Income Mobility and the Social Structure

Okay, let’s get down to brass tacks here in looking at Barton Hinkle’s critique of Jim Webb’s populism. The topic here is one of the most fundamental social questions we can possibly ask—whether or not the American social order is a just one—so it’s worth sinking our teeth in just a bit.

In tackling that question, we need to distinguish between two related yet distinct concerns. The first is whether the basic structure of American society is just or fair; the second is whether the long-term trend in the United States has been towards more or less fairness and equality. This is an important distinction:  if, for instance, long-term trends are static, but the basic structure of society is unjust, then we should be less than heartened to learn that an unjust society is not getting any more just.  

Keeping that in mind, let’s look at the data.

 

The specific data in question here are snapshot analyses of income distribution, divided by quintile, i.e. how much income is the top 20% getting compared to the bottom 20%, and each sector in between? Hinkle, like many others, correctly notes that this sort of snapshot, taken in itself, provides only limited information about the fairness of the overall structure of society.

Why isn’t the snapshot data enough? Because the snapshots don’t provide us information about mobility over time between the quintiles. Consider the child of an affluent family who goes to a selective private college. As a young adult that person might well be in the middle or bottom quintiles of income as he or she finds her feet in the labor market or struggles through graduate school. But eventually that person has a very good chance of making it to one of  the higher quintiles—at least until he or she retires (or gets laid off), when they will likely see income decline.

The quintile snapshot essentially abstracts from all this churning and provides a static shot of how the income distribution looks at a given time. So it’s a limited tool, if we think that we should take not just absolute levels of inequality but also social mobility into account in evaluating the justice of the social structure.

If we compare several quintile snapshots over a long period of time, however, we can garner useful information about the long term trend in the distribution of income, towards more or less inequality. Indeed, looking at how these snapshots have changed over the past three decades produces some striking results:

In 1974, the bottom (poorest) quintile of American families captured 5.7% of aggregate family income; in 2004 that same group captured just 4.0% of such income. In 1974, the top (richest) quintile of American families captured 40.6% of aggregate family income; in 2004 that same group captured 47.9% of such income. Perhaps most strikingly, in 1974 the top 1% of American families, captured 14.8% of aggregate family income; in 2004 those same fortunate few claimed 20.9% of such income. (This data comes from the Economc Policy Institute.)

This is exceptionally strong evidence that the distribution of income in the United States has gotten (just as Jim Webb claims) substantially more unequal over time. In fact, the trend is so strong that it simply is not in dispute among economists and other social scientists who study inequality—in those circles the live debate is not about whether inequality has grown sharply, but what the causes of that growth have been.

Even so, we might not be so disturbed by this growing inequality if it were offset by an increase in social mobility. But how best to measure social mobility?

To answer this question we must again introduce another distinction: between the movement of individuals up and down the quintiles due to variations in income over the course of the life cycle, and between genuine social mobility, in which an individual sees a permanent increase (or decline) in one’s relative position. Conservatives are correct to point out that the income quintiles are not very static over time, with individuals moving in and out of each group all the time, but many (including Hinkle in this case) make the mistake of confusing variation in income over the course of the life cycle—the fact that you’re likely going to make more money in your 40s and 50s than when you’re in your 20s or 70s– with genuine mobility.

The best way to measure mobility is not via snapshots of the whole population, but by tracking a set of individuals over the course of their lives and seeing how they do compared to how their parents did. Economists who undertake such studies have found that, at a minimum, genuine social mobility has not increased over the past generation, and in fact may have actually slowed.

This is important because if mobility has been static, but the distribution of family income has gotten sharply more unequal, than we can only conclude that the American social system as a whole has in fact become more unequal and less fair to the folks on the bottom over the past generation.

But the mobility data can also give us needed insight into the justice of the social structure itself. If you are born into the bottom 10% of families, income-wise, what are your chances of making it out of that bottom 10%? What are your chances of making it into the top 10?

The best recent data on that question comes from Tom Hertz’s study “Rags, Riches, and Race,” which examines mobility among black and white families using data from the Panel Study of Income Dynamics. (The paper is reprinted in the book Unequal Chances: Family Background and Economic Success, the best collection of recent academic work on this set of questions.) 

After adjusting for changes in household size, Hertz finds that if you are born into a family in the bottom decile (poorest 10%) of the income distribution, you have a 36.6% chance of remaining there as an adult, and a 57.1% chance of staying in the bottom quintile. You have just a 2.3% chance of making it into the top quintile, and a mere 0.5% chance (1 in 200) of making it into the top decile.

Conversely, if you are born into a family in the top decile, you have a 26.7% chance of staying there as an adult, a 43.2% of being in the top quintile, and a 77.7% chance of being somewhere in the top half of the income distribution. You have just a 5% chance of falling into the bottom quintile, and only a 1.4% chance of falling into the bottom decile.

In short, if you are born in the poorest rung (decile) of American society, you are over 26 times more likely than someone born in the top rung to stay on that bottom rung as an adult. And if you’re born into the top rung, you’re over 53 times more likely to get there yourself as an adult that someone born on the lowest rung.

