RIP, American Dream? Why It's So Hard for the Poor to Get Ahead Today

[xchrom]

http://www.theatlantic.com/business/archive/2013/06/rip-american-dream-why-its-so-hard-for-the-poor-to-get-ahead-today/276943/



The American Dream isn't dead. It's just moved to Denmark.

Now, we like to think of ourselves as a classless society, but it isn't true today. As the Brookings Institution has pointed out, America has turned into a place Horatio Alger would scarcely recognize: we have more inequality and less mobility than once-stratified Europe, particularly the Nordic countries. It's what outgoing Council of Economic Advisers chief Alan Krueger has dubbed the "Great Gatsby Curve" -- the more inequality there is, the less mobility there is. As Tim Noah put it, it's harder to climb our social ladder when the rungs are further apart.

And it's getting worse.

Inequality is breeding more inequality. It's a story about paychecks, marriage, and homework. Now, it's not entirely clear why the top 1 percent have pulled so far away from everyone else, but there's a long list of suspects. Technology has let winners take, if not all, at least most, in fields like music; deregulation has set Wall Street free to make big bonuses off big bets (and leave taxpayers with the bill when they go bad); globalization and the decline of unions have left labor with far less leverage and share of income; and falling top-end tax rates have exacerbated it all. But high-earners aren't just earning more today; they're also marrying each other more. It's what economists romantically call "assortative mating" -- and Christine Schwartz, a professor of sociology at the University of Wisconsin, estimates inequality would be 25 to 30 percent lower if not for it.

Marriage is widening inequality today, and keeping it wide tomorrow. Well-off couples get married more, stay together more, read to their children more, and otherwise have more time and money to spend on their children's education. As the New York Times points out, economists Richard Murname and Greg Duncan have found that high-income couples have poured resources into the educational arms race at a prodigious pace the past generation. For one, the amount of time college-educated parents spend with their kids has grown at double the rate of others since 1975; for another, high-income households invested 150 percent more in "enrichment activities" for their kids from 1972 to 2006, compared to a 57 percent increase for low-income households.

It's paying off. As Jonathan Cohn of The New Republic points out, early cognitive development has long-lasting consequences that can leave less-lucky children behind from the moment they start school -- and keep them there. But even when kids from low-income households do outperform those from high-income households, it's far from a guarantee that they'll end up earning more as an adult. Indeed, Matt Bruenig highlights the chart below from the Pew Economic Mobility Project that shows that rich kids without a college degree are 2.5 times more likely to end up rich than poor kids who do graduate from college.

[abelenkpe]

1. K&R

"...rich kids without a college degree are 2.5 times more likely to end up rich than poor kids who do graduate from college."

[marmar]

2. k/r

[davidn3600]

3. In America, you pretty much remain in the economic class you were born into

Been that way for years.

[ReRe]

4. Like in India's caste system :-( n/t

[handmade34]

5. "...why the 1 percent have pulled so far away..."

?? easy... money and security trumps all (at the expense of humanity and the environment)

the wealthy write the rules and the rest are way too complacent... the 99% need to revolt and until we do, the status quo remains



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[Triana]

6. "the 99% need to revolt and until we do, the status quo remains"

THAT.

[HughBeaumont]

9. I disagree with that sign.

Capitalism has already £ailed.

[CrispyQ]

11. The revolt needs to be on a global scale. --nt

[HughBeaumont]

7. Conservative economic policies.

Three words that explain, since 1981, nearly every problem we experience today.

K&R.

[Recursion]

8. How do immigrants manage it?

Serious question; I've never quite understood why immigrants do so much better than people born here.

[Starry Messenger]

12. ?

There are high rates of poverty in families who immigrated.

http://www.migrationinformation.org/USfocus/display.cfm?ID=188

In 1970, poverty rates of children of immigrants were lower than among children of natives. But by 1980, only ten years later, this pattern had reversed itself. During the 1980s, poverty rates continued to diverge between immigrant and native families. In both 1990 and 2000, poverty rates among children of immigrants were 50 percent higher than among children of natives. As of 2000, over one-fifth of children of immigrants compared with 15 percent of children of natives and only nine percent of non-Hispanic white children were classified as poor. Among children of Mexican immigrants, the largest and most disadvantaged national origin group, one-third were poor.

<snip>

The New Economy. Another explanation for the increase in immigrant child poverty relates to the fact that economic returns to education, employment, and work experience have declined. Since 1979, earnings growth has been confined to those with a college degree. Those who did not complete high school experienced a 30 percent decline in real wages. Rising wage inequality has been attributed in part the formation of an "hourglass" economy, in which jobs for skilled and semi-skilled workers in manufacturing have declined relative to both highly paid professional occupations at the top and dead-end service-sector jobs at the bottom of the pay scale.

The "hourglass" structure of today's economy has made it more difficult for new arrivals—many of whom start out with low levels of education—to work their way up the job ladder. It takes more education, employment, and experience in the United States to lift children out of poverty today than 30 years ago. For example, even after accounting for other factors, poverty levels tend to be much higher for children of parents with a high school education or less than for children of parents who went to college. Even more important, poverty levels among those with low education increased significantly in the past three decades, particularly during the 1980s.

<snip>

[marmar]

13. Thanks for that. Facts are good things.

[Recursion]

14. Huh. Thanks. Goes against my life anecdotes, but good to know (nt)

[Starry Messenger]

16. I teach in CA.

I see it close up.

[Fumesucker]

15. My parents were immigrants, they were doing well until cancer struck them down

They both died penniless thanks to medical bills.

Bear in mind that the immigrants we get today are not the old Ellis Island "huddled masses" but tend to be better educated and with more resources than many natives. The educated immigrants have often been educated in a system that does not leave them drowning in debt just for getting that education.

[Recursion]

17. So sorry to hear that. I know two "groups" of immigrants, for the most part

One, the people who opened the businesses in my DC neighborhood. Two, my wife's family and their friends (Bengali and Indian immigrants to the Bay Area, who did the literal "show up with the shirt on their back and $50" thing, though they had a support network of other immigrants).

Bear in mind that the immigrants we get today are not the old Ellis Island "huddled masses" but tend to be better educated and with more resources than many natives.

Interesting point. Have you ever read Isabelle Wilkerson's The Warmth of Other Suns? She talks about that both in the context of African-American migration within the US and European immigration to the US at the same time. Her main point (which fascinates me) is that there was a greater number of person-miles travelled in the African American Great Migration from 1900 to 1970 than by European immigrants to the US in the same period, but what's relevant here is that she shows that both African American movers and European immigrants actually had higher average educational attainment than the native-born whites they were moving in amongst.

[Fumesucker]

18. Doesn't surprise me

Even though they weren't formally extremely well educated my parents tended in America to move with a well educated set that were surely cultural elite if not financial although there was a lot of that too.

I think coming to America in that era allowed European "commoners" who were bright and/or well educated to move up a class level or two on average, something that was difficult in Europe at the time. There's some of that still going on today I think.

Americans wouldn't tend to notice the class differences that are so obvious to those raised in another country, you just have a funny accent, for the most part it's neither higher nor lower class and doesn't brand you in the same way an uneducated sounding native accent does.

[reformist2]

10. The free market drives wages to subsistence levels.

It's increasingly obvious that without government mandatory minimums - and more than that, active redistributionist programs - there is no way a middle class could exist in an otherwise "capitalist" economy.

[progressoid]

19. "And it's getting worse."

Amen.