Demographics of Social Mobility

Earlier this month, President Obama got a lot of attention for a speech in which he emphasized the importance of renewing our national commitment to social mobility. The problem is not just that the top 10 percent of US earners bring in 50 percent of the nation's income. At least as important is that it is now harder than it used to be (maybe even harder than ever) to make it into that top economic rung of American society. Garannce Franke-Ruta of the Atlantic confirmed with the White House that the social science behind the President's speech came from a presentation made in 2012 by Harvard Political Scientist Robert Putnam of "Bowling Alone" fame. The point here is that social mobility needs to be the topic under discussion, rather than focusing on race and/or poverty. Bill Keller's Op-Ed in the New York Times defines the potential consequences of not doing something about the lack of mobility:

A stratified society in which the bottom and top are mostly locked in place is not just morally offensive; it is unstable. Recessions are more frequent in such countries. A widely praised 2012 book, “Why Nations Fail,” argues that historically when the ruling elites have pulled up the ladder and kept newcomers from getting a foothold, their economies have suffocated and died. “The most pernicious fact of inequality is when it translates into political inequality,” said Daron Acemoglu, a co-author of the book and a Massachusetts Institute of Technology economist. “That means our democracy ceases to function because some people have so much money they command greater power.” The rich spend heavily on lobbyists and campaign donations to secure tax breaks and tariff advantages and bailouts that perpetuate their status. Not only does a dynamic economy stagnate, but the left-out citizenry becomes disillusioned and cynical. Sound familiar?

One of the problems in trying to create policy initiatives to deal with the lack of mobility is that we actually don't have good data on the topic. Recognizing this deficiency, the National Research Council organized a workshop on how to create such data and the report just came out on Christmas Eve and will hopefully be a blueprint for new data collection that will allow us to monitor how various policies are (or are not) working.

A root cause (if not the major cause) of the slow down in social mobility will be very complex to deal with. The manufacturing jobs that existed for a few decades and helped to create a broader middle class have been transferred to developing countries where growing populations work for lower wages, or have been transferred to robots or computers that also work for lower wages. These jobs are unlikely to return, so a whole new segment of the economy needs to be invented. My own suggestion would be that this new segment be oriented toward redefining our use of resources--figuring out how to quite literally redefine what we mean by our standard of living. This almost certainly will require some government initiatives, but there is no reason why a public-private partnership could not be created to move such an idea forward. This could even be wrapped into the unemployment benefit issue by creating a new "conservation corps" of people who are working on such programs at government expense until they can be picked up by the private sector.