Friday, July 15, 2016

What social mobility?

Those who make very little money in their first jobs will probably still be making very little decades later, and those who start off making middle-class wages have similarly limited paths. Only those who start out at the top are likely to continue making good money throughout their working lives. That’s the conclusion of a new paper by Michael D. Carr and Emily E. Wiemers, two economists at the University of Massachusetts in Boston.

“It is increasingly the case that no matter what your educational background is, where you start has become increasingly important for where you end,” Carr explained. 

Elisabeth Jacobs, the senior director for policy and academic programs at the Washington Center for Equitable Growth said, “If you’re in the middle, you’re stuck in the middle, which means there’s less space for others to move into the middle.”

This lack of mobility holds even for people with a college degree, the researchers found. Carr and Wiemers aren’t sure exactly why the American economy has become less conducive to economic mobility. The decline in unions may play a role: Organized labor was once better able to negotiate pay raises for their members, whatever their career stage. Carr and Wiemers also cite the work of the economist David Autor, who has found that the number of jobs at the bottom and the top of the pay scale is increasing, while the number of jobs in the middle isn’t. If there were more employment growth in the middle, those who start out at the bottom might have a better shot at moving up.

Carr and Wiemers found that the earnings of the people in the top decile are much higher than they used to be, compared to the overall population. That means it is increasingly harder to reach those top ranks. “In the presence of increasing inequality,” they conclude, “falling mobility implies that as the rungs of the ladder have moved farther apart, moving between them has become more difficult.”