Upward Mobility Continues to be a Challenge

The lack of upward mobility is a critical social issue. Contemporary information shows that a person’s health is often more about his or her zip code in addition to their genetic code. Geographic location matters, social capital matters, and institutionalized racism matters.

The Fading American Dream: Trends in Absolute Income Mobility since 1940. David Grusky, Maximilian Hell, Nathaniel Hendren, Robert Manduca, Jimmy Narang), Science 356 (6336): 398-406, 201 is one important report on this topic.

First, children’s prospects of earning more than their parents have faded over the past half-century in the U.S. The fraction of children earning more than their parents fell from approximately 90% for children born in 1940 to around 50% for children entering the labor market today. Absolute income mobility has also fallen across the entire income distribution, with the largest declines for families in the middle class. These findings contrast with prior research showing that relative mobility – measured, for instance, by the correlation between parents’ and children’s incomes – remained stable in recent decades. The measures of absolute mobility differ from relative mobility because they compare levels of earnings across generations by bringing in data on the marginal income distributions of parents and children. Secondly, most of the decline in absolute mobility is driven by the more unequal distribution of economic growth in recent decades rather than the slowdown in GDP growth rates. The rise in inequality and the decline in absolute mobility are closely linked. Growth is an important driver of absolute mobility, but high levels of absolute mobility require broad-based growth across the income distribution. With the current distribution of income, higher GDP growth rates alone are insufficient to restore absolute mobility to the levels experienced by children in the 1940s and 1950s. If one wants to revive the so-called “American Dream” of high rates of absolute mobility, then one must have an interest in growth that is spread more broadly across the income distribution.

Where is the Land of Opportunity? The Geography of Intergenerational Mobility in the United States (with Nathaniel Hendren, Patrick Kline, and Emmanuel Saez), Quarterly Journal of Economics 129(4): 1553-1623, 2014 is another research report on this topic.

This paper used population data to present a new portrait of intergenerational income mobility in the United States. Intergenerational mobility varies substantially across areas. For example, the probability that a child reaches the top quintile of the national income distribution starting from a family in the bottom quintile is 4.4% in Charlotte but 12.9% in San Jose. The spatial variation in intergenerational mobility is strongly correlated with five factors: (1) residential segregation, (2) income inequality, (3) school quality, (4) social capital, and (5) family structure. In this paper, we have presented a cross-sectional snapshot of intergenerational mobility for a single set of birth cohorts. This research finds that the level of intergenerational mobility (national rank-rank slope) has remained stable for the 1971-1993 birth cohorts in the U.S., especially in comparison to the degree of variation across areas.

A natural question given the results of the two papers is whether the cross-sectional correlations documented here are consistent with the time trends in mobility. To answer this question, we predict the trend in the rank-rank slope implied by changes in the five key correlates over time. The predicted changes are quite small because the factors move in opposing directions. For example, the increase in inequality and single parenthood rates in recent decades predict a small decline in mobility in recent decades. In contrast, the decline in racial segregation and high school dropout rates predict an increase in mobility of similar magnitude.

Overall, the cross-sectional correlations documented here are consistent with the lack of a substantial time trend in mobility in recent decades. The main lesson of our analysis is that intergenerational mobility is a local problem, one that could potentially be tackled using place-based policies (Kline and Moretti 2014). Going forward, a key question is why some areas of the U.S. generate higher rates of mobility than others.

This Chetty study (2014) ranked Charlotte last among the 50 largest US cities and Mecklenburg 99 out of 100 counties in upward mobility. Access to economic opportunity in Charlotte-Mecklenburg is far too often aligned with the zip code where one lives.

Charlotte’s Leading on Opportunity Council formed in March 2017 to implement the recommendations of the Charlotte-Mecklenburg Opportunity Task Force that convened in 2015 to study economic mobility challenges in our region. Executive Director Dr. Stephanie Cooper-Lewter joined Leading on Opportunity in February 2018.

As charged in the Opportunity Task Force Report, Leading on Opportunity takes a systemic approach to addressing the key determinants of early care and education, college and career readiness, and child and family stability, while simultaneously focusing on the cross-cutting factors of segregation and social capital.

Here is part of the challenge. Expensive homes are replacing the 1940s bungalows in low-income black neighborhoods in Raleigh, N.C., as whites, seeking bargains, near the city center, move in. The arrival of white residents, starting in 2000, is now changing non-white communities in cities of all sizes, affecting about one in six predominately African -American census tracts. The pattern is remarkably consistent and has been labeled gentrification. Arriving white residents’ incomes are twice as high as that of their existing neighbors, and two-thirds higher than that of existing homeowners. And they are getting most mortgages. 

The New York Times article linked here shows pictures of 9 cities (Raleigh, Brooklyn, Atlanta, Philadelphia, Houston, Nashville, Chicago, Indianapolis, and Columbus) where the patterns are consistent in the geographic location of this gentrification. In Charlotte, it is called “The Crescent.”  As white suburbs grow more diverse, city centers grow whiter.  The pictures in the article show neighborhood change from 2000 to 2017 as white populations grew, nonwhite populations grew, and those that did not grow diverse.  The changes show gentrification visually. 

This pattern is difficult to stop, and are we sure it is best to be stopped.  Ingrid Gould Ellen, a professor at New York University, said that American could get to a place where the real estate market in any location is not so sensitive to signals about race.  The blogs in the next few months will continue this conversation about upward mobility and the various facets of that challenge. I’ll make the point that underlying factors must be addressed, such as institutionalized racism, lack of social capital, mindsets that do not lend to success.  I’ll also make the point that we have many more avenues to address these challenges that are being used and discussed.


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