Upward Mobility is Now a Myth in America

For many Americans it has been taken as gospel that upward mobility is the norm in America and that each generation can expect to achieve a higher status than that of their parents.  Perhaps that was true once upon at time, but it is no longer the case except in increasingly rare instances.  Indeed, a number of studies have found that Europe - derided as "Old Europe" by many "conservatives" - offers younger generations more chances at upward mobility than can now be anticipated in America. Now, downward mobility is what terrifies even middle class and upper middle class families. What happened?  A number of things, not the least of which has been decades of Republican warfare against labor unions, state right to work laws, and policies that enable big corporations to reap huge profits while workers are treated as disposable and easily replaceable trash.  Wages have stagnated even as the cost of living has soared.  Hardest impacted are Milennials who even with college degrees often cannot secure high paying jobs.  A column in the Washington Post looks at the growing myth of upward social mobility in today's America.  Here are some highlights:

It’s an axiom among many Americans that each future generation will live better than its predecessor. New technologies, greater efficiencies and a can-do spirit will reward us with higher living standards. There might be periodic stumbles, but the long-term trajectory is up. And the people most guaranteed to enjoy this bountiful future are the children of today’s upper-middle class.

That’s the conventional wisdom. Ditch it.

If you are an upper-middle-class parent, as I am, you must have noticed that the real world isn’t playing according to script. Among many young Americans, there is downward mobility. The children aren’t achieving what they (and their parents) expected. Even when they have (and many have), the gains could be eroded in the future. The trajectory is not inevitably up. Parents worry about their children’s fate.

Partly, this reflects the memory of the 2007-2009 Great Recession and its huge job losses. But it’s more than that. Compared with their elders, many younger Americans are doing worse. Despite today’s strong economy, they’re falling behind.

 

We know this from an important study by Raj Chetty and fellow economists from Stanford University, Harvard University and the University of California at Berkeley.  . . . .

 

What they reported is fascinating. About 90 percent of children born in 1940 ultimately exceeded their parents’ incomes. That is, almost everybody. . . . . However, for children born in 1970, only 61 percent earned more than their parents, and for those born in 1980, only 50 percent did.

 

That’s a sea change. It suggests that we’re already at the point where many in the present and next generations of younger Americans won’t live as well as their predecessors. If current trends continue, that certainly will be true.

You can see the consequences among millennials, those born from 1981 to 1996. Their squeezed incomes have forced them to rearrange their lives. They’re marrying later, buying homes later, having children later and — to save money — living longer with their parents. What’s also surprising is that the biggest losers seem to be the children of the middle and upper-middle classes, precisely those who are supposedly most protected against adverse changes, . . . .

“This seems to have become steadily harder to achieve for those born into middle-class families in particular from 1950 onward.”

Their explanation is simple. Those in middle and upper-middle classes have more to lose than, say, the poor. The incomes of the poor can’t drop much lower; indeed, with small gains, they can pass their parents’.

The result: The higher the parents’ incomes, the less likely that their children will match them. This is even true for the richest 1 percent of families, says economist Aparna Mathur of the American Enterprise Institute.

Just what has caused the slowdown in incomes is a tangled tale with the usual suspects: poor schools that produce poor workers; income inequality that stifles consumption spending; weak housing construction; inadequate innovation;  . . . .

[T]he broad trends seem reliable. The paradox is apparent. Today’s strong economy notwithstanding, there’s an underlying worry about the future.

Economic anxiety is increasingly an equal-opportunity affliction. No one can escape it. The poor worry about staying poor. The lower-middle class worries about paying bills or losing jobs. Now upper-middle class parents have joined the crowd, because their own well-being is often judged by how well their children are doing. That is the stubborn source of their angst.

