Myth of Economic Immobility

April 28, 2014

Income immobility is not the problem it is made out to be, says Greg Beato, contributing editor at Reason Magazine.

President Obama has decried the problem of decreased upward mobility, and a recent Gallup poll indicates that much of the American public has begun to doubt the ability of individuals to move up the income ladder. But rhetoric aside, actual economic evidence indicates that this is not the case.

  • In January, five economists published a paper through the National Bureau of Economic Research, finding that intergenerational mobility has actually remained stable and, if anything, mobility has increased slightly.

  • A child born into the bottom income quintile in 1971 had an 8.4 percent chance to reach the top income quintile.

  • And a child born at the bottom in 1986? He had a 9 percent chance to reach the top.

  • The Pew Charitable Trust's Economic Mobility Project has come to similar results, finding that income change patterns have remained similar from 1967 all the way to 2004, with most Americans moving upward.

  • Eighty-four percent of Americans, the project found, have higher family incomes than their parents had at the same age, across all levels of the income ladder.

Moreover, mobility -- while an important measure -- is not the only way to measure national wellbeing. The United States has seen massive increases in cultural and physical mobility, benefits that are often hard to capture using standard measurements. All Americans have much greater access to all sorts of goods, services and institutions, and transportation has vastly improved. In 1990, 17.6 million passengers departed from U.S. airports -- that number increasing to 31.4 million by 2006. And the Internet, of course, has transformed American life.

The most encouraging part of this "mobility renaissance" is how widely distributed it is -- a full 56 percent of American adults today have smartphones. And yet, the narrative that plagues the airwaves is that the United States is facing declining economic mobility, despite the vast number of modern-day mobility breakthroughs available to all.

Source: Greg Beato, "The Myth of Economic Immobility," Reason Magazine, May 2014.

 

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