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Kickin' Ass and Takin' Names
Guest
The American Dream Is Alive and Well ... in Finland!
By Joshua Holland, AlterNet
Posted on December 11, 2007, Printed on December 13, 2007
http://www.alternet.org/story/70103/
Fewer than 1 percent of Americans are millionaires, but almost one in
three believe they'll end up among that group at some point.
The belief that our chance of moving up the economic ladder is limited
only by our innate abilities and our appetite for hard work is almost
universal in the United States. When you define the "American Dream"
as the ability of working-class families to afford a decent life -- to
put their kids through school, have access to quality healthcare and a
secure retirement -- most will tell you it simply doesn't exist
anymore. In stark contrast, when you define it according to mobility,
the picture is radically different; according to a study of public
opinion in 25 rich countries, Americans are almost twice as likely to
believe that "people get rewarded for intelligence and skill" than
working people in other advanced economies (PDF). At the same time,
fewer than one in five say that coming from a wealthy family is
"essential" or "very important" to getting ahead -- significantly
lower than the 25-country average.
It's impossible to overstate the impact that has on our policy
debates. Americans are less than half as likely as people in other
advanced economies to believe that it's "the responsibility of
government to reduce differences in income." Working Americans are
parties to a unique social contract: They give up much of the economic
security that citizens of other wealthy countries take for granted in
exchange for a more "dynamic," meritorious economy that offers
opportunity that's limited only by their own desire to get ahead. Of
course, it's never explicitly stated, and most of us don't know about
the deal, but it's reinforced all the time in our economic discourse.
But new research suggests the United States' much-ballyhooed upward
mobility is a myth, and one that's slipping further from reality with
each new generation. On average, younger Americans are not doing
better than their parents did, it's harder to move up the economic
ladder in the United States than it is in a number of other wealthy
countries, and a person in today's work force is as likely to
experience downward mobility as he or she is to move up.
Moreover, the single greatest predictor of how much an American will
earn is how much their parents make. In short, the United States,
contrary to popular belief, is not a true meritocracy, and the
American worker is getting a bum deal, the worst of both worlds. Not
only is a significant portion of the middle class hanging on by the
narrowest of threads, not only do fewer working people have secure
retirements to look forward to, not only are nearly one in seven
Americans uninsured, but working people also enjoy less opportunity to
pull themselves up by their bootstraps than those in a number of other
advanced economies.
Moving on up?
Researchers look at two kinds of economic mobility: "absolute
mobility," which is the degree to which one generation does better
than the one before it, and "relative mobility," or how easy it is to
move up in society through smarts, talent, hard work, etc.
New research by Julia Isaacs, a fellow with the Economic Mobility
Project, looked at both measures using a unique set of data that
allowed her to directly compare how people were doing in the late
1990s and early 2000s with the incomes of their parents in the late
1960s.
Isaacs, using family income data, found that the current generation as
a whole is doing better than the previous generation -- that's
absolute mobility -- but that the nation's income is distributed much
less evenly than it was a generation ago.
And family incomes tend to obscure the degree of overall mobility,
because much of the past three decades' growth in household income was
a result of more women joining the workforce. When the Brookings
Institution's Isabel Sawhill and John Morton looked at four
generations of income data for men alone (PDF), they came up with a
very different picture. When they compared men aged 30-39 in 1994 with
their fathers at the same point in their careers, they found that
median incomes had increased by just 0.2 percent annually during the
past three decades. But, they noted, "the story changes for a younger
cohort." Men in their thirties in 2004 had a median income that was,
on average, 12 percent less than that of their fathers' generation at
the same age. The scholars concluded: "The up-escalator that has
historically ensured that each generation would do better than the
last may not be working very well."
But it's relative mobility that really speaks to the health -- or lack
thereof -- of the American Dream, and Isaacs' conclusions are
stunning. "Contrary to American beliefs about equality of
opportunity," she wrote, "a child's economic position is heavily
influenced by that of his or her parents:"
Children of middle-income parents have a near-equal likelihood of
ending up in any other quintile, presenting equal promise and peril
for those born to middle-class parents.
