The Asset Building Program hosted an event Friday to delve into the issue of economic mobility – the scope of the problem, the connections between mobility and inequality, and possible solutions to a slippery problem. Heather McGhee was unfortunately unable to make it, but Scott Winship and Shawn Fremstad managed to have a stimulating debate in her absence. Reid Cramer served as moderator, introducing the panelists and then framing the issue of economic mobility as an increasingly regular conversation topic amongst political figures.
Winship began his remarks by outlining the numerous challenges to even defining economic mobility. Do we look solely at income and earnings? Where would this leave wealth holdings, educational attainment and occupational patterns – other potentially key factors? He also introduced the importance of specifying relative vs. absolute economic mobility. As the Pew Economic Mobility Project has done a great job at illustrating in this video, these concepts are related and important in their own right, but not synonymous. Persistent gaps in economic mobility among demographic groups are also particularly interesting to look at, but this is made difficult in the absence of solid longitudinal data sets. Winship proposed another set of criteria for establishing a problem with economic mobility that he dubbed the “Potter Stewart Criterion”: we know it when we see it. With each of these measurements, we are limited by the data offerings as well as demographic shifts that make it difficult to discern patterns over time. For example, the influx of women into the labor force during the 20th century but continued disparities between men and women taking time off to care for children make gender comparisons of economic mobility tricky.
Winship particularly took issue with some recent claims from the Obama administration, including statements that upward mobility for a child born into poverty has declined substantially and that the middle class has shrunk. He does not believe the evidence supports these assertions. Mobility for the poor in the US has been persistently difficult but it does not appear to have gotten substantially worse over time, he asserts. While he argues that the middle class is not under the level of threat some might fear, Winship acknowledges that the U.S. has a unique struggle with elevating children, particularly boys, from lower income households to higher incomes in adulthood. The chance that a child with parents in the bottom fifth will end up in the top two fifths as an adult is 17%. For children who grow up in these top two fifths their chance of remaining in those top two fifths are 60%. This gap, Winship suggests, is indeed substantial and deserves our attention, but advocates and policymakers should take caution to not overstate the extent of inequality and diminished economic mobility.
Shawn Fremstad disputed a number of Winship’s fundamental ideas and set about making the case for taking the threat of growing inequality seriously. For example, Fremstad questioned the wisdom of excluding the top 1% of income earners from conversations about growing inequality. Since this group of highest earners has contributed to such a substantial part of the divergence, Winship found it more productive to focus on the other 99%. Fremstad presents figures on the growth in real household income between 1979 and 2007 to illustrate his point: the top 1% saw a 277.5% increase in income while those in the bottom quintile saw an 18.3% growth in income. Namely, the numbers illustrate one of Winship’s points: indeed, absolute mobility has been on the rise. Americans of all income levels have seen income gains. But the divergence in growth, Fremstad argues, is a major problem. Fremstad also pointed to discrepancies in his and Winship’s ideas about how the cost of living affects this question and highlighted educational attainment disparities as a critical part to the conversations.
Audience members latched onto the concept of education, asking both panelists to comment on the role it has played both in perpetuating these problems and as a potential way to address them in the future. Other questions concerned the rise in health care costs and racial and gender disparities. You can watch the whole event here or check out what was said on Twitter. The presentations from the event are available on the right side of the page under Related Files.