What’s the Deal With Income Mobility? A Next City Explainer – Next City
The Equity Factor

What’s the Deal With Income Mobility? A Next City Explainer

Everyone from President Obama to Rep. Paul Ryan has trumpeted the lack of economic mobility in this country. It’s a talking point our barking politicians can agree on. Now, if they could only agree on policy to address the staggering gap.

Much ink has been spilled on the issue, starting with a marquee study from researchers at Harvard and UC Berkeley released this summer. That same group is back with another study informing us that mobility hasn’t changed in half a century here in the U.S. We’re here to sort through the details for you.

So what’s the deal with economic mobility?

It’s essentially climbing the ladder. According to new research, kids growing up in the bottom fifth of income distribution today have the same chance of reaching the top echelon of earners later in life as children did 50 years ago.

Nothing has changed in half a century, huh?

Nope! Look at the chart below. The probability of reaching the top fifth of earners by age 26 has remained practically unchanged.

That’s not very promising. I thought things were getting better?

Sure, we’re slowly climbing back from the Great Recession. But while mobility has remained stagnant for 50 years, income inequality has only widened, frighteningly so. The researchers provided this handy graph Microsoft Clip Art you see below. Basically, as the illustration says, “the rungs of the income ladder have grown further apart.”

Sounds like opportunity is stacked at the top.

Rising incomes in the top fifth allow those parents to invest in their children, which only widens the gap. “The level of opportunity is alarming, even though it’s stable over time,” Emmanuel Saez, one of the study’s authors, told the New York Times this month. It’s a cycle that’s very difficult to break.

Is this a widespread problem across the country?

Sort of. Some areas, like San Francisco and Salt Lake City, have mobility rates similar to Western Europe. Whereas Atlanta, Charlotte and the much-maligned Midwest — don’t call it the Rust Belt! — have much lower mobility. “The key issue in our view is not that prospects for upward mobility are declining in the U.S. as a whole,” the authors write. “But rather that some regions of the U.S. persistently offer less mobility than most other developed countries.” So yes, it’s absolutely a nationwide problem — some regions are just better off than others.

What sort of impact does inequality have on a city’s economic vitality?

If we’re talking about New York, nothing! It has Wall Street to fall back on, though some experts think that inequality is a predictor of poor economic success. Basically, the more diverse and inclusive a city is, the more robust economic growth can be.

The Equity Factor is made possible with the support of the Surdna Foundation.

Bill Bradley is a writer and reporter living in Brooklyn. His work has appeared in Deadspin, GQ, and Vanity Fair, among others.

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Tags: economic developmentincome inequalityequity factorpoverty