The "rags to riches" story works in Hollywood but not on Main Street.
Only 6 percent of children born to parents with family income at the
very bottom move to the very top.
Isaacs categorized American families as belonging to one of four
groups: the "upwardly mobile" who do better relative to their parents,
those "riding the tide" -- families that earn more than their parents
but remain in the same relative position on the economic ladder --
those "falling despite the tide," a small group who are earning more
than their parents but who nonetheless fell into a lower position on
the ladder, and those who are "downwardly mobile." The key take-away
is that American families are just as likely to be downwardly mobile
-- 33 percent fall into the group -- as they are to join the 34
percent who move up.
It's crucial to understand the relationship between inequality and
immobility, and central to the relationship is the concept of
"intergenerational assistance." That's a fancy way of saying that a
person's chances to advance economically are very much impacted by
whether his or her family can help with tuition payments, a down
payment on a house or seed money to start a business. The wealthy
don't pass on their status through inheritance alone, but by smoothing
the way for their children.
In an interview last year, Dalton Conley, director of NYU's Center for
Advanced Social Science Research, compared two hypothetical kids --
one from a family with some money and the other from poor parents.
Both are born with the same level of intelligence, both are ambitious
and both work hard in school. In a meritocracy, the two would enjoy
the same opportunity to get ahead. But the fact that one might
graduate from college free and clear while the other is burdened with
$50,000 in debt makes a huge difference in terms of their long-term
earnings prospects. That's just one of the myriad ways that parents
pass their economic status to their children. Conley concluded: "When
you are talking about the difference between financing their kid's
college education, starting a new business, moving if they need to
move for a better job opportunity -- [differences] in net worth might
make the difference between upward mobility and stagnation."
As bleak as the recent findings about our ability to move up are, the
picture for American families would look much worse if not for the
increasing number of women in the work force. Women, while still
earning less than their male counterparts, have had far greater upward
mobility over the past three decades, largely because they had farther
to go to get to the same place. While men's employment rates, hours
worked and wages have been flat or declining during that period, all
three measures have increased for women. Isaacs concluded: "Family
incomes have grown slightly because the increase in women's earnings
has more than offset stagnant male earnings."
The streets are paved with gold ... in Denmark
Several studies released in recent years suggest that, contrary to
popular opinion, Americans enjoy significantly less upward mobility
than citizens of a number of other industrialized nations (some of the
studies can be accessed here, here and here). German workers have 1.5
times the mobility of Americans, Canada is nearly 2.5 times more
mobile and Denmark is 3 times more mobile. Norway, Finland, Sweden and
France (France!) are all more mobile societies than the United States.
Of the countries included in the studies, the United States ranked
near the bottom; only the United Kingdom came in lower.
Blame the "neos"
Unlike inequality, which some classical economists and most
conservative pundits dismiss as irrelevant, there's broad agreement
across the ideological spectrum about the importance of mobility. In
the United States, where we take for granted levels of inequality and
poverty that would be a front-page scandal in most advanced economies,
the stakes are that much higher. It's one thing living in a new gilded
age when we all have a fair shot at ending up among the "haves," but
it's something else altogether when a nation's wealth is concentrated
at the top of a rigidly stratified society. As Dalton Conley put it,
the fact that parents' wealth is the strongest predictor of where kids
will end up "very manifestly displays the anti-meritocracy in America
-- the reproduction of social class without the inheritance of any
innate ability."
But it's the interplay of a number of factors that determines social
mobility, and there's heated debate about what's caused these changes
in the American economy and what their policy implications might be.
Three trends help explain why it's so much harder to get ahead in
America today than it was for previous generations of working people,
and why it's apparently easier to get ahead in more socially oriented
countries: differences in education, the decline in union membership
and loss of good manufacturing jobs and, more generally, a relatively
weaker social safety net. Roughly speaking, the decrease in relative
mobility from generation to generation correlates with the rise of
"backlash" conservatism, the advent of Reaganomics and the series of
massive changes in industrial relations and other policies that people
loosely refer to as the "era of globalization."
