Surprise: Income mobility is not falling after all

posted at 12:01 pm on January 23, 2014 by Ed Morrissey

“The facts themselves are pretty unassailable,” says an economist who reviewed the latest canon in the political fight over redistributive policies. “How you want to interpret them is the question.” The New York Times dissects the study from Harvard that the Left is grasping to show the urgent need to address “income inequality,” and finds that it’s not exactly quite as advertised. Income mobility — the ability to improve one’s standing in the US economy — has not grown over the last few decades, but it’s not falling, either. In fact, it’s held remarkably steady since the 1950s:

The study found, for instance, that about 8 percent of children born in the early 1980s who grew up in families in the bottom fifth of the income distribution managed to reach the top fifth for their age group today. The rate was nearly identical for children born a decade earlier.

Among children born into the middle fifth of the income distribution, about 20 percent climbed into the top fifth as adults, also largely unchanged over the last decade.

To compare their results to those for earlier decades, the authors noted that a previous study of children born from 1952 to 1975 — by Chul-In Lee and Gary Solon — found broadly similar and steady levels of mobility. Taken together, the studies suggest that rates of intergenerational mobility appeared to have held roughly steady over the last half-century, Mr. Chetty said.

That’s not to say that the current rates are necessarily optimal, either. Like most trend lines, the qualitative is much more subjective than the quantitative. The study notes that other nations have better rates of income mobility, such as Denmark, which suggests that we can do better. However, the Times continues in its analysis by pegging the point in time when the US started becoming less economically mobile:

Another earlier study — of the late 19th century, by Joseph P. Ferrie — suggested that mobility was higher then in the United States than in England, Mr. Autor noted. Sometime after the 1920s, though, social mobility in the United States appeared to have declined, the Ferrie study found.

Let’s see. Sometime after the 1920s, but before the 1950s, when the rates stabilized … what may have happened in that time period? Perhaps the launch of massive redistribution programs might have impacted that trajectory? That’s correlation more than causation, but it’s at least a change to which one can correlate.

Financial Times columnist Samuel Brittan wants everyone to banish “inequality” from their playbooks, noting that equality isn’t ever going to be achieved. In fact, no one seems clear on what exactly is supposed to be equalized, let alone how to get there, and he also points out the New Deal as the basis for this new push:

Many of the remedies advanced by the left would only make things worse. And the right are inclined to copy them. For instance, in Britain we have had the strange spectacle of a conservative chancellor, who is not on the progressive wing of his party, urging a rise in the minimum wage. A medical acquaintance of mine, with no pretensions to economic expertise, immediately saw through this ploy. If earnings rose, more tax would be gathered. Even if many of those immediately affected were below the tax threshold, an increase at the bottom might raise the whole earning structure in nominal terms and thus benefit the exchequer.

There was a time when rightwing academics were quick to point out that an increase in the cost of labour would put more people out of work. In any case, tackling the problem by pushing up wages would increase costs and make matters worse. This could be offset by devaluations. But what would then become of the inflation targets on which governments have set such store? And would real wages benefit? A devaluation is normally regarded as a way of cutting real wages by the back door.

Many of the other suggestions for easing the pressure on the mass of wage-earners belong to the list of worthy policies that have been espoused by most governments since the end of the second world war, if not even earlier. Some of them echo the less successful aspects of Franklin Roosevelt’s New Deal, an example being the rebuilding of union strength.

Nevertheless, in the least surprising political development ever, Barack Obama will use his State of the Union speech to focus on income inequality, launching his 2014 narrative strategy that could just as well be titled “Let’s Get Everyone To Stop Talking About ObamaCare.” Of course, it might get a little uncomfortable when people point out that ObamaCare was the White House/Democratic effort to address inequality in health insurance coverage …. and look how well that’s turning out. Just wait until Obama tries it with the other five-sixths of the economy!

He’s going to need divine intervention to avoid the consequences of his first big inequality project, let alone any of his new agenda items. For that purpose, he’s traveling to the Vatican to meet Pope Francis, who has also challenged the world to address inequality. The problem for Obama, as I explain in my column for The Fiscal Times, is that the rhetoric is similar but the agendas couldn’t be more opposed:

Even on policy, Obama will find Francis a challenge. The Obama administration, for instance, forced an end to a school voucher program in Washington DC – where the federal government has direct jurisdiction – that helped educate poor children and prepare them for economic success. Archbishop Thomas Wenski of Miami chairs the U.S. Conference of Catholic Bishops’ Committee on Domestic Social Development, including the USCCB programs to fight poverty, and he brought up that decision when speaking to the Washington Post about the upcoming meeting. “If Obama would see our way with the voucher system,” Wenski said, “we could help get a lot of kids out of poverty by giving them the tools to have a successful life through Catholic schools.”

