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Tags: american dream | meritocracy | opportunity. income disparity

Restoring True Meritocracy in America Is Possible

Restoring True Meritocracy in America Is Possible

By    |   Wednesday, 06 September 2017 01:27 PM EDT

Over the weekend, Speaker Paul Ryan tweeted, “In our country, the condition of your birth does not determine the outcome of your life. This is what makes America so great.” Equality of opportunity is an American ideal that conservatives and liberals alike can rally around. But does everyone have the same chance of making it in America?

Let’s look at the data, and take 1,000 people to represent the U.S.’ 325 million people. Break these 1,000 people into five groups, bunched by income from highest to lowest, with 200 in each.

If Ryan’s statement holds, regardless of which income group one is born into, there should be a one in five chance of ending up in any of the five income groups as an adult. So, if 200 children were born to parents in our poorest income group, 40 of them (one in five) should end up as adults in the highest income group.

How close is America today to this meritocratic ideal? Data from the Equality of Opportunity Project, the most exhaustive effort to measure upward mobility, shows that only 18 of the 200 children born to the poorest income group would make it into the top income group as adults. Similar work from the Brookings Institution finds 68 remain in the poorest income group. A pure meritocracy would see 40 stay in the bottom group, and 40 rise to the top. These numbers suggest America is some way from realizing Paul Ryan’s dream.

Across the U.S., there will always be rags to riches stories — I am not saying this is impossible. Just unlikely. Children born to parents in the top income group are 3.5 times more likely to be in the top income group as adults than children born to families in the bottom income group. This is the dire reality for many Americans trying to get ahead.

What Causes Upward Mobility?

Departure from meritocracy does not happen by accident. Those born rich are at an advantage from the outset and increasingly so. With money, comes access to improved health care including in utero, more prosperous neighborhoods, and more resources that foster a stable and enriching home environment. In the early 1970s, families in the top income group spent four times more on “enrichment” activities for their children than families in the bottom group. Today, the equivalent number is almost 9-fold.

In adulthood, advantages persist. Parental networks can help get that first internship or college admission. There is increased freedom to take risk, such as starting a business, knowing that there is a safety net of parental wealth to fall back on.

These advantages for children from rich families bear fruit. At Ivy League colleges today, more children come from parents with income in the top 1 percent than the bottom 50 percent combined.

I do not begrudge wealthy families for investing in their children to get them the best start in life. But to pretend these advantages do not exist, and that we’re already living in a meritocratic society, is dangerous and neglects opportunities to explore policies to give children a more equal start in life.

Evidence shows that promoting upward mobility among the children of low-income families depends on high quality public schools and early childhood education, lower parental income inequality, more stable families, communities where people help one another out, and integrated neighborhoods with diversity of race and income. Recent research also suggests that higher marginal tax rates, particularly for lower income groups, may constrain upward mobility by lowering incentives to work. While it is early days for this research agenda, relieving the tax burden on poorer working Americans would likely help.

These factors vary across countries and, in turn, so does upward mobility. The persistence of wealth and poverty observed in America is not seen in other countries. In the words of leading U.S. economist Raj Chetty, “you’re twice as likely to realize the American dream of moving up if you’re growing up in Canada rather than the U.S.”

These factors also vary widely across the U.S. San Jose, the highest ranked large American city by upward mobility, has the same level of upward mobility as Canada. While in parts of America, it is next to impossible to get ahead if you’re not rich already. Interestingly, in a ranking of upward mobility for America’s 50 biggest cities, Speaker Ryan’s home city of Milwaukee ranks 49th — second from the bottom. If there were 200 people born in Milwaukee’s bottom income group, only 9 would make it to the top.

Let’s look in detail at one of these factors — public schools. In the U.S., almost half of school funding comes from local taxes — largely property tax. Wealthy families buy expensive properties which leads to neighborhoods with well-resourced schools which leads to a better education for children from wealthier families. A better education means these children are more likely to earn more as adults.

For a poorer city like Milwaukee, public schools have less resources to provide avenues out of poverty. Potential among children from poorer families is more likely to be wasted and, thanks to the actions of government, America is worse for it.

How to Improve Upward Mobility?

Decisions made by governments — particularly those impacting children and their families — can directly improve upward mobility. This is not necessarily about spending more. It’s about spending smarter on initiatives that equip people to reach their full potential.

One program, “Moving to Opportunity," supported families to move out of higher poverty neighborhoods. Children who moved when they were very young earned 30 percent more as adults and were 27 percent more likely to go to college. With opportunity and freedom to succeed, children from poorer families can get ahead. Yet often long public housing waiting lists leave families stranded in poverty stricken neighborhoods for the most important years of a child’s development.

Over coming weeks, Congress will debate healthcare, taxes, and a 2018 budget with the potential to cut programs that promote upward mobility such as Early Childhood Education and Medicaid. As you assess the merits of the arguments that will ensue, know that America is not a meritocracy. Know too that Speaker Ryan is coming to his policy positions with the opposite premise. Let that sink in.

Matt Tyler is an economist who works to improve government effectiveness with a particular focus on social services. Tyler is a former management consultant, where he supported executives in developing and implementing strategy across financial services, telecommunications, manufacturing, postal services, and retail. He worked as an economist for Australia’s foreign service and as a policy adviser to the Federal Australian Labor Party on economic and social policy. He has also worked for Third Sector Capital Partners where he assisted with the construction of two Social Impact Bonds in Salt Lake City. He is currently completing a Master of Public Policy at Harvard’s Kennedy School of Government. He tweets as @matt_b_tyler. To read more of his reports — Click Here Now.

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Children born to parents in the top income group are 3.5 times more likely to be in the top income group as adults than children born to families in the bottom income group. This is the dire reality for many Americans trying to get ahead.
american dream, meritocracy, opportunity. income disparity
Wednesday, 06 September 2017 01:27 PM
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