The United States is the only advanced country in which the federal
government is not directly involved in higher education. That's played
a role in the dramatic increase in the average costs of a college
education since the post-World War II era. In 1957, for example, a
full-time student at the University of Minnesota paid $111 per year in
tuition, which, in today's dollars, is about $750. During the
2005-2006 school year, in-state tuition at the University of Minnesota
was $8,040. As education writer Naomi Rockler-Gladen noted, that's an
inflation-adjusted increase of 1,000 percent since 1957. At almost
$10,000 in average costs (in 2002), a public university education in
America is a lot more difficult to finance than it was a generation
ago. That impacts mobility; a college degree is a ladder -- one of the
classic methods by which hard work and intelligence could be
translated into economic success.
Sawhill looked at the relationship between education and mobility
(PDF) and concluded that "at virtually every level, education in
America tends to perpetuate rather than compensate for existing
inequalities." She pointed to three reasons for that.
First, we have a relatively weak K-12 system. "American students
perform poorly on international assessments," she wrote. "Colleges are
forced to provide remedial work to a large share of entering freshmen,
and employers complain about workers' basic skills." A society with a
weak education system will, by definition, be one in which the
advantages of class and family background loom large.
Second, the U.S. education system is largely funded through state and
local property taxes, which means that the quality of a kid's
education depends on the wealth of the community in which he or she
grows up. This, too, helps replicate parents' economic status in their
kids.
Finally, Sawhill notes, in the United States, unlike other advanced
economies, "access both to a quality preschool experience and to
higher education continues to depend quite directly on family
resources."
The decline in organized labor and solid, good-paying manufacturing
jobs is another factor. Those jobs once represented a ladder; their
role in moving past generations into the middle class is an American
archetype: The paper boy's son finishes high school and gets an
apprenticeship that leads to a solid job in a union shop that allows
him to send his son or daughter to college, where they become a doctor
or a lawyer. That particular ladder is disappearing.
There's also an inverse relationship between how robust a country's
social safety net is and the degree to which working families face the
prospect of downward mobility. For example, research comparing
countries that have generous unemployment benefits with those -- like
the United States -- which offer stingier programs show a clear trend:
Offering displaced workers better benefits (a) extends the period of
unemployment (which tends to be the focus of most conservatives) and
(b) means that when working people do re-enter the work force, they do
so at a higher average wage. A similar dynamic has been demonstrated
in terms of healthcare: People with access to paid sick leave and
other health benefits switch jobs less frequently than those who don't
and have longer average tenure and higher earnings.
In all of these areas, the United States has undergone what Jacob
Hacker calls the "great risk shift." Hacker describes how the American
"framework of security has unraveled, leaving Americans newly exposed
to the harshest risks of our turbulent economy: losing a good job,
losing healthcare, losing retirement savings, losing a home -- in
short, losing a stable, financial footing." All of these things offer
unique opportunities to fall out of the middle class -- opportunities
for downward mobility that simply don't exist for the Canadian or
French worker, who can rely on a progressive state to help preserve
his or her income level when those kinds of disasters arise.
Ultimately, the take-away from the decline in American upward mobility
is one that progressives have been saying for years: The existence of
a middle class is not a natural phenomenon. It was built through real
progressive policies like the GI education bill, which gave tens of
millions of Americans (including my grandfather) access to free
college tuition and low-cost loans to start businesses or buy homes.
It was created by providing quality public education, mandating
minimum wages and guaranteeing working people the right to organize.
After spending three decades unraveling those kinds of protections --
all have been subjected to death "by a thousand small cuts" over the
past 30 years -- we're no longer a mobile society. No longer is it the
case that the accident of one's birth doesn't dictate one's life
chances in America, and that's a wholly predictable result of the rise
of the conservative backlash.
Joshua Holland is an AlterNet staff writer.
(c) 2007 Independent Media Institute. All rights reserved.
