Wednesday, May 21, 2008

Are you better off than your parents? Yes!

Unfortunately, a recent article by Jack Kemp at Spotlight on Poverty chooses to emphasize the negative side of a new report by the Economic Mobility Project entitled "Getting Ahead or Losing Ground: Economic Mobility in America" (.pdf link).

The data compares generational family incomes to determine if children are "doing better" than their parents. One chart (click below for bigger, .pdf link) shows that while the difference between the top quintile and the bottom quintile median incomes is increasing, all income levels do increase. Calling a difference a gap, as they do in the report, is a good way to generate a negative connotation for the data.

The Kemp article chooses to focus on the income disparity while I think an important conclusion is that even the bottom quintile median income (normalized to 2006 dollars) has increased generation to generation.

One interesting chart (click for larger, .pdf link) shows the fraction of each generation that stays in the same quintile or moves to different quintiles.

Kemp and the economic mobility project prefer to focus on the fact that 42% of children whose parents started in bottom quintile remain in the bottom quintile. His quote, with which I disagree, is "A cherished piece of the American Dream – the notion that individuals have the opportunity to rise beyond their parent’s economic status – is not standing up to scrutiny." I think they ignore the fact that most of children of the bottom quintile, 58%, move up a quintile, 6% actually end up in the top quintile, good for them. This doesn't change the fact that we should examine and potentially correct the situations that result in families remaining in the bottom quintile, but it is a quintile, 20% of people will end up in the bottom quintile, that is how it is defined Remember that median income levels still increased from generation to generation for this group.

The report includes a table (click for larger, .pdf link) breaking out each group into rising, falling and staying the same groups with respect to income and quintile. It is only in this chart that I see the most concerning data.

Firstly over all families from top to bottom the trend is generally, one third move up, one third stay the same and one third move down. Keep in mind that this includes those in the upper quintiles staying put or moving down, and while that is dismaying for someone in those groups, we should assume that they have a higher and sufficient quality of life vs. someone in the bottom quintile, especially if it is poverty you care about, not just upward mobility for all. The most concerning statistic on this chart is the 18% of children in the bottom quintile that do worse than their parents. This is the group to focus on.

The rest of the key findings (.pdf link) of the report focus on things that we have been aware of for some time. Many of the families in poverty are families with a single mother, and non-white. Thus the programs in place to offer these groups opportunities to improve their economic situation should continue or be improved. I strongly disagree that economic equality is a target to be striven for. The report seems to think that economic advantage or disparity is a bad thing in and of itself. As Americans we often don't realize that for most people things are better now than before, we are miserable when we someone else with more, no matter how much we have. I daresay we would be miserable if everyone had the same as well, no matter how well off.

In spite of the negative view offered by Kemp, I tentatively agree with some of his conclusions. We should try to reduce poverty as much as possible. We should find ways to allow increased opportunity for those in poverty to break out of it and move up the income scale and improve quality of life. I disagree with the negative tone of the article because the very study that it uses seems to also support the idea that the United States is one country in the world where these opportunities exits and that incomes (and by extension the quality of life) of each generation do continue to improve.

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