Is that fair? Not if you take seriously the notion that America should be characterized by substantive equality of opportunity. (And by the way, from the point of view of African-Americans, the actual picture is even worse than these figures suggest, as Hertz found that upward mobility among African-Americans from the bottom to top quartile was less than half the rates observed among whites.)

Confronting the actual data about intergenerational mobility in the United States forces one to confront some hard truths about the basic structure of this society. Where you start has a huge impact on where you end up, and there is no evidence that it’s getting easier for people to move up. And, as we have also seen, the consequences of ending up near the bottom as opposed to near the top have become more severe, as income inequality has grown over time.

None of those conclusions are controversial among academics who study these questions, and in fact some of those scholars have been trying to ring the alarm on this issue for a number of years. Jim Webb just happened to be the Virginia politican who answered the bell.

Next installment: Do the rich pay too much in taxes? 

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Published in: on November 22, 2006 at 4:09 pm  Comments (2)  

Why History–And Editorial Pages–Matter

What’s the most important book about Richmond and its history published in the past twelve months? I’ll give you a hint: the book has been favorably reviewed in the nationally read Boston Review, and the author has been designated by the History News Network as one of the nation’s “Top Young Historians,” but no review of nor reference to the book has yet appeared in the Times-Dispatch.

The book in question is Matthew D. Lassiter’s The Silent Majority: Suburban Politics in the Sunbelt South, published earlier this year by Princeton University Press. Lassiter, a historian at the University of Michigan, describes and critically assesses how the suburbanization of the 1960s and 70s affected local politics in Atlanta, Charlotte, and Richmond.

The crucial issue in that history, of course, is race, and in particular how whites responded to the reality of the end of formal racial segregation and the incorporation of African-Americans into the political process. Lassiter skillfully tells the story of how Richmond failed to create a regional political structure based on the idea that we’re all in it together, and instead opted for a system which perpetuates rather than alleviates racial inequalities.

The central episode of that failure, depicted at length in Chapter 11 of Lassiter’s book, was the busing crisis of the early 1970s and the Richmond region’s refusal during those years to create a system of effectively integrated public schools, achieved through the “consolidation of urban and suburban school systems.”

Lassiter gives particular attention to the role Richmond’s local newspapers played in defeating integration proposals. “In an extension of their enthusiasm for defiance during the massive resistance era of the 1950s, the Richmond Times-Dispatch and the Richmond News Leader maintained a shrill tone and encouraged an obstructionist stance throughout the three-year busing crisis. Expressing open hostility toward the black plaintiffs and the federal courts, the Times-Dispatch repeatedly invoked a doomsday scenario of coercive integration where ‘thousands of children ould be hauled away from their own neighborhoods to strange schools in strange communities miles away.’ . . .

The editorial pages launched a campaign of personal vituperation against [Governor] Linwood Holton after his refusal to exploit the crisis, which the Times-Dispatch attributed to the governor’s solicitation of black voters for the Republican party. The News Leader actively participated in the antibusing movement by circulating its own freedom of choice petition, signed by 29,122 readers and delivered to the steps of the Supreme Court by editor Ross Mackenzie and Senator Harry F. Byrd, Jr. . . . A community study of the Richmond crisis concluded that the editorial pages jointly created ‘an atmosphere of mass hysteria and defiance by fanning the flames of emotionalism and racial biogtry, which only served to poison race relations between blacks and whites at a time when understanding and mutual cooperation were desperately needed.'”

As Lassiter writes, the ultimate failure of efforts to create a unified metropolitan school system in Richmond “guaranteed an urban system debilitated by a fusion of race and class hypersegregation.” The disparity between Richmond public schools and those of the suburban counties, and the many consequences that follow from that disparity, remains the most fundamental structural problem facing the Richmond region.

Unfortunately, it’s also a problem that rarely gets acknowledged or addressed in the pages of the RTD in any meaningful way (other than in the columns of Michael Paul Williams). Indeed, there’s little in the pages of the RTD to suggest that the editorial board regards the educational disparities between its namesake city and the surrounding suburbs as a problem at all.

But there are one or two signs that just maybe the RTD is at least willing to revisit the legacy of white resistance to the civil rights movement. On October 3 and 10, the newspaper printed two letters regarding the massive resistance movement of the 1950s in Virginia, one by a Republican and one by a Democrat.

That’s a start. If the newspaper wants to go further and is wiling to take the difficult step of not only re-examing Virginia’s past but the paper’s own role in that past–and in creating the structure of inequality that characterizes the Richmond regions–they could do worse than taking the time to review Lassiter’s book or interview the author.

That would be a terrific step towards using the newspaper’s influence to address the sources of Richmond’s real problems, and might also mark a welcome turn away from the editorial politics of “personal vituperation” that still persist in good measure at the RTD. (Exhibit A: Sunday’s column by Mackenzie concerning Mark Warner’s withdrawal last week from the presidential race, which can only be characterized as a case study in ungraciousness.)

Published in: on October 16, 2006 at 6:49 am  Comments (5)