This brings up two huge issues that will certainly be on the Pope’s agenda on March 27th. First, the efforts by Barack Obama and his HHS to redefine and limit religious expression to merely freedom to worship within the confines of a church hammers the Catholic Church and its affiliated organizations in their own efforts to fight poverty and want in the US.

Catholic schools, hospitals, clinics, and even convents now face having to either facilitate contraception against their own doctrine or shut down as ruinous fines bankrupt them. Don’t expect Francis to give Obama a free photo opportunity without forcing him to answer for that attack on Catholic efforts to help in the effort Obama claims to prioritize.

Even more fundamentally, Francis will challenge Obama on abortion. As his message to Davos makes clear, the very undergirding principle for social justice is the equal sanctity and dignity of all human life at all stages of development. American presidents who travel to the Vatican to declare inequality and poverty as the most pressing issues of the day, while at the same time celebrating the anniversary of Roe v Wade by declaring that “this is a country where everyone deserves the same freedom and opportunities to fulfill their dreams” [are] itching for a fight.

Or will find one.

Besides, any discussion of income inequality and wage stagnation should begin with this chart of the civilian workforce participation rate under Obama’s economic policies (from the Bureau of Labor Statistics):

bls-civ-part-rate-2009-13

Obamanomics has pushed millions of people out of the workforce, even from the point of technical recovery in June 2009 (10.87 million), or from the White House’s own artificial point of calculating stimulus response in February 2010 (8.53 million). That is why the workforce participation rate has hit 36-year lows, reached in an era where much fewer women worked. Until we fix the issues of job creation by making it simpler and cheaper to employ people — which will also make labor rates more competitive — we’ll just be “redistributing” deck chairs on the Titanic.


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Chuck Schumer hardest hit!

Schadenfreude on January 23, 2014 at 12:02 PM

Well campaigning on Income Inequality is a better issue than Obamacare. Gotta stand for something to show those conservatives are just plain mean and they sunk O’care.

Herb on January 23, 2014 at 12:07 PM

noting that equality isn’t ever going to be achieved

It won’t prevent the pajama-president to bloviate about it, from the SOTU on out, forever, while he and his are on the way to be billionaires, based on absolutely nothing.

obama hates the middle class. I always knew it.

Schadenfreude on January 23, 2014 at 12:08 PM

arack Obama will use his State of the Union speech to focus on income inequality, launching his 2014 narrative strategy that could just as well be titled “Let’s Get Everyone To Stop Talking About ObamaCare.”

BINGO

cmsinaz on January 23, 2014 at 12:10 PM

Why would any sane person wish to be “equal” to anyone else?

I’ve never understood the concept.

For me it w/b the most disgusting of outcomes…sheep, gnats, plankton, flies, fleas, lice are all equal, pretty much.

I thank God every day for being unique and wish this on all the good people of the world.

Schadenfreude on January 23, 2014 at 12:11 PM

Alert – stay away from Medicaid, you or your loved ones. It’s a big trap, one that is now much bigger under obama’care’. The broken states are collecting billions from estates now.

Schadenfreude on January 23, 2014 at 12:12 PM

If folks are interested in these and other long-term trends, you might find this book quite interesting: The Big Picture: An Illustrated Guide to Modern American Trends. It contains lots of charts and graphs on income mobility, labor participation rates, federal entitlement policies, and some 20 other related topics.

Mervis Winter on January 23, 2014 at 12:14 PM

Quit confusing them with facts Ed…

sandee on January 23, 2014 at 12:15 PM

Hey Ed, I don’t know if you’ve heard about this or not. Millions of Christians are being cleansed from the Middle East, and the Western Media, liberal and conservative, couldn’t give a sh*t.
http://theweek.com/article/index/255403/the-worlds-most-ancient-christian-communities-are-being-destroyed-mdash-and-no-one-cares

AmeriCuda on January 23, 2014 at 12:17 PM

Americans are so enamored of equality that they would rather
be equal in slavery than unequal in freedom.”
– Alexis de Tocqueville

tommyboy on January 23, 2014 at 12:21 PM

“Hey Ed, I don’t know if you’ve heard about this or not. Millions of Christians are being cleansed from the Middle East, and the Western Media, liberal and conservative, couldn’t give a sh*t.

But just let some Jew look crosseyed at a “Palestinian” in Jerusalem and it’s in the headlines for weeks.

tommyboy on January 23, 2014 at 12:23 PM

As always, it is about making sure Al Czervik never makes enough money to even dream about getting into Bushwood.

Steve Eggleston on January 23, 2014 at 12:24 PM

Any mention of “income inequality” in political circles has one, and only one goal:

Enabling the government to take ever more money from “certain people”, by force, and hand it to “certain other” people.

It has been thus for 75+ years.

Bat Chain Puller on January 23, 2014 at 12:27 PM

Handing out more money and largess, taken from productive, hard-working people, and giving it to others does nothing to improve the liberal fallacy of income inequality.