View this story online at: http://www.alternet.org/story/70103/
By Joshua Holland, AlterNet
Posted on December 11, 2007, Printed on December 13, 2007
http://www.alternet.org/story/70103/
Fewer than 1 percent of Americans are millionaires, but almost one in
three believe they'll end up among that group at some point.
The belief that our chance of moving up the economic ladder is limited
only by our innate abilities and our appetite for hard work is almost
universal in the United States. When you define the "American Dream"
as the ability of working-class families to afford a decent life -- to
put their kids through school, have access to quality healthcare and a
secure retirement -- most will tell you it simply doesn't exist
anymore. In stark contrast, when you define it according to mobility,
the picture is radically different; according to a study of public
opinion in 25 rich countries, Americans are almost twice as likely to
believe that "people get rewarded for intelligence and skill" than
working people in other advanced economies (PDF). At the same time,
fewer than one in five say that coming from a wealthy family is
"essential" or "very important" to getting ahead -- significantly
lower than the 25-country average.
It's impossible to overstate the impact that has on our policy
debates. Americans are less than half as likely as people in other
advanced economies to believe that it's "the responsibility of
government to reduce differences in income." Working Americans are
parties to a unique social contract: They give up much of the economic
security that citizens of other wealthy countries take for granted in
exchange for a more "dynamic," meritorious economy that offers
opportunity that's limited only by their own desire to get ahead. Of
course, it's never explicitly stated, and most of us don't know about
the deal, but it's reinforced all the time in our economic discourse.
But new research suggests the United States' much-ballyhooed upward
mobility is a myth, and one that's slipping further from reality with
each new generation. On average, younger Americans are not doing
better than their parents did, it's harder to move up the economic
ladder in the United States than it is in a number of other wealthy
countries, and a person in today's work force is as likely to
experience downward mobility as he or she is to move up.
Moreover, the single greatest predictor of how much an American will
earn is how much their parents make. In short, the United States,
contrary to popular belief, is not a true meritocracy, and the
American worker is getting a bum deal, the worst of both worlds. Not
only is a significant portion of the middle class hanging on by the
narrowest of threads, not only do fewer working people have secure
retirements to look forward to, not only are nearly one in seven
Americans uninsured, but working people also enjoy less opportunity to
pull themselves up by their bootstraps than those in a number of other
advanced economies.
Moving on up?
Researchers look at two kinds of economic mobility: "absolute
mobility," which is the degree to which one generation does better
than the one before it, and "relative mobility," or how easy it is to
move up in society through smarts, talent, hard work, etc.
New research by Julia Isaacs, a fellow with the Economic Mobility
Project, looked at both measures using a unique set of data that
allowed her to directly compare how people were doing in the late
1990s and early 2000s with the incomes of their parents in the late
1960s.
Isaacs, using family income data, found that the current generation as
a whole is doing better than the previous generation -- that's
absolute mobility -- but that the nation's income is distributed much
less evenly than it was a generation ago.
And family incomes tend to obscure the degree of overall mobility,
because much of the past three decades' growth in household income was
a result of more women joining the workforce. When the Brookings
Institution's Isabel Sawhill and John Morton looked at four
generations of income data for men alone (PDF), they came up with a
very different picture. When they compared men aged 30-39 in 1994 with
their fathers at the same point in their careers, they found that
median incomes had increased by just 0.2 percent annually during the
past three decades. But, they noted, "the story changes for a younger
cohort." Men in their thirties in 2004 had a median income that was,
on average, 12 percent less than that of their fathers' generation at
the same age. The scholars concluded: "The up-escalator that has
historically ensured that each generation would do better than the
last may not be working very well."
But it's relative mobility that really speaks to the health -- or lack
thereof -- of the American Dream, and Isaacs' conclusions are
stunning. "Contrary to American beliefs about equality of
opportunity," she wrote, "a child's economic position is heavily
influenced by that of his or her parents:"
Children of middle-income parents have a near-equal likelihood of
ending up in any other quintile, presenting equal promise and peril
for those born to middle-class parents.
