If we want to improve upward mobility, we must tackle income inequality

Is America still the land of opportunity? Today in particular, it’s a question well worth asking. The United States has low rates of upward mobility compared to other advanced nations, and there has been no improvement in decades. So creating more opportunity—and perhaps a better chance at that mobility—is a worthy goal.

But, opportunity simply doesn’t thrive amid great inequalities. And so if “more opportunity” is offered as an alternative to addressing income inequality, it’s a dodge. It’s a hollow promise.

To understand why, it’s important to appreciate the difference between opportunity—that is, upward mobility—and income inequality. Concerns about mobility center on strengthening the chances that children who grow up with relatively low incomes will attain middle-class or higher incomes in adulthood. Taking on inequality means focusing on whether low- and middle-income households improve their share of the economic growth generated in the next two decades. These are different issues—although ultimately they are intimately related.

To grasp the reality of rising inequality, take a look at what’s happened to the share of the growth of household income received by the top 1 percent of our society. In 1979, this stratum received 9 percent of all income. Yet, between that year and 2007, the share of new income going to the 1 percent was 38 percent, according to the Congressional Budget Office—and estimates using tax data on new market-based incomes put it at 60 percent. In short, the top 1 percent received four to six times its expected share of all the income growth.

For politicians who don’t want to tackle income inequality, the opportunity dodge is very popular. Most conservatives consider income outcomes to be the result of meritocracy. “I don’t care about income inequality per se; I care about opportunity inequality,” Arthur Brooks, head of the American Enterprise Institute said last year. "I want everybody to have a chance to be mobile, to rise, for everybody to have a chance to earn success." Though left unsaid, this view rests on a perception that groups on the short end of income inequality haven’t exerted sufficient effort, have inadequate skills, or have made counterproductive choices, such as not getting married. In other words, this perspective relies on blaming the victim.

Centrists also sometimes address opportunity instead of income inequality to avoid confronting the top 1 percent’s capture of the lion’s share of income growth. Addressing soaring executive pay and a runaway financial sector—the main causes of the 1 percent’s income gains—is uncomfortable for centrists, as it necessarily involves redistribution; and besides, those folks are their donor base. And talking about opportunity allows a politician to avoid confronting ongoing wage suppression and the imbalance of bargaining power that has led to stagnant wages for college and non-college graduates alike over the last dozen years. As Rep. Scott Peters of the House New Democrat Coalition said last year, "To the extent that Republicans beat up on workers and Democrats beat up on employers—I'm not sure that offers voters much of a vision."  

So let’s be clear: The “opportunity agenda” of improved early-childhood education and access to college will help today’s children to prosper as adults if coupled with policies that improve the availability of good jobs. But it will do nothing to enable today’s families to share more fully in economic growth. That’s what makes it a dodge to pursue opportunity while ignoring income inequality. At best, it’s changing the subject—in Larry Summers’s characterization, evading the tougher issue of who has bargaining power in the economy.

We can’t substantially change opportunity without changing the actual living circumstances of disadvantaged and working-class youth. Therefore, reducing income inequality is essential for improving upward mobility. Here’s why:

First, income inequality and intergenerational mobility are closely linked. The so-called Great Gatsby Curve comparing opportunity with equality shows that mobility is less in countries with the greatest inequality. We won’t be able to foster more opportunity and mobility without also addressing income inequality.

Second, success in school depends heavily on a child’s environment. Policies to increase mobility usually focus on more and better education, including starting earlier and extending schooling through community college or a four-year degree. Yet one of the most robust and long-standing social science research findings is that family background—the circumstances in which children grow up—greatly shapes educational advancement. For example, test score gaps between rich and poor children essentially peak in kindergarten, meaning that family circumstances cement pre-existing inequalities for too many children.

Promoting education solutions to mobility without addressing income inequality is ultimately playing pretend. We can’t substantially change opportunity without changing the actual living circumstances of disadvantaged and working-class youth.

Success in school is not as easy for someone facing poverty, especially the concentrated poverty that racial segregation produces. Children from families struggling to make ends meet face a litany of obstacles: They frequently change schools due to poor housing and often have little support in doing their homework. Living in a chaotic and frequently unsafe environment—with parents who are under great stress—they suffer more exposure to lead and asbestos, and endure untreated health problems. For these kids, opportunity is not enough.

If we’re serious about reducing inequality, we need to help people earn the kind of living that enables them to provide for their families and build a better future. Without that, promoting mobility and opportunity through more and better education is simply posturing.

Lawrence Mishel is president of the Economic Policy Institute.

The views presented in this guest post solely reflect those of the author.