The truly stagnant class in American society are young men from low-income backgrounds

Version 2In this blog post @ucdpolitics student, Muireann O’Shea, examines why America tends to look back upon the past with nostalgia, and to what extent this is bound up with perceptions of social mobility and the America Dream. The period of 1950 to 1980 saw the lowest income inequality ever in modern American history, with the top decile taking 30 to 35% of US National Income, which has increased to over 50% today (Piketty, 2014, p. 294). Economic policy in post World War II America used an increase in minimum wage to increase wages at the lower end of scale, but by the end of the 1970s, this was replaced by stark increases in pay at the very top of the income scale, leading to an “explosion of inequality” (Piketty, 2014, pp. 310-4). American minimum wage peaked in 1969 at $1.60, or $10.10 in 2013 dollars, and unemployment was below 4% (Piketty, 2014, p. 309). Yet by the end of the 1970’s rates of upward social mobility had stalled, and it has barely moved since (Surowiecki, 2014).

The late baby boomers, those born to middle class families of the fifties and that came of age in the seventies, will probably be the last generation to experience lifetime upward mobility (Longman, 2015). Yet, Americans still have strong in their concepts of the American Dream or American Exceptionalism. The American Dream is the belief that every person has the opportunity to climb from the lower levels of the social ladder up to financial prosperity (Cummins, 2013). American exceptionalism is the concept that the United States is a nation that stands apart from the rest of the world, and that, since it’s independence from Britain in 1776, it has lead the way in creating a state of freedom and equality for the ‘hard-working’ middle class (Lind, 2015). But is this empirically true?

A study in 2001 showed that the majority of Americans believe that their country has high levels of economic mobility, that their levels of income inequality are moderate and that hard-working Americans are generally rewarded for their efforts (Issacs, 2016). It seems that, regardless of the growing data on the extreme levels of income inequality in the USA, perceptions of social mobility have blurred public opinion to the structural effects of income inequality (Piketty, 2014, p. 299). But the data on social mobility is rather stark. The evidence suggests that there is a particularly low rate of mobility for men among the lowest income deciles (Jäntti et al., 2006, p. 27). Social mobility for men in the poorest deciles has barely improved at all.

Today, when the data is adjusted for inflation, middle-class families have the same earning power as middle-class families in 1979 (Longman, 2015). Yet, the people that lived behind these statistics in 1979 are not the same people living in middle class families now. In fact, one third of all children raised in American middle class families in the 1970’s has dropped below middle class during their adulthood (Longman, 2015). Two thirds of Americans have household incomes greater than that of their parents, even though cost of living had increased, household size has decreased, allowing many middle class families to be better than their parents at their age (Winship, 2011). The middle class is often referred to as ‘stagnant’, but it is probably the most fluid section of the social scale. The true ‘stickiness’ lies at the very top and the very bottom, where the ability or probability of social mobility is miniscule (De Parlejan, 2012).

It is in fact the ‘stagnant’ middle class that uphold the belief in the American Dream, it has been suggested that the poor classes of American society do understand their miniscule chances of upward social mobility (Jäntti et al., 2006). Between 1950 and 1970, the average earnings of a male worker had increased by approximately 25% (Greenstone and Looney, 2011). In the face of the Vietnam war, when college enrollment would excuse student from constriction to the war effort, university enrollment for men soared, as a result, there was a temporary compression of the wage gap due to the influx of skilled labour (Greenstone and Looney, 2011). The wage gap eventually began to increase at the end of the 1970s, when the number of college attendees peaked (Piketty, 2014, p. 306).

The truly stagnant class in American society are young men from low-income backgrounds (Jäntti et al., 2006, p. 27). On the cusp of the seventies, the average male worker with only a high school qualification was earning 55% less than the average male full time worker with a college degree, whereas at the beginning of this decade, the average male college graduate was earning 116% more than his counterpart with only a high school diploma (Greenstone and Looney, 2011). Moreover, this increase in income inequality is not simply due to an increase in pay for college graduates, but also a decline in pay for unskilled male workers, considering that, in 2009, the average male worker with only a high school qualification was earning 47% less than their counterparts in 1969 (Longman, 2015).

In the US, a dismal 8% of sons who grew up with fathers in the bottom fifth of the earnings scale managed to move up to the top two fifths of the scale by 2000 (Winship, 2011). 42% of men whose fathers were in the bottom fifth of the income scale remained there until adulthood, 10% more than many European countries (De Parlejan, 2012) In 1970, the amount of ‘prime aged’ men receiving social security disability insurance was 2.4%, by 2009, that figure had doubled to 4.8% (Greenstone and Looney, 2011).