The "rags to riches" story works in Hollywood but not on Main Street.
Only 6 percent of children born to parents with family income at the
very bottom move to the very top.
Isaacs categorized American families as belonging to one of four
groups: the "upwardly mobile" who do better relative to their parents,
those "riding the tide" -- families that earn more than their parents
but remain in the same relative position on the economic ladder --
those "falling despite the tide," a small group who are earning more
than their parents but who nonetheless fell into a lower position on
the ladder, and those who are "downwardly mobile." The key take-away
is that American families are just as likely to be downwardly mobile
-- 33 percent fall into the group -- as they are to join the 34
percent who move up.
It's crucial to understand the relationship between inequality and
immobility, and central to the relationship is the concept of
"intergenerational assistance." That's a fancy way of saying that a
person's chances to advance economically are very much impacted by
whether his or her family can help with tuition payments, a down
payment on a house or seed money to start a business. The wealthy
don't pass on their status through inheritance alone, but by smoothing
the way for their children.
In an interview last year, Dalton Conley, director of NYU's Center for
Advanced Social Science Research, compared two hypothetical kids --
one from a family with some money and the other from poor parents.
Both are born with the same level of intelligence, both are ambitious
and both work hard in school. In a meritocracy, the two would enjoy
the same opportunity to get ahead. But the fact that one might
graduate from college free and clear while the other is burdened with
$50,000 in debt makes a huge difference in terms of their long-term
earnings prospects. That's just one of the myriad ways that parents
pass their economic status to their children. Conley concluded: "When
you are talking about the difference between financing their kid's
college education, starting a new business, moving if they need to
move for a better job opportunity -- [differences] in net worth might
make the difference between upward mobility and stagnation."
As bleak as the recent findings about our ability to move up are, the
picture for American families would look much worse if not for the
increasing number of women in the work force. Women, while still
earning less than their male counterparts, have had far greater upward
mobility over the past three decades, largely because they had farther
to go to get to the same place. While men's employment rates, hours
worked and wages have been flat or declining during that period, all
three measures have increased for women. Isaacs concluded: "Family
incomes have grown slightly because the increase in women's earnings
has more than offset stagnant male earnings."
The streets are paved with gold ... in Denmark
Several studies released in recent years suggest that, contrary to
popular opinion, Americans enjoy significantly less upward mobility
than citizens of a number of other industrialized nations (some of the
studies can be accessed here, here and here). German workers have 1.5
times the mobility of Americans, Canada is nearly 2.5 times more
mobile and Denmark is 3 times more mobile. Norway, Finland, Sweden and
France (France!) are all more mobile societies than the United States.
Of the countries included in the studies, the United States ranked
near the bottom; only the United Kingdom came in lower.
Blame the "neos"
Unlike inequality, which some classical economists and most
conservative pundits dismiss as irrelevant, there's broad agreement
across the ideological spectrum about the importance of mobility. In
the United States, where we take for granted levels of inequality and
poverty that would be a front-page scandal in most advanced economies,
the stakes are that much higher. It's one thing living in a new gilded
age when we all have a fair shot at ending up among the "haves," but
it's something else altogether when a nation's wealth is concentrated
at the top of a rigidly stratified society. As Dalton Conley put it,
the fact that parents' wealth is the strongest predictor of where kids
will end up "very manifestly displays the anti-meritocracy in America
-- the reproduction of social class without the inheritance of any
innate ability."
But it's the interplay of a number of factors that determines social
mobility, and there's heated debate about what's caused these changes
in the American economy and what their policy implications might be.
Three trends help explain why it's so much harder to get ahead in
America today than it was for previous generations of working people,
and why it's apparently easier to get ahead in more socially oriented
countries: differences in education, the decline in union membership
and loss of good manufacturing jobs and, more generally, a relatively
weaker social safety net. Roughly speaking, the decrease in relative
mobility from generation to generation correlates with the rise of
"backlash" conservatism, the advent of Reaganomics and the series of
massive changes in industrial relations and other policies that people
loosely refer to as the "era of globalization."
