The Myth of Upward Mobility

So, I've been thinking a lot about my path in life; I think I'm having some sort of existential-midlife crisis, if you will, intermingled with what I know about economics, psychology, etc. In other words, I've been spending a lot of time thinking about how I got where I am and how not just my life, but how my parents' lives and their parents' lives and so on are just as much responsible for where I am and who I am. What got me thinking about all this (not that I don't think about it regularly, but what got me on THIS particular tangent) is money.

I've been thinking about upward mobility and how nearly impossible it is in America today. The reason my bank account will only ever be slightly above what my parents' was, despite my degrees and good career, is precisely because my parents had very little money. I had to borrow money to go to college, which I am still paying back; a large part of my income goes to that so despite making more money than my parents, I don't actually get to ENJOY it as much as I would had I been able to have my college paid for in the first place. And that is the rub of income inequality in America.
Yes, those of us with the intellect and the motivation to better our lives are given the opportunity to do so, but only at great cost.

I suppose I could have gone to medical school or taken a different psychological path and chosen to do therapy in private practice and make a heck of a lot more money than I do now, but instead, I chose to teach. Granted, if I'd gone to medical school, I would've graduated with even more debt than I have, but we reward that choice by providing a very high income. After all, "it costs so much to go to medical school!" Um, it costs a lot to go to any school. Most PhDs I know have a pretty high amount of student debt.

Look, I know these were my choices. I'm not complaining so much as just exploring what choosing a career that pays me less than I might make otherwise means. What does it mean for society, for my community? Well, it means that highly qualified and caring people are helping change other people's lives, which is a good thing. What does it mean for me personally? That despite having a career that I love, I will likely never be rich. I'm not saying that's a bad thing (I'm comfortable and I don't think being rich should be one's goal anyway), I'm just saying that the notion that everyone has an equal opportunity to rise in SES (to "get rich") in America is foolish and naive.

However, the baby boomer generation did indeed have that opportunity--in part because, thanks to the very generous post-WWII tax base higher education cost very little. A college degree from the University of Illinois in 1970 cost around $2,000 TOTAL, much of which could be paid for with work study jobs. Now consider this: the cost of a college degree has increased 1,120 % since 1978. THAT'S ONE THOUSAND, ONE HUNDRED AND TWENTY PERCENT. Baby boomers didn't graduate with tremendous debt, so when they got into the careers that their new degrees allowed them to have, they did indeed out-earn their parents. By leaps and bounds. Upward mobility was guaranteed. Furthermore, low cost health benefits were almost always provided by employers. Automobiles and homes didn't cost 3/4 of a man's take home income.

And here's where it gets interesting.

This baby boomer generation, benefitting from what was as close to socialized medicine and free education as is possible in the good 'ol US of A, became greedy. As they became the CEOs and leaders, the battle to fight taxing the rich began. The generous tax base that allowed this generation to fly out of their parents' SES and create the first strong middle class in the history of America was destroyed, and along with it, every subsequent generation's ability to do the same, including the baby boomers' own children. What's rather baffling to me, however, is how so many (yes, I know, not all!) members of the baby boomer generation simply refuse to get it--they just can't understand why a person can't get a job, or get ahead, or whatever. "You just have to want it enough!" Um, yes, that used to be true. Truly, it did. But when they chose to keep more and more of their wealth instead of putting some of it toward the society that sacrificed to get them there, they essentially said they had no intention of paying it forward.

I recently read that the group least affected by the economic downturn in America has been the baby boomers. Get X and Millennials are not doing so great. From the Motley Fool (2013, so the age ranges are from 3 years ago): "When adjusted for inflation, the median net worth of households led by people aged 45 to 54 was 10% lower in 2009 than it was in 1984, according to the Pew Research Center. Those led by individuals aged 55 to 64 -- currently the leading edge of the boomer generation -- was 10% higher in 2009. On the other hand, households led by people between ages of 35 and 44, which today is the primary age range of Generation X, had 44% less median net worth in 2009 than the first-wave boomers did in 1984. Those younger than 35 had two-thirds less net worth in 2009 than the same age group did in 1984, which means that boomers generally had almost three times as much real wealth (and potentially much more than that, in the case of older boomers) during Reagan's first term in office as their children did at the start of President Obama's first term." Baby boomers, who are the children of the greatest generation, have taken more and are leaving less than any other generation before them.

Look, I didn't write this to trash baby boomers per se--I am simply talking about the economic policies that many have pushed and and supported and how they have hurt so many of their children and will continue to hurt their grandchildren. And again, I know this doesn't apply to all. I have many baby boomer friends who are as appalled by the changes in our economic infrastructure as I am.