On the opposite end of the scale, in the 21st century it is estimated that 40% of children born into the top fifth of the income scale will remain there throughout their adulthood (Winship, 2011). There is a sense of legacy associated with the elite, ivy league schools, complacency of the rich kids. A study by Cummins (2013) correlating surnames to wealth shows that the offspring of the 19th century elite class as still richer than average today, and that contrary to popular belief, social class may persist in families for 20 generations.

America is, in essence, a nation of fifty different nations. Social Mobility rates in Salt Lake City alone are on par with the rest of the developed world, while rates in Mississippi are incredibly lower than the average in the rest of the developed world (Surowiecki, 2014). Potential for upward mobility from the bottom classes of America society can be far too easily hindered by race, divorced parents, unplanned pregnancy or a lack of college education (Winship, 2011). Taking private money away from political campaigns would open the political sphere to participation from all rungs of the social ladder (Pinsker, 2015). High tuition fees mean that access to higher education is incredibly unequal (Piketty, 2014, p. 485). There will always be a lower class, but America needs to reduce many of it’s economic barriers to upward mobility, (Winship, 2011).

It is important to mention though, that parents pass on a lot more than just their class standing to their children, and the equality of opportunity that a child possesses can be influenced, regardless of their class, by their parent’s genetic ability, cultural beliefs and social connections (Corak, 2006). Also, that it is quite possible that rates of social mobility are immune to government intervention and institutional influence (Cummins, 2013). If that is the case, it would be best to forget about increasing upward social mobility and focus public policy on improving universal standards of living (Surowiecki, 2014).

The American Dream might actually exist for some middle class families, but for those who truly need it, the men at the bottom of the income scale, the American Dream is nothing more than a sardonic fable that has not contained an ounce of reality since the 1970’s.

Muireann O’Shea is a 20-year-old student at University College Dublin. She is currently in her second year of studying for a bachelor’s degree in Politics and History. Her areas of interest include the social and political history of Ireland and America. She completed this blog as part of her module on Capitalism and Democracy.

Bibliography

Acs, G. (2011) ‘Downward Mobility from the Middle Class: Waking Up from the American Dream’, The Pew Charitable Trusts Economic Mobility Project, September. Available at: http://www.pewtrusts.org/~/media/legacy/uploadedfiles/pcs_assets/2011/middleclassreportpdf.pdf?la=en (3 Nov 2016).

Corak, M. (2006) ‘Do Poor Children Become Poor Adults? Lessons from a Cross Country Comparison of Generational Earnings Mobility’, IZA Discussion Paper No. 1993, March. Available at: http://ftp.iza.org/dp1993.pdf  (3 Nov 2016)

Cummins, N. (2013) ‘We live in a world where social class is strongly inherited’, London School of Economics and Political Science, 9 Nov. Available at: http://blogs.lse.ac.uk/europpblog/2013/11/09/we-live-in-a-world-where-social-class-is-strongly-inherited/  (3 Nov 2016).

DeParlejan, J. (2012) ‘Harder for Americans to Rise From Lower Rungs’, The New York Times, 4 Jan. Available at: http://www.nytimes.com/2012/01/05/us/harder-for-americans-to-rise-from-lower-rungs.html?_r=0 (3 Nov 2016).

Greenstone, M. and Looney, A. (2011) ‘Trends: Men in Trouble’, The Milken Institute Review, Third Quarter, pp. 8-16. Available at: http://assets1c.milkeninstitute.org/assets/Publication/MIReview/PDF/08-16MR51.pdf (3 Nov 2016).

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Jäntti, M., Røed, K., Naylor, R., Björklund, A., Bratsberg, B., Raaum, O., Österbacka, E. and Eriksson, T. (2006) ‘American Exceptionalism in a New Light: A Comparison of Intergenerational Earnings Mobility in the Nordic Countries, the United Kingdom and the United States’, IZA Discussion Paper No. 1938, Available at: http://ftp.iza.org/dp1938.pdf (3 Nov 2016).

Lind, M. (2015) ‘How the South Skews America’, Politico, 3 July. Available at: http://www.politico.com/magazine/story/2015/07/how-the-south-skews-america-119725 (3 Nov 2016).

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Piketty, T. (2014) Capital in the Twenty-First Century. Harvard: Belknap.

Pinsker, J. (2015) ‘America is even more socially mobile than most economists thought’, The Atlantic, 23 July. Available at: http://www.theatlantic.com/business/archive/2015/07/america-social-mobility-parents-income/399311/ (3 Nov 2016).

Surowiecki, J. (2014) ‘The Mobility Myth’, The New Yorker, 3 March. Available at: http://www.newyorker.com/magazine/2014/03/03/the-mobility-myth (3 Nov 2016).

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Winship, S. (2015) ‘Does America have less economic mobility? Part 1’, Economics21, 22 April. Available at: http://economics21.org/html/does-america-have-less-economic-mobility-part-1-1302.html (3 Nov 2016).

 

 

 

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