America is the land of the “American Dream,” where, according to James Truslow Adams, “Each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position.”
And yet, recent research shows that social mobility is not a vibrant as a Horatio Alger novel implies. There are two ways to measure social mobility. The first is to see how children compare to their parents, and the second is to see how individuals fare over time. On both counts, the United States is rather dismal. The chart below comes from a 2008 Brookings Institution study and shows inter-generational mobility. It shows the percentage of sons who remained in the same income bracket as their father. I re-created the chart with just the bottom quintile, and the result is depressing: some 40% of children with a poor father remain poor, while only 8% will make it to the highest income bracket. In Sweden, the corresponding numbers are 26% and 11%.
American also fails to facilitate lifetime mobility. The following chart is compiled from Treasury Department data comparing tax returns from 1996 and 2005. The color of the bar corresponds to the individual’s earnings in 1996. So those who were in the highest quintile in 1996 (purple bar) make up a whopping 70% of those in the highest bracket in 2005. Those in the lowest bracket in 1996 (blue bar) make up a dismal 5% of those in the highest bracket in 2005.
Economists measure what is called “inter-generational elasticity,” essentially, how sticky earnings are. Inter-generational elasticity measures how much of each dollar earned by a father is passed on to his son. If a society has high mobility, a child’s earnings will be determined on their own merits, rather than their father’s. So a high IGE score means low social mobility. Unsurprisingly, the United States has a high IGE score, as seen below in a chart made from data compiled by Miles Corak.
America’s IGE has increased from .297 in 1950 to .545 in 2000, indicating that social mobility has decreased dramatically. Various economists, including Corak, Dan Andrews, and Alan Kreuger have noted the uncanny correlation between inequality and social mobility, and both historically in the United States and internationally the correlation has held up solidly. But why? The most important factor in social mobility is education, and the United States has been educating not only poorly, but unequally, for the last few decades.
A 2011 study for the National Bureau of Economic Research by Martha J. Bailey and Susan M. Dynarski finds that between 1979 and 1997, “the gap in the college-entry rate between the bottom- and top-income quartiles increased from 39 to 51 percentage points.” This shift is largely due to poverty, not cognitive ability. The authors write, “Even among those who had the same measured cognitive skills as teenagers, inequality in college entry and completion across income groups is greater today than it was two decades ago.” Read that twice. Between roughly 1980 and 2000, the gap between poor students going to college and rich students increased by 10 percentage points. Worse, that gap held for students with the same cognitive ability.
The National Center for Education Statistics confirms the trend. A 2003 study examined how many students who graduated eighth grade in 1988 had a bachelor’s degree by 2000. What it discovered is that among students with the highest cognitive ability but the poorest parents, 29% of students had a bachelor’s degree. Among students with the lowest cognitive ability but the richest parents, 30% had a bachelor’s. If you want a college degree, you are better off being born rich and dumb than poor and smart. A report by the Century Foundation, aptly titled "Left Behind," finds, “Seventy-four percent of students at the nation’s top 146 colleges come from the richest socioeconomic quartile and just 3% come from the poorest quartile. Put differently, one is 25 times as likely to run into a rich student as a poor student at the nation’s top 146 colleges.”
Much of the college gap occurs because of events earlier in life: Poor children have little access to preschool, poor mothers cannot take time off work, the United States does not guarantee paid leave, and a 2011 Department of Education report confirmed that poor school districts receive less federal funding than rich ones. It appears the American Dream may well be just that – a dream. Until we improve our education system, it will remain that way.
In many ways, I think these types of statistics are responsible for a lot of the “millennial apathy” that we are catching so much flack for. We were promised meritocracy and we got nepotism. Look at the evidence. In Hollywood you have the Arquettes, Sheens, Douglases, Coppolas, Baldwins, Afflecks, Gyllenhaals, Goldie Hawn-Kate Hudson, Aaron Spelling-Tori Spelling, and Colin Hanks. IMDB has a list here. In politics you have Liz Cheney who benefitted immensely from her father’s dictatorial penchant for appointing loyal advisors to accrue more power. She scored a State Department job that was specially created just for her! How lucky! Her husband also got a nice little bonus from his father-in-law, a job as chief counsel for Office of Management and Budget. Then you have the Adams family, Bush family, Kennedy clan, Ulysses S. Grant handing out patronage to his relatives, the Roosevelts, the Gores, and the Clintons, just to name a few.
It’s called the “American Dream,” George Carlin once said, “because you have to be asleep to believe it.” Sad but true.