President Obama got it half right. Kind of. Last month, he declared the “defining challenge of our time” was “a dangerous and growing inequality and lack of upward mobility that has jeopardized middle-class America’s basic bargain … .” Obama, shorter: What’s good for the 1% isn’t at all good for America. In fact, extreme income differences are toxic for the rest of us — and for equality of opportunity.
But new data tell a different, more complex story about income inequality and economic mobility and causality. A landmark study from the Equality of Opportunity Project — which includes rock-star economists Raj Chetty and Emmanuel Saez — examined millions of tax records and found that mobility has change little in nearly half a century.
Children born in 1971 in the bottom 20% of household earners, according to The Wall Street Journal, had an 8.4% chance of eventually making it into the top 20% of earners by their 20s or 30s vs. for 9.0% kids born in 1986. And about 20% of children born into the middle fifth households in the mid-1980s climbed into the top fifth as adults, also largely unchanged from earlier. Upward mobility has not been declining.