The United States is the only advanced country in which the federal
government is not directly involved in higher education. That's played
a role in the dramatic increase in the average costs of a college
education since the post-World War II era. In 1957, for example, a
full-time student at the University of Minnesota paid $111 per year in
tuition, which, in today's dollars, is about $750. During the
2005-2006 school year, in-state tuition at the University of Minnesota
was $8,040. As education writer Naomi Rockler-Gladen noted, that's an
inflation-adjusted increase of 1,000 percent since 1957. At almost
$10,000 in average costs (in 2002), a public university education in
America is a lot more difficult to finance than it was a generation
ago. That impacts mobility; a college degree is a ladder -- one of the
classic methods by which hard work and intelligence could be
translated into economic success.
Sawhill looked at the relationship between education and mobility
(PDF) and concluded that "at virtually every level, education in
America tends to perpetuate rather than compensate for existing
inequalities." She pointed to three reasons for that.
First, we have a relatively weak K-12 system. "American students
perform poorly on international assessments," she wrote. "Colleges are
forced to provide remedial work to a large share of entering freshmen,
and employers complain about workers' basic skills." A society with a
weak education system will, by definition, be one in which the
advantages of class and family background loom large.
Second, the U.S. education system is largely funded through state and
local property taxes, which means that the quality of a kid's
education depends on the wealth of the community in which he or she
grows up. This, too, helps replicate parents' economic status in their
kids.
Finally, Sawhill notes, in the United States, unlike other advanced
economies, "access both to a quality preschool experience and to
higher education continues to depend quite directly on family
resources."
The decline in organized labor and solid, good-paying manufacturing
jobs is another factor. Those jobs once represented a ladder; their
role in moving past generations into the middle class is an American
archetype: The paper boy's son finishes high school and gets an
apprenticeship that leads to a solid job in a union shop that allows
him to send his son or daughter to college, where they become a doctor
or a lawyer. That particular ladder is disappearing.
There's also an inverse relationship between how robust a country's
social safety net is and the degree to which working families face the
prospect of downward mobility. For example, research comparing
countries that have generous unemployment benefits with those -- like
the United States -- which offer stingier programs show a clear trend:
Offering displaced workers better benefits (a) extends the period of
unemployment (which tends to be the focus of most conservatives) and
(b) means that when working people do re-enter the work force, they do
so at a higher average wage. A similar dynamic has been demonstrated
in terms of healthcare: People with access to paid sick leave and
other health benefits switch jobs less frequently than those who don't
and have longer average tenure and higher earnings.
In all of these areas, the United States has undergone what Jacob
Hacker calls the "great risk shift." Hacker describes how the American
"framework of security has unraveled, leaving Americans newly exposed
to the harshest risks of our turbulent economy: losing a good job,
losing healthcare, losing retirement savings, losing a home -- in
short, losing a stable, financial footing." All of these things offer
unique opportunities to fall out of the middle class -- opportunities
for downward mobility that simply don't exist for the Canadian or
French worker, who can rely on a progressive state to help preserve
his or her income level when those kinds of disasters arise.
Ultimately, the take-away from the decline in American upward mobility
is one that progressives have been saying for years: The existence of
a middle class is not a natural phenomenon. It was built through real
progressive policies like the GI education bill, which gave tens of
millions of Americans (including my grandfather) access to free
college tuition and low-cost loans to start businesses or buy homes.
It was created by providing quality public education, mandating
minimum wages and guaranteeing working people the right to organize.
After spending three decades unraveling those kinds of protections --
all have been subjected to death "by a thousand small cuts" over the
past 30 years -- we're no longer a mobile society. No longer is it the
case that the accident of one's birth doesn't dictate one's life
chances in America, and that's a wholly predictable result of the rise
of the conservative backlash.
Joshua Holland is an AlterNet staff writer.
(c) 2007 Independent Media Institute. All rights reserved.
View this story online at: http://www.alternet.org/story/70103/