In fact it does the converse. It creates dependency and complacency while at the same time destroying incentives for the productive sector by stealing their future and ability to be upwardly mobile.

Everybody loses in redistributive socialism. Which is what Democrats mean by “income inequality”.

That is simple logic and proven by facts and experience.

There is no substitute for the time-tested method of hard-work and perseverance. That is part of our culture (yes, America has its own unique culture) and heritage. It is the reason we are a great nation.

Marcus Traianus on January 23, 2014 at 12:28 PM

AmeriCuda on January 23, 2014 at 12:17 PM

Did you bother to search the site before asking that question? I’ve actually written quite a bit on global persecution of Christians, and talked about it on my show.

Ed Morrissey on January 23, 2014 at 12:29 PM

Brilliant Ed.

gwelf on January 23, 2014 at 12:30 PM

OT (may already have been posted?) sweet story:

Yesterday, the Internet Solved a 20-Year-Old Mystery

Yesterday afternoon, a woman seeking help with a decades-old family mystery posted a thread on Ask Metafilter titled “Decoding cancer-addled ramblings”:

My grandmother passed away in 1996 of a fast-spreading cancer. She was non-communicative her last two weeks, but in that time, she left at least 20 index cards with scribbled letters on them. My cousins and I were between 8-10 years old at the time, and believed she was leaving us a code. We puzzled over them for a few months trying substitution ciphers, and didn’t get anywhere.

The index cards appear to just be a random series of letters, and had confounded the poster’s family for years. But it only took Metafilter 15 minutes to at least partially decipher them. User harperpitt quickly realized she was using the first letters of words, and that she was, in fact, writing prayers:

Was she a religious woman? The last As, as well as the AAA combo, make me think of “Amen, amen, amen.” So extrapolating — TYAGF = “Thank you Almighty God for…”

It would make sense to end with “Thank you, Almighty God, for everything, Amen – Thank you, Almighty God, for everything, Amen, Amen, Amen.”
Which harperpitt soon followed with:

kcewa on January 23, 2014 at 12:34 PM

Perfect, as usual

Schadenfreude on January 23, 2014 at 12:41 PM

gwelf, for future posts, two links are the limit for one comment…3 get eaten by the mill.

Schadenfreude on January 23, 2014 at 12:43 PM

Until we fix the issues of job creation by making it simpler and cheaper to employ people — which will also make labor rates more competitive — we’ll just be “redistributing” deck chairs on the Titanic.

To the progressives in government, redistributing the deck chairs on the Titanic is a valid and acceptable task as long as it also results in the expansion of the federal government’s power and control.

Even though their own policies exacerbate the domestic fiscal / economic problems, they will continue to run on income equality and class warfare by blaming the opposition for the failures of those programs to work – assisted by the intellectually and ethically bankrupt propaganda machine of the LSM.

Athos on January 23, 2014 at 12:46 PM

Well…. if the power of the gubRmint is gonna expand. It’s back to the Terror Boogeyman…… Of course, maybe someone will shoot up a school or a whether catastrophe will put the other scary boogeymen into play.

roflmmfao

donabernathy on January 23, 2014 at 1:11 PM

Look here – guy’s life is in jeopardy.

“This is the smoking gun. For years, we have been saying the real agenda behind this administration’s energy and environmental policies is just what President Obama has said it is: to fundamentally transform America.

“In his testimony under oath, Beale, perhaps unwittingly, has laid bare the administration’s end goal. The President’s policies are not about carbon, they are not about coal, they are not even about energy and the environment. They are about fundamentally altering the DNA of the capitalist system. These policies are not about energy, but power.

“Beale was ordered by EPA administrator to head the agency’s climate change efforts. Today’s publicly released deposition means that McCarthy has many more questions to answer about her bad judgement regarding Beale and the true nature of the administration’s climate action plan.”

Schadenfreude on January 23, 2014 at 1:19 PM

No statisics here, but I would guess that 75% of American’s consider themselves to be in the bottom 50%.

It’s not about reality. It’s all about perception. Then causing rift and division based on that misperception.

A.K.A. Rules for Radicals 101.

And it will likely be successful once again as the human species does not change.

Carnac on January 23, 2014 at 4:59 PM

He’s going to need divine intervention to avoid the consequences of his first big inequality project, let alone any of his new agenda items. For that purpose, he’s traveling to the Vatican to meet Pope Francis

Best snark ever.

talkingpoints on January 23, 2014 at 6:13 PM

Dear leader doesn’t need to tell everyone how to get there, he just needs to keep repeating income equality kinda like he kept repeating keep your plan. He shouldn’t have slept thru Rev. Wright’s sermon about not coveting your neighbor’s assets and Jesus’s admonition about the poor always being with us. Oh, wait…

Kissmygrits on January 24, 2014 at 9:01 AM