The American dream is a bit of an elusive concept to define. To some, it means home ownership, to others job prosperity. As someone who came from a poor immigrant family, to me, the American dream, has always been the idea that anyone, no matter what circumstances or socio-economic bracket they were born into, they still have the opportunity to succeed and live a happy and prosperous life.
To put this into terms of something that is statistically measurable, we can take a look at the probability that a child born to parents in the bottom fifth of the income distribution makes the leap to the top fifth of the income distribution – otherwise known as economic mobility.
The State of Economic Mobility
In the United States, children born to parents in the bottom fifth of the income distribution have a 7.5 percent chance of reaching the top fifth themselves. That compares with about a 9.0 percent chance in the United Kingdom, 11.7 percent in Denmark, and 13.5 percent in Canada. These numbers all may seem low at first, but it’s important to remember that regardless of policy, it’s impossible to have more than 20 percent of people in the top 20 percent.
Interestingly, economic mobility actually varies substantially throughout the United States. A couple weeks ago, we shared this map on our blog; which calculates upward mobility for every metro and rural area in the United States using anonymous earnings records on 40 million children and their parents.
This map has significant implications. For people living in the the lightest colored areas, their odds of reaching the top fifth conditional on starting in the bottom fifth exceed 16.8 percent– that’s higher than the numbers we saw for Denmark and Canada. In contrast, at the other end of the spectrum —the darkest red colors— show that number at lower than 4.8 percent, which is actually lower than any developed country for which data is available.
The table below lists upward mobility statistics for the 50 largest metro areas, focusing on the 10 cities with the highest (on the left) and lowest (on the right) levels of upward mobility. It’s clear from the map and table that low economic mobility is currently an issue in Ohio.
Why it Matters
The traditional arguments for greater economic mobility are usually based on principles of justice and the principle of equality of opportunity. But improving opportunities for upward mobility actually has broader benefits. Research has repeatedly shown that increased mobility leads to faster and greater levels of overall economic growth for everyone, and reduces poverty levels. Hence, increasing mobility is of interest not just from the perspective of justice but also from the perspective of economic growth.
The Causes
After seeing how greatly economic mobility can vary from community to community, the next logical question becomes: “why?”. Why is it that places like Salt Lake City (10.8%) or San Jose (12.9%) are generating such high levels of upward mobility, and what can we do to get Ohio to that level?
A study done by Stanford University points out five main factors that strongly correlate with economic mobility:
- Mixed-income communities tend to produce better outcomes for kids from disadvantaged backgrounds.
- Areas with less income inequality tend to have higher rates of upward mobility.
- Areas with more stable family structures—in particular, areas with fewer single parents—have substantially higher rates of upward mobility.
- Areas that are more socially cohesive, with large amounts of social capital, also have much higher rates of social mobility.
- Areas with better public schools tend to have much higher rates of upward mobility.
What We Can Do
Too often we think of economic mobility only on the national level. But it is important to remember that place matters in enabling intergenerational mobility. Thus, it’s critical and effective to tackle social mobility at the local level.
Discussion
What can your community do address the main factors above, such as improve income inequality, support non-traditional families, boost social capital, and support public schools?
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I was hoping for a more detailed report. I am left with these questions: 1. Is the study and author assuming all people want to live in the upper 20% of income range? Many people I know are content to live a comfortable life in the middle and believe that having more money brings more problems they prefer not to have. 2) Why does “the community” need to change? Americans give to charities at the highest rate in the world. And the government spends 70% of our taxes on SS, Medicare, Health, Income Security and Veterans Benefits. ( http://www.pewresearch.org/fact-tank/2017/04/04/what-does-the-federal-government-spend-your-tax-dollars-on-social-insurance-programs-mostly/ ) 3) The concept of personal responsibility, positive attitude and work ethic seems to never get discussed. Trying to make society change never seems to work. However, helping people to help themselves through the changing of attitudes and behaviors never seems to get discussed.
Hey June,
Thanks for the comment! To address your questions: We agree that it doesn’t have to be everyone’s goal to “make it” to the top 20% income range. If you’re content you’re content! But our focus is on equitable opportunity. It makes sense that helping others help themselves is an important factor in all of this. In fact, we think this IS a part of societal change. In the outline above of the causes of high economic mobility it’s not suggesting we should give “handouts”, simply pointing out how the integration of income levels and increasing access to social capitol can create that equitable opportunity. This then leads to more economic growth for everyone and can reduce poverty levels within your community.