Okay, I've digressed a little into a rant, and that truly wasn't the point of this post. Income inequality was, so let me get back to it, and why upward mobility is so much more difficult in today's America.

Children from lower SES families not only often start out their adult lives in debt, but often start their adult lives with very few good money management skills
 (see http://www.pewtrusts.org/en/projects/financial-security-and-mobility for some great stats on upward mobility in the U.S). I'm not saying that they can't get them, and I'm not saying that we are supposed to feel sorry for people who start out their adult lives in terrible debt, I'm just saying that context matters. But increasingly, researchers are showing that it truly is nearly impossible to move up the SES ladder in America any more, mostly because of economic policies put into place in the last 30 years, but also because so many lower SES young adults start out already in the hole. When they do begin making money, a tremendous amount of it goes to pay the debt, instead of going to build a life. And those poor money management skills? Adults who grew up in lower SESs are more likely to get into credit card debt, more likely to invest whatever money they have into risky investments, etc. They are less likely to save, primarily because they didn't learn how and why to save when they were growing up--probably because their parents had no money to give them to save, and their parents had no money to save so there was no modeling of saving.

Even where you grew up has an impact on the likelihood of accumulating wealth. The county where I grew up is considered "among the worst counties in the U.S. helping poor children" experience upward mobility,  When all else is equal, boys who grow up in low income neighborhoods and cities with low mobility earn 35% less than boys who grow up poor but in areas with better records of upward mobility. For girls, the number is 25%.

And that's why liberals tend to like economic policies that help the poor.  They know that an economic infrastructure that supports lower income families makes it less likely that the children of those families will grow up to be low income. Policies--and they have to be aggressive-- that help people go to college at little to no cost, have affordable health care, etc. HELP OUR SOCIETY IN THE LONG RUN. And it can't just be "oh, join the military" or "take out a student loan." Because that just keeps poor kids fighting our wars and poor kids in debt longer, and less likely to be able to save for their own children's education, which means the cycle will repeat.

When I was in college, I always worked a minimum of two jobs. Always. During my freshman and sophomore years, one of my jobs was working for a stockbroker. He was a very nice man with strong community ties (his father was a realtor in the area), and he was very nice to me, paid me fairly well, and generally treated me with great respect.  I liked my job very much.  But one day stands out as a reminder of the separation between us, and I don't mean because I was just a college student doing his data entry.

He had lost his social security card and needed to go the social security office to get a new one. He was ranting about all the dirty people and homeless people who hang out by the office and how that made him nervous about getting mugged. He turned to me and said, "I could pay you to do it! I'll give you all my information and you can wait in line for me." He had just talked about how he thought it was a dangerous area, how he was afraid of getting mugged, but his 18-year-old female assistant? Well, clearly, she can't be worth as much as him so it must be okay. I must've looked a bit mortified because he soon realized what he had implied, quickly apologized, and then never mentioned it again. But it had happened. I was a lower class person to him. I cried my entire way home from work that day, realizing that no matter how nice I dressed, how well I spoke, my status to him was already set the moment I took the job. And in a way, that sort of encapsulates the unofficial class system we have in America. If it was so clear on such a small scale that I was worth less than he was because I was from a different socioeconomic status than he was, then we must acknowledge the impact this class separation has on a much grander scale, and most definitely must consider the impact of race and ethnicity on class. I was a white girl, but still "not quite good enough" simply because of where I was from, where I lived, where I went to high school, and what my parents did for a living.

What would it have been like for young black man? Oh, that's right, he likely wouldn't have even gotten an interview for the job at the stockbroker's office.

Poor minority children are even less likely than poor white kids to grow up and break the bonds of poverty. The report, "Umbrellas don't make it rain: Why studying and working hard isn't enough for Black Americans," points out that the average black household would have to save "100 percent of their income for three consecutive years to overcome the obstacles to wealthy parity by dint of their own savings activity." In the United Stated today, it is the unearned family inheritance that has the greatest effect on wealth accumulation. Education is no longer the great equalizer. The Republican mantra of "work hard and you'll get ahead" is simply not fact for the majority of all Americans today.

Upward mobility? That's an American dream that is on its last breath.

See:

http://www.nccp.org/publications/pub_911.html

http://www.brookings.edu/blogs/brookings-now/posts/2015/06/raj-chetty-maps-geography-social- mobility

http://www.fool.com/investing/general/2013/06/29/how-the-baby-boomers-destroyed-americas- future.aspx

http://www.nytimes.com/interactive/2015/05/03/upshot/the-best-and-worst-places-to-grow-up-how- your-area-compares.html?_r=0

http://economics.harvard.edu/news/new-research-mobility-studies-profs-chetty-hendren-and-katz http://www.insightcced.org/tag/economicsecurity/