Monday, January 25, 2016

What is economic mobility?

Tim wrote a thoughtful rebuttal to my posts on economic mobility, but it seems we’re at least partly talking past one another.

One of Tim’s central arguments is that some of the studies I highlighted miss the point he has in mind—whether “someone from a poor or lower-income family has the same or better chance of attaining such a position than in an earlier generation”—and instead reflect the fact that part-time high school and college workers rise to higher income brackets over time.

But whether someone poor rises relative to his predecessors’ position is separate from whether people remain stuck at a given income level over time, which is the view promulgated by the media and our cultural elite, and which the studies I cited by the U.S. Treasury, the Federal Reserve and the University of Michigan debunk. Most people in the United States rise to higher income quintiles as they gain education and experience. Economic stagnation is a myth.

The question of whether the impoverished have a better chance of rising than in an earlier generation is one that’s trickier to assess. Statistics alone may not provide the answer. For instance, certain groups may remain destitute over periods of time, which would seem to indicate a lack of mobility, but that cannot be assumed to be due to a lack of economic opportunity. As my former colleague and current Chamber of Commerce economist JD Foster points out, “What if someone's choices (education, personal habits, attitude) preclude their doing better?  Is it then society's fault they fail to prosper?  Alternatively, what if someone consistently does great work.  Is the system failing when they stay "rich"?”

That is why I argued that, to the extent that certain groups may remain impoverished, and among other factors, my view is that our expanded welfare state combined with the absence of middle-class values at least partly encourages immobility. 

Perhaps a forthcoming post will explore the idea, but the case is compellingly presented in books such as “Losing Ground,” “The Dream and the Nightmare,” and “Life at the Bottom.”

The larger point, however, is that Tim and I differ partly due to the fact that we’re emphasizing different aspects of mobility. With respect to the idea that people in the middle- or lower-income groups stagnate year after year, the data clearly demonstrates that isn’t the case.

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