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June 07, 2005

David Wessel on Equal Opportunity and the Meritocracy

He writes, relying on the work of the excellent Joe Ferrie among others:

WSJ.com - As Rich-Poor Gap Widens in the U.S., Class Mobility Stalls: The notion that the U.S is a special place where any child can grow up to be president, a meritocracy where smarts and ambition matter more than parenthood and class, dates to Benjamin Franklin. The 15th child of a candle-and-soap maker, Franklin started out as a penniless printer's apprentice and rose to wealth so great that he retired to a life of politics and diplomacy at age 42. The promise that a child born in poverty isn't trapped there remains a staple of America's self-portrait....

But the reality of mobility in America is more complicated... the gap between rich and poor has widened... the odds that a child born in poverty will climb to wealth -- or a rich child will fall into the middle class -- remain stuck.... Americans are no more or less likely to rise above, or fall below, their parents' economic class than they were 35 years ago. Although Americans still think of their land as a place of exceptional opportunity... the evidence suggests otherwise....

As recently as the late 1980s, economists argued that not much advantage passed from parent to child, perhaps as little as 20%. By that measure, a rich man's grandchild would have barely any edge over a poor man's grandchild.... [Today a] substantial body of research finds that at least 45% of parents' advantage in income is passed along to their children, and perhaps as much as 60%.... [E]conomists and sociologists say that in recent decades the typical child starting out in poverty in continental Europe (or in Canada) has had a better chance at prosperity. Miles Corak... 'The U.S. and Britain appear to stand out as the least mobile societies among the rich countries studied,' he finds....

Even Karl Marx accepted the image of America as a land of boundless opportunity, citing this as an explanation for the lack of class consciousness in the U.S. 'The position of wage laborer,' he wrote in 1865, 'is for a very large part of the American people but a probational state, which they are sure to leave within a longer or shorter term.' Self-made industrialist Andrew Carnegie, writing in the New York Tribune in 1890, catalogued the 'captains of industry' who started as clerks and apprentices and were 'trained in that sternest but most efficient of all schools -- poverty.'

The historical record suggests this widely shared belief about 19th-century America was more than myth. 'You didn't need to be told. You lived it. And if you didn't, your neighbors did,' says Joseph Ferrie, an economic historian at Northwestern University, who has combed through the U.S. and British census records that give the occupations of thousands of native-born father-and-son pairs who lived between 1850 and 1920.... The biggest factor, Mr. Ferrie says, is that young Americans could do something most British couldn't: climb the economic ladder quickly by moving from farm towns to thriving metropolises. In 1850, for instance, James Roberts was a 14-year-old son of a day laborer living in the western New York hamlet of Catharine. Handwritten census records reveal that 30 years later, Mr. Roberts was a bookkeeper -- a much higher rung -- and living in New York City at 2257 Third Ave. with his wife and four children.

As education became more important in the 20th century -- first high school, later college -- leaping up the ladder began to require something that only better-off parents could afford: allowing their children to stay in school instead of working. 'Something quite fundamental changed in the U.S. economy in the years after 1910 and before the Great Depression,' says Prof. Ferrie....

Why aren't the escalators working better? Figuring out how parents pass along economic status, apart from the obvious but limited factor of financial bequests, is tough. But education appears to play an important role. In contrast to the 1970s, a college diploma is increasingly valuable in today's job market. The tendency of college grads to marry other college grads and send their children to better elementary and high schools and on to college gives their children a lasting edge....

In the U.S., race appears to be a significant reason that children's economic success resembles their parents'.... 17% of whites born to the bottom 10% of families ranked by income remained there as adults, but 42% of the blacks did....

Posted by DeLong at June 7, 2005 10:19 PM