economic mobility. Winfree explained, “As the payoffs to post-secondary schooling have increased, it’s more difficult for disadvantaged youth to climb out of poverty.”
In fact, experts agree that interventions at all levels—including new early childhood programs, funding grants for public schools, and merit scholarships for college students—are critical to any effort to bolster economic mobility. Though many universities have made visible efforts to expand both diversity and affordability in recent years, the average cost of attending college has continued to grow sharply over the past generation.
Dream or no dream, Americans now lag behind much of the developed world in educational access. “We started stagnating in the 1970s and the rest of the world is catching up,” said Christopher Jencks, a professor at the Harvard Kennedy School, in an interview with the HPR. Indeed, higher education is better funded in many European countries than in the United States, where among the top quarter of institutions, 74 percent of students are from the highest socioeconomic quartile, while only 3 percent are from the lowest. Those statistics, of course, are not new; as Jencks put it, “We talk about educational inequality, but don’t take the necessary steps.”
From Myth to Inaction
Belief in the American dream, ironically, may be the greatest obstacle to achieving it. A typical child born into the lowest income bracket in the United States enjoys far greater economic mobility than he or she would have had a century ago. Yet there is a compelling argument that he or she would have a higher chance of success today in Europe. Whereas 42 percent of American children born in the bottom quintile remain there through adulthood, between 25 and 30 percent do in Denmark, Finland, Sweden, Norway, and the United Kingdom. As Jencks remarked: “If the American dream means that opportunities were once greater here, that is no longer true.”
As the world economy becomes ever more knowledge-based and renders post-secondary education ever more important, active intervention to increase college access, preparedness, and affordability is essential if the United States wishes to renew economic mobility and increase the real wages of the working class. Such ambitious policies alone can, in the vision of James Adams, create “a land in which life should be better and richer and fuller for everyone,” a land in which the American dream is alive and well.
By the time historian James Truslow Adams gave a name to the “American dream,” the Great Depression was already under way. The year was 1931, and his definition of the now-iconic phrase perfectly embodied the hopes of the working class of the time: “[It] is that dream of a land,” he wrote, “in which each… shall be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position.” Nearly eight decades later, the United States yet again faces a collapsing economy. The mythology that Adams described is worth reconsidering as a greater number of citizens wonder whether the American dream still exists.
Myth and Reality
Americans certainly believe that they live in a nearly classless society. In a 1999 survey of 27 middle and high-income countries, only 18 percent agreed that being born to wealth is very important in getting ahead, compared to 28 percent among all nationalities polled. A consequence of a strong belief in economic mobility is, often, greater tolerance toward present-day inequality. Only one-third of Americans polled believed that the government should actively reduce income disparities, in dramatic contrast to the more than two-thirds of citizens holding that belief in the other countries surveyed.
In the face of economic stagnation, that may be changing. “Today, there are two Americas,” declared John Edwards in his stump speech during the Democratic presidential primary: “One does the work, another reaps the reward.” Edwards’ populist themes, later incorporated into the Obama campaign, echoed a rising tide of anger among middle and lower-income Americans. As the Pew Research Center reported in a 2007 study, 73 percent of the population now agrees with the statement that in modern economic life, “It is really true that the rich get richer while the poor get poorer.”
But does reality match the new fears of the voting public? Paul Winfree, a policy analyst at the conservative Heritage Foundation, pointed out in an interview with the HPR that “Today, two peers whose parents have incomes 100 percent apart end up with incomes 60 percent apart.” But he conceded, “We can’t know if that rate will change until the current generation grows up.” Driven by wealth creation at the top, the gap between the richest and poorest Americans appears to be rising rapidly, while economic mobility remains stagnant at best.
Stickiness at the Bottom
This lack of economic mobility has been most pronounced among those who need it the most. Of those Americans whose parents earned incomes in the bottom quintile, 42 percent will find themselves in that quintile as well. In an interview with the HPR, Ron Haskins, a senior fellow at the Brookings Institution, offered yet another complication to that sobering reality. “Despite massive economic growth overall, wages for the so-called ‘working class,’ at the tenth percentile, have simply not increased in three decades,” he said.
Members of the bottom quintile tend to be stagnant not only in relative position but, also, in real income. The old truism that a “rising tide lifts all boats,” while not entirely false, does not accurately reflect the reality of recent decades. The combination of increasing inequality and declining economic mobility has meant that the poor did not, on average, make noticeable gains through years of rapid economic growth. As Isabel Sawhill, a senior fellow at the Brookings Institution, told the HPR, “If the rungs of the ladder are getting further and further apart, then it gets harder to climb from one rung to the next.”
It is this bottom quintile that has been targeted by the vast majority of government interventions in the past generation. After child health reforms, early childhood programs, welfare reform, and scores of other policies, if the government has failed in improving conditions for this group, it is not for lack of trying. “We spend more money on new programs each year than in the previous one,” Haskins noted.
Education First
On one point, the consensus among experts is clear: the single most critical factor in determining a child’s future earnings is his or her level of education. “In the old days you could get a job at GM [General Motors] and have a solid middle-class income, but that’s just not true anymore,” Haskins said. In a modern society, a college education is of paramount importance. That fact has played a critical role in economic mobility. Winfree explained, “As the payoffs to post-secondary schooling have increased, it’s more difficult for disadvantaged youth to climb out of poverty.”
In fact, experts agree that interventions at all levels—including new early childhood programs, funding grants for public schools, and merit scholarships for college students—are critical to any effort to bolster economic mobility. Though many universities have made visible efforts to expand both diversity and affordability in recent years, the average cost of attending college has continued to grow sharply over the past generation.
Dream or no dream, Americans now lag behind much of the developed world in educational access. “We started stagnating in the 1970s and the rest of the world is catching up,” said Christopher Jencks, a professor at the Harvard Kennedy School, in an interview with the HPR. Indeed, higher education is better funded in many European countries than in the United States, where among the top quarter of institutions, 74 percent of students are from the highest socioeconomic quartile, while only 3 percent are from the lowest. Those statistics, of course, are not new; as Jencks put it, “We talk about educational inequality, but don’t take the necessary steps.”
From Myth to Inaction
Belief in the American dream, ironically, may be the greatest obstacle to achieving it. A typical child born into the lowest income bracket in the United States enjoys far greater economic mobility than he or she would have had a century ago. Yet there is a compelling argument that he or she would have a higher chance of success today in Europe. Whereas 42 percent of American children born in the bottom quintile remain there through adulthood, between 25 and 30 percent do in Denmark, Finland, Sweden, Norway, and the United Kingdom. As Jencks remarked: “If the American dream means that opportunities were once greater here, that is no longer true.”
As the world economy becomes ever more knowledge-based and renders post-secondary education ever more important, active intervention to increase college access, preparedness, and affordability is essential if the United States wishes to renew economic mobility and increase the real wages of the working class. Such ambitious policies alone can, in the vision of James Adams, create “a land in which life should be better and richer and fuller for everyone,” a land in which the American dream is alive and well.