Brookings: Social Mobility – 13 Facts

 

Thirteen Economic Facts about Social Mobility and the Role of Education

By Michael Greenstone, Adam Looney, Jeremy Patashnik, and Muxin Yu, The Hamilton Project.

This Hamilton Project policy memo provides thirteen economic facts on the growth of income inequality and its relationship to social mobility in America; on the growing divide in educational opportunities and outcomes for high- and low-income students; and on the pivotal role education can play in increasing the ability of low-income Americans to move up the income ladder.

It is well known that the income divide in the United States has increased substantially over the last few decades, a trend that is particularly true for families with children. In fact, according to Census Bureau data, more than one-third of children today are raised in families with lower incomes than comparable children thirty-five years ago. This sustained erosion of income among such a broad group of children is without precedent in recent American history. Over the same period, children living in the highest 5 percent of the family-income distribution have seen their families’ incomes double.

What is less well known, however, is that mounting evidence hints that the forces behind these divergent experiences are threatening the upward mobility of the youngest Americans, and that inequality of income for one generation may mean inequality of opportunity for the next. It is too early to say for certain whether the rise in income inequality over the past few decades has caused a fall in social mobility of the poor and those in the middle class—the first generation of Americans to grow up under this inequality is, on average, in high school—but the early signs are troubling.

Investments in education and skills, which are factors that increasingly determine outcomes in the job market, are becoming more stratified by family income. As income inequality has increased, wealthier parents are able to invest more in their children’s education and enrichment, increasing the already sizable difference in investment from those at the other end of the earnings distribution. This disparity has real and measurable consequences for the current generation of American children. Although cognitive tests of ability show little difference between children of high- and low-income parents in the first years of their lives, large and persistent differences start emerging before kindergarten. Among older children, evidence suggests that the gap between high- and low-income primary and secondary-school students has increased by almost 40 percent over the past thirty years.

These differences persist and widen into young adulthood and beyond. Just as the gap in K–12 test scores between high and low-income students is growing, the difference in college graduation rates between the rich and the poor is also growing. Although the college graduation rate among the poorest households increased by about 4 percentage points between those born in the early 1960s and those born in the early 1980s, over this same period, the graduation rate increased by almost 20 percentage points for the wealthiest households.

Given how important education and, in particular, a college degree are in the labor market, these trends give rise to concerns that last generation’s inequities will be perpetuated into the next generation and opportunities for upward social mobility will be diminished. The emphasis that American society places on upward mobility makes this alarming in and of itself. In addition, low levels of social mobility may ultimately shift public support toward policies to address such inequities, instead of toward policies intended to promote economic growth.

While the urgency of finding solutions to this challenge requires rethinking a broad range of social and economic policies, we believe that any successful approach will necessitate increasing the skills and human capital of Americans. Decades of research demonstrate that policies that improve the quality of and expand access to early-childhood, K–12, and higher education can be effective at ameliorating these stark differences in economic opportunities across households.

Indeed, making it easier and more affordable for low-income students to attend college has long been a vehicle for upward mobility. Over the past fifty years, policies that have increased access to higher education, from the GI Bill to student aid, have not only helped lift thousands of Americans into the middle class and beyond, but also have boosted the productivity, innovation, and resources of the American economy.

Fortunately, researchers are making rapid progress in identifying new approaches that complement or improve on long-standing federal aid programs to boost college attendance and completion among lower-income students. These new interventions, which include high school and college mentoring, targeted informational interventions, and behavioral approaches to nudge students into better outcomes, could form the basis of important new policies that aim to steer more students toward college.

A founding principle of The Hamilton Project’s economic strategy is that long-term prosperity is best achieved by fostering economic growth and broad participation in that growth. This principle is particularly relevant in the context of social mobility, wherein broad participation in growth can contribute to further growth by providing families with the ability to invest in their children and communities, optimism that their hard work and efforts will lead to success for them and their children, and openness to innovation and change that lead to new sources of economic growth.

In this spirit, we offer our “Thirteen Economic Facts about Social Mobility and the Role of Education.” In chapter 1, we examine the very different changes in income between American families at opposite ends of the income distribution over the last thirty-five years and the seemingly dominant role that a child’s family income plays in determining his or her future economic outcomes. In chapter 2, we provide evidence on the growing divide in the United States in educational opportunities and outcomes based on family income. In chapter 3, we explore the great potential of education to increase upward mobility for all Americans, with a special focus on what we know about how to increase college attendance and completion for low-income students.

Chapter 1: Inequality Is Rising against a Background of Low Social Mobility

Central to the American ethos is the notion that it is possible to start out poor and become more prosperous: that hard work—not simply the circumstances you were born into—offers real prospects for success. But there is a growing gap between families at the top and bottom of the income distribution, raising concerns about the ability of today’s disadvantaged to work their way up the economic ladder.

1. Family incomes have declined for a third of American children over the past few decades.

2. Countries with high income inequality have low social mobility.

3. Upward social mobility is limited in the United States.

Chapter 2: The United States Is Experiencing a Growing Divide in Educational Investments and Outcomes Based on Family Income

Although children of high- and low-income families are born with similar abilities, high-income parents are increasingly investing more in their children. As a result, the gap between high- and low-income students in K–12 test scores, college attendance and completion, and graduation rates is growing.

4. The children of high- and low-income families are born with similar abilities but different opportunities.

5. There is a widening gap between the investments that high- and low-income families make in their children.

6. The achievement gap between high- and low-income students has increased.

7. College graduation rates have increased sharply for wealthy students but stagnated for low-income students.

8. High-income families dominate enrollment at America’s selective colleges.

Chapter 3: Education Can Play a Pivotal Role in Improving Social Mobility

Promoting increased social mobility requires reexamining a wide range of economic, health, social, and education policies. Higher education has always been a key way for poor Americans to find opportunities to transform their economic circumstances. In a time of rising inequality and low social mobility, improving the quality of and access to education has the potential to increase equality of opportunity for all Americans.

9. A college degree can be a ticket out of poverty.

10. The sticker price of college has increased significantly in the past decade, but the actual price for many lower- and middle-income students has not.

11. Few investments yield as high a return as a college degree.

12. Students are borrowing more to attend college—and defaulting more frequently on their loans.

13. New low-cost interventions can encourage more low-income students to attend, remain enrolled in, and increase economic diversity at even top colleges.

For additional detailed information regarding the above 13 facts, see Michael Greenstone, Adam Looney, Jeremy Patashnik, and Muxin Yu, The Hamilton Project.

(Emphasis added)