Part VI – Enhancing Social Mobility

Editor-in-Chief

7 August 2018

One of the most significant purposes of the welfare state is to increase social mobility. Unfortunately, social mobility has stagnated since the 1970s. Even worse, most have not focused on its significance and the dangers its stagnation poses to the health of democracy. Instead, it is income inequality that has been the focus of the political left. This is not without good reason, income inequality has an inverse effect on social mobility: as income inequality increases, social mobility decreases. This article will tackle income inequality as one of the many causes to social mobility.

Social mobility, the ability of one to climb the economic ladder, often measured in quintiles, allows children born into a poor family to end up better off than their parents. Economists have presented clear evidence for how long the stagnation has occurred and which areas have the worst effects. This article should provide politicians with indications of how to overcome the core issues that lead to social immobility. This is not a politically untouchable issue either, both the left and right have agreed that it is a serious detriment to society with leaders such as former President Obama, Speaker Paul Ryan, and Senator Marco Rubio decrying it. Where the political division is found, as usual, is in which policies to implement. The United States has the worst stagnation among western democracies and is most politically divided as to how to solve the issue. Looking to Europe should allude to better solutions.

The poorest in Denmark are twice as likely to reach the top quintile than in the United States. While seeking differences among states would suggest that it is national policies that make the difference, but even within the United States, different regions are radically different. San Jose, California is similar to Denmark for social mobility, while Charlotte, North Carolina is just a third of that. Economists have found five factors that correlate with differences in social mobility: residential segregation, the quality of schooling; family structure; social capital; and income inequality. Improving these issue will likely improve the social mobility among the worst regions and could improve it in even the best regions.

The issue of residential segregation, both in terms of economic differences and residual racial effects has left families struggling to move out of poor neighbours. If governments invest in low income housing that is better mixed into medium and upper priced neighbourhoods, families will gain the advantages by being surrounded by the benefits of wealthier neighbourhoods.  

Improving the quality of education can be done through many facets. First and foremost, by subsidizing or even making post-secondary free, this will enable students to further their quality of education that is usually inhibited by the vast cost of post-secondary institutions. Once this is established, there have been innovative programs that have improved the graduation, which is the aim of being educated at an university. Georgia State University has begun an initiative focusing on low-income individuals, which has raised the graduation rate from 32 percent to 54 percent.

Georgia State uses data analysis to identify potential academic problems for students, pre-emptively applying assistance to prevent the students from dropping out. This initiative has attracted experts from across the world. Assistance may include identifying academic and financial risks, then suggesting alterations to the students’ academic plans, tutoring, or financial assistance or literacy classes.

Family structure can disadvantage children at a young age. This often comes in the form of single parenting or having above average number of children. This can be offset by better child care and parental leave programs, preventing the disruption in the parent(s) careers. Additionally, better child benefits and single-parent tax breaks will ease the pressure that an atypical family structure brings.

Encouraging social capital may also bring economic benefits later in life for children and their families as a whole. Social capital refers to participating in community-building and socializing within one’s community. Spreading one’s social group can bring benefits as members of the community can help support one another’s children.

Lastly, income inequality. Traditional wealth redistribution does reduce the degree of income inequality. The United States has the least redistribution, largely because it is embedded in the culture that one can get to the top by working hard, even though the evidence does not support this ‘American Dream’. Efforts to increase this will increase the social mobility, but politically it can be difficult.

Others functions that can reduce income inequality are supporting medium to high paying jobs. As technology develops, low paying jobs will begin disappearing and it is unlikely the jobs of the future will replace that section of the economy. As has been reported on earlier in this series, focusing on the economy of future will help balance the current polarization of wealth.

By targeting these five issues, governments should see improvements in the overall social mobility of their citizens. By focusing on the least advantaged regions most, the equality of opportunity should also rise. It is the pursuit of equal opportunity that assists the poorest out of poverty, making for a better life than their parents had had.