Is Social Mobility a Mirage?
NEW YORK ( MainStreet) President Barack Obama has been sounding the clarion call of income inequality and lack of social mobility in the United States. But a recent, comprehensive, study refutes this - even though it falls into the miasma of college as they key to social mobility.
The paper, published by the National Bureau of Economic Research (NBER), is called, "Is the United States Still a Land of Opportunity? Recent Trends in Intergenerational Mobility." It drew some interesting conclusions about social mobility in America today.
Conducted by two Harvard economists, Raj Chetty and Nathaniel Hendren; two economists from the University of California, Berkeley Patrick Kline and Emmanuel Saez; and Nicholas Turner from the Office of Tax Analysis of the U.S. Treasury Dept., it determined that "....children entering the labor market today have the same chances of moving up in the income distribution (relative to their parents) as children born in the 1970s. However, because inequality has risen, the consequences of the 'birth lottery' the parents to whom a child is born are larger today than in the past."
So while social mobility has been the same through the past three decades, the economic starting line does make more of a difference now. It is not a controlling factor but it does make more of a difference than before.
The study is troubling, though, because of its overemphasis of the importance of a college education for social mobility. It states, "For more recent cohorts, we measure mobility as the correlation between a child's probability of attending college and her parents' income rank."
The study also notes "[t]he fact that the college attendance is a good proxy for income mobility is intuitive given the strong association between higher education and subsequent earnings."
If you give a carpenter a problem, do not be shocked if his solution calls for a hammer and nail. Similarly, give an academic a problem and do not be shocked if the solution calls for more academics - i.e. more education.
Is social mobility absent from those who start their own businesses? Does one have to be a college graduate to start one's own business? Certainly a college education did not matter to people such as Bill Gates and Paul Allen who started Microsoft. The same is true of Michael Dell, Larry Ellison, Carl Bernstein of Watergate fame, Thomas Edison, Andrew Carnegie, and David Oreck of the vacuum cleaner empire. Indeed, according to a January 2012 Forbes magazine article, "Out of the 400 richest people in the U.S., 63 entrepreneurs don't have one more than 15% of the list."
This is not to say that a college education is not important - but access to capital, learning a skill, and being able to apply one's talents should be just as important. The only reason a college education is currently a determinant is that it is the key to the executive lounge so to speak. A person is not even allowed to apply for certain jobs without one.