|
|||||||||||||||
|
SEPTEMBER 2005 :: ECONOMICS American
Idle By
David Wessel The notion that the U.S is a special place where any child can grow up to be president, where smarts and ambition matter more than lineage and class, dates to Benjamin Franklin. The 15th child of a candle-and-soap maker, Franklin started out as a penniless printer's apprentice and rose to wealth so great that he was able to retire to a life of politics and diplomacy at age 42.
But the reality of mobility in America is more complicated than the myth. As the gap between rich and poor has widened since 1970, the odds that a child born in poverty will climb to wealth-or a rich child will fall into the middle class-remain stuck. Despite the spread of affirmative action, the expansion of community colleges and the other social change designed to give people of all classes a shot at success, Americans are no more or less likely to rise above, or fall below, their parents' economic class than they were 35 years ago. Exceptional Opportunity Although Americans still think of their land as a place of exceptional opportunity-unlike class-bound Europe-the evidence suggests otherwise. And over the past decade, scholars have come to see America as a less mobile society than they once believed. As recently as the late 1980s, economists argued that not much advantage passed from parent to child, perhaps as little as 20%. By that measure, a rich man's grandchild would have barely any edge over a poor man's grandchild. "Almost all the earnings advantages or disadvantages of ancestors are wiped out in three generations," wrote Gary Becker, the University of Chicago economist and Nobel Prize winner, in 1986. "Poverty would not seem to be a 'culture' that persists for several generations," he added.
Many Americans believe their country remains a land of unbounded opportunity. That perception explains why Americans have tolerated the widening inequality in recent years. It is OK to have ever-greater differences between rich and poor, they seem to believe, as long as their children have a good chance of grasping the brass ring. This continuing belief shapes American politics and economic policy. Technology, globalization and unregulated markets tend to erode wages at the bottom and lift wages at the top. But Americans have elected politicians who oppose using the tools of government to try to fight widening inequality. These politicians argue that lifting the minimum wage or requiring employers to offer health insurance would do unacceptably large damage to economic growth. The escalators of social mobility continue to move. Nearly a third of the freshmen at four-year colleges last fall said their parents hadn't gone beyond high school. And thanks to a growing economy that lifts everyone's living standards, the typical American is living with more than his or her parents did. People today enjoy services-cellphones, cancer treatment, the Internet-that their parents and grandparents never had. Tough to Measure Measuring just how much the prosperity of Americans depends on advantages inherited from their parents is difficult, since it requires linking income data across many decades. U.S. research relies almost entirely on a couple of long-running surveys. One began in 1968 at the University of Michigan and now tracks more than 7,000 families with more than 65,000 individuals; the other was started by the Labor Department in 1966. One drawback of the surveys is that they don't capture the experiences of recent immigrants or their children, many of whom have seen extraordinary upward mobility. The University of California at Berkeley, for instance, says 52% of last year's undergraduates had two parents who weren't born in the U.S., and that's not counting the relatively few students whose families live abroad. Nonetheless, those two surveys offer the best way to measure the degree to which Americans' economic success or failure depends on their parents. University of Michigan economist Gary Solon, an authority in the field, says one conclusion is clear: "Intergenerational mobility in the U.S. has not changed dramatically over the last two decades." Bhashkar Mazumder, a Federal Reserve Bank of Chicago economist, recently combined the government survey with Social Security records for thousands of men born between 1963 and 1968 to see what they were earning when they reached their late 20s or 30s. Only 14% of the men born to fathers on the bottom 10% of the wage ladder made it to the top 30%. Only 17% of the men born to fathers on the top 10% fell to the bottom 30%. Why aren't the escalators working better? Figuring out how parents pass along economic status, apart from the obvious but limited factor of financial bequests, is tough. But education appears to play an important role. In contrast to the 1970s, a college degree is increasingly valuable in today's job market. The tendency of college grads to marry other college grads and send their children to better elementary and high schools and on to college gives their children a lasting edge. The idea that children of smart, successful people are also smart and successful is appealing, and there is a link between parent and child IQ scores. But most research finds IQ isn't a big factor in predicting economic success. Race Is a Factor In the U.S., race appears to be a significant reason that children's economic success resembles their parents'. From 32 years of data on 6,273 families recorded by the University of Michigan survey, American University economist Tom Hertz calculates that 17% of whites born to the bottom 10% of families ranked by income remained there as adults, but 42% of the blacks did. Perhaps as a consequence, public-opinion surveys find African-Americans more likely to favor government redistribution programs than whites. The tendency of well-off parents to have healthier children, or children more likely to get proper treatment for their health problems, may also play a role. "There is very powerful evidence that low-income kids suffer from more health problems, and childhood health does predict adult health and adult health does predict performance," observes Christopher Jencks, a Harvard sociologist. Passing along personality traits to one's children may be a factor, too. Economist Melissa Osborne Groves of Maryland's Towson University looked at results of a psychological test for 195 father-son pairs in the government's long-running National Longitudinal Survey. She found similarities in attitudes about life accounted for 11% of the link between the income of a father and his son. Nonetheless, Americans continue to cherish their self-image as a unique land where past and parentage puts no limits on opportunity, as they have for centuries. In his "Autobiography," Franklin wrote simply that he had "emerged from the poverty and obscurity in which I was born and bred to a state of affluence." But in a version that became the standard 19th-century text, his grandson, Temple, altered the words to underscore the enduring message: "I have raised myself to a state of affluence … ." Do you believe that most Americans have the opportunity to be more economically successful than their parents? Write to us. |
|
||||||||
|
about
us | contact us
| subscribe | sponsor
| advertise | privacy
statement | home
Copyright © 2008 Dow Jones & Company, Inc. All rights reserved. 
|
|||||||||
But
over the past 10 years, better data and more number-crunching have
led economists and sociologists to a new consensus: The escalators
of mobility move much more slowly. A substantial body of research
finds that at least 45% of parents' advantage in income is passed
along to their children, and perhaps as much as 60%. With the higher
estimate, it's not only how much money your parents have that matters-even
your great-great-grandfather's wealth might give you a noticeable
edge today. 
