6 Things to Know about Economic Mobility (or Lack Thereof) in the US


April 9, 2015

Last week, I attended a conference with a very long name addressing a very big problem. The Federal Reserve System Community Research Conference; Economic Mobility: Research and Ideas on Strengthening Families, Communities and the Economy was two days of presentations and discussions about the many aspects of economic mobility – or lack thereof – in our country. The conference attempted to address questions like 1) how financial factors (like income, savings, and family wealth) affect a person’s ability to move up the economic ladder relative to their peers, their parents, or themselves over time; 2) how location, neighborhoods and communities affect someone’s ability to move up the ladder; and 3) how a lack of economic mobility affects our nation’s broader economy.
There were many insightful speakers, including Janet Yellen, Chair of the Federal Reserve System, and Joseph Stiglitz, a winner of the Nobel Prize in economics. Several of the speakers shared useful and interesting research that we’ll highlight in future posts on the blog, but for now, let’s start with the top 6 things I took away from the event:

  1. We are not currently a land of equity in opportunity. The chance that a child raised in the bottom fifth of the income distribution in the U.S. will make it to the top fifth is very slim – only between 4 percent and 7.5 percent, depending on which study you look at. We have a long way to go to get to being a nation with a level playing field, where everyone who works hard and plays by the rules can get ahead. The problems of income inequality, wealth inequality, inequality of opportunity, and lack of economic mobility are large and persistent.
  1. Quality education matters a lot. But it’s not a cure-all. Most of the speakers agreed that we need more investments in, and access to, quality education at all levels, from early childhood to college. To paraphrase Eric Hanushek’s presentation, the quality of schooling received is critical – if you go to school and don’t learn anything, it doesn’t count.Others, though, did point out that academic credentials – and the connections to make best use of them – will come way more easily to upper income young people, even ones who haven’t learned much. Children born to the highest-income families in 1993 were almost 70 percent more likely to attend college than those from the lowest-income families. As Robert Putnam put it in his remarks, “Rich dumb kids are more likely to complete college than smart poor kids.” So while quality education is a lynch pin to moving up the economic ladder, other factors play a role in keeping low-income smart kids from doing so.
  1. Place matters a lot. Whether we’re talking geographic part of the country or the particulars of a child’s environment (like family structure, poverty rate of the neighborhood), the place where a child grows up has a big impact on that’s child ability to move up the economic ladder. There was much discussion about whether we should focus on improving disadvantaged communities where they are or help individuals and families move to less-distressed neighborhoods. Both help children and families have a greater chance of getting ahead.
  1. Inequality and lack of mobility are worse for people of color. No kidding. This has been shown in research time and time again, but it’s still just as striking and just as important to keep in mind as we continue to look for policies to affect positive changes.
  1. More investments are needed. We cannot build towards shared prosperity without hiring more teachers, modernizing infrastructure, and ensuring that our workers are as productive as possible because they have had good nutrition and health care. Again, this is something advocates know, and it’s why we do the work we do. However, as the budget resolutions passed recently by the House and Senate, it’s not something everyone in the country agrees upon.
  1. Changes are needed at the national, state, and local levels. There were differences of opinion on what matters most in creating economic mobility and reducing inequality among the economists, policy makers, and service providers attending the conference. The good news is there is a lot of interest in this problem and a lot of promising proposals. And there was some consensus on steps that would help – more quality early childhood development, more and better jobs, better wages, and programs that help parents (like paid leave). There was also consensus that change is needed at all levels – national, state, and local. The bad news is not all policy makers agree on solutions, and implementing changes big enough to match the scope of the problem will not come easily.

Stay tuned to this blog (subscribe here if you haven’t already) for more on specific research that was presented and for information on how you can be a part of the change we need to make happen. For ways you can get involved now to impact programs covered by the Congressional budgets, click here.


[Photo Credit: Mykl Roventine via Flickr]

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Poverty and Income