DRIVERS INCREASING INEQUALITY AND REDUCING UPWARD MOBILITY

MULTIPLE DRIVERS TO INCREASING INEQUALITY AND

THE BARRIERS TO UPWARD MOBILITY

I’ve never been as struck or worried as I am today at the multiple drivers that are driving rising inequality between people of means and higher education and those without and the barriers to upward mobility which these drivers of inequality represent.  What worries me most is how these drivers build on one another. And how systemic and deeply embedded they are, especially in family conditions, racial and other biases and policy. This is tearing at our social fabric (witness the appeal of Donald Trump in this election cycle) and cramping significantly our economic growth as a Nation. 

The realities are numerous and altogether clear.  As just one example, the likelihood of an individual having been born into the bottom quintile of income now having a college degree is 6%.  The chance of a person born into the lower income quintile moving to the median income in his or her lifetime is 30%.

What are these drivers and barriers I refer to?

1.     They start with the impact of the family circumstances into which a child is born--circumstances differentiated by education, income and wealth and race.  A well-known fact:  A child born into a college-educated family (and far more than in the past, today, people are choosing partners of similar education) have a working vocabulary three times the size of a child born into a family whose parents have not gone beyond high school at the time the child enters kindergarten.  Here is another critical fact relating to family circumstances as influenced by education (and poverty). While over 40% of all babies born today are born to unwed mothers, the comparable number for college educated mothers is only 6%. It goes on...the enormous and widening gap in wealth (and, thus, what parents can afford for their children) which exists today is likely to continue widening. Why? One reason is that, as Thomas Piketty persuasively argues in his book, Capital in the 21st Century, the return on capital (accumulated wealth) is significantly greater today (at 6-8%) than the average increase in wages (at 1-2%) which barely covers inflation and is virtually the only potential  source of increased wealth for the overwhelming majority of all families. The gap in wealth in our country has greatly expanded over the past 30 years. As of 2013, the average median family wealth was $81,000 compared to $942,000 in the top 10% and $7,880,000 in the top 1%. The bottom 10% was a meager $2,050 and the bottom 1% are in debt.  And as we know, the gap in wealth is particularly significant across racial lines. The median wealth for white families is $134,000 yet only $11,000 for African-American families, again in 2013. Much lower home ownership among African Americans is a key factor. 

And it is not only the increasing gap in "wealth.”  There is the increasing gap in "earned income". This of course continues to drive this wealth gap on a compounding basis.   Over the last approximately 40 years, real income for the bottom 20% of wage earners has not increased at all, while income for the top half have increased in double digits, and particularly the top 10%, has increased by 60%. There are simply too many people, working one or two jobs, who are being paid poverty wages, grossly insufficient to allow them to bring up a family. The failure to provide a livable wage for work well done is an enormous inequity in our nation and a driver of the poverty that afflicts us. 

2.     The availability of quality parental support during the first three years. We know more than ever how important the interactions are between a parent and child in the development of the child.  A lower-income family, particularly one with the only parent or both parents needing to work (which characterizes over 70% of these families), is going to have far less time to interact with a child in his or her earliest years than those families where one of the parents, if not staying at home fulltime, can spend substantial time with the child 

Beyond that, there is the affordability (or lack of it) of quality childcare and pre-K experience.  Today, no more than 25% of children are in quality pre-K.   And again class and race make all the difference. Most families of significant means do have their children in quality pre-K, some as early as age two, let alone at the age of three and four. The cost of quality child care is as much as 25% of the average median family income, i.e., unaffordable. 

3.     The gap in the quality of educational support continues in K-12.  Not so much in the quality of teachers, but in the facilities and extra-curricular activities and the preparedness of fellow students, all of which makes a difference to every single student in the class. In light of the foregoing facts, it is hardly surprising to find that recent tests show that while overall American elementary school students fall below the median compared to the students from other developed nations in proficiency tests , those students from high-income districts (i.e. ones where less than 10% of the students are in federally subsidized lunch programs) score the highest of all the nations. In contrast, in those school districts where 75% or more of students are in federally-subsidized lunch programs, students from the United States score the lowest.

4.     Post-high school education.  As is well publicized, up to 70% of jobs in the future will require more than a high school education.  Yet, the availability of this education is far more readily available to students whose families have significant means, both in affording tuition and being able to handle the debt which remains after school. The need for post-high school education will only grow in the future. 

Thus, from pre-birth all the way through to a young person’s latter teenage years, there are these reinforcing, multiple drivers to growing inequality and greater barriers to upward mobility.  They build on one another. They are deeply rooted. And they are multi-generational in their impact.  This is wrong.  Every child deserves the chance to fully develop his or her God-given abilities. Our future as a nation and society depends on it.  Today, an estimated 25-30% of our young are entering adulthood unprepared to succeed and prosper and the consequences of this also flow to the next generation. 

We must not allow this to continue.

Beyond all the points I have made so far, there is one other. We have abundant evidence that the investment in quality childhood development programs, focused on children ages 0-5 and their parents, provides financial returns of 2 or 3:1. They are financial no brainers.

It goes way beyond this short piece to address the systemic and policy changes we need to make to confront the realities I have described above.  However, four are of fundamental importance: 

·      to provide support for parents to give their children the development experience they need and parents want for their children, cognitively, emotionally and in health, ages 0-5 during which 90% of brain development occurs. 

·      to provide holistic, community-based interventions to address the scourge of poverty, including addressing racial and income disparities in health, safety, jobs and education.

·      to implement minimum wage legislation bringing salaries over the next few years to at least $15.00 per hour or about $30,000 per year, assuming a 40 hour work week; 50 weeks per year.
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t  .to provide tuition plans and student loan relief that will enable every young adult seeking post high school to obtain it.

John Pepper 

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