Taking the South's Pathologies Nationwide

I have lived in the South for more than 2/3's of my lifetime at this point although, thankfully, the Hampton Roads area of Virginia becomes a little less Southern with each passing day in part because of the constant rotation of military members and their families through the area.   Alabama and Texas where I also lived in the past and much of the rest of the region are akin to someone with a significant case of bi-polar disorder who refuses to remain on their medications.  Some days one sees sweetness and light and graciousness and others one sees racism and bigotry and the embrace of ignorance that is downright chilling.  Some southerners live in a fantasy world where they are akin to the Saxon nobles in Ivanhoe resisting the Norman ascendancy.  Others embody the worse elements of the Klan and/or religious extremism. Despite its proclaimed religiosity, the Bible Belt has the highest teen pregnancy rates, the highest Internet porn usage, and the highest divorce rate.  Education levels also are among the lowest in the nation.  Now, Donald Trump and the Republican Party want to spread this dysfunction nationwide.  A piece in the Washington Post looks at this disturbing prospect.  Here are highlights:  

Have you ever wondered what it would be like to live in Mississippi or Alabama? Well if the GOP has its way, you’ll get the chance to find out.

That’s because Donald Trump and congressional Republicans, through the executive branch leadership now being assembled and the legislative priorities they have laid out, are preparing to take the economic, political, and social arrangements of the South and spread them across the country.

The desire to southernize the entire United States is not new, and in some ways it’s been happening for a while, at least where Republicans have control of government. But now that Republicans have complete control in Washington, they’re going to try to accelerate and deepen that process. Let’s look at it piece by piece:

The Southern economic model. The first and most far-reaching component of this project is to take the Southern economic model national. The foundation of that model is the elimination of collective bargaining and the destruction of the labor unions that are able to negotiate higher wages and better benefits for workers. The Southern model replaces the North’s high-wage, unionized manufacturing with a low-wage, low-benefit version that has succeeded in drawing many factories southward. Southern states have lured companies with gigantic tax breaks and the promise of a powerless and desperate workforce. The result is often more jobs in those Southern states, but worse jobs. . . . multiple forces including the crippling of unions and the emergence of Walmart as the nation’s largest retailer have acted to pull wages and benefits across the country down toward the South’s level.

Yesterday we learned that Trump will nominate Andrew Puzder, the CEO of the fast-food company CKE Restaurant Holdings, to be Secretary of Labor. . . . . Puzder is an ardent opponent of minimum wage increases, expanded overtime pay, paid sick leave, health coverage for workers, and collective bargaining. While he’s toiling at the Labor Department for the interests of corporations, Republicans will almost certainly try to pass a federal “right to work” law — the kind now in force in states across the South — as part of their effort to destroy labor unions once and for all.

The Southern health care model. The Republicans’ first legislative priority is to repeal the Affordable Care Act, and while we don’t yet know what form that repeal (or its replacement) will take, the people most vulnerable are the estimated 12 million who would lose the coverage they gained because of the law’s expansion of Medicaid. Nineteen states refused to accept that expansion, preferring to keep their poor citizens uninsured . . . . the largest group of states was in the South: 10 of the 11 states of the Confederacy (Louisiana being the sole exception) refused the Medicaid expansion. 

The Southern education model. Trump’s nominee for Secretary of Education, Betsy DeVos, is not an educator or education administrator; using her wealth as the wife of an heir to the Amway fortune, she has devoted her efforts to essentially trying to destroy public education in her home state of Michigan and in America more generally. DeVos advocates for vouchers that can be used at private and religious schools, and for the expansion of for-profit charter schools with as little oversight as possible. . . . . it’s a system that is particularly strong in the South, where not only charter schools (which have support in many places) but private vouchers (which have far less support) are prevalent.

The Southern civil rights model. For his Attorney General, Trump picked Alabama’s Jefferson Beauregard Sessions III, named for the president of the Confederacy and a Confederate general. Sessions was rejected by the Senate in the 1980s for a judgeship because of his history of what these days we call “racially charged” comments. His most famous case as a prosecutor involved his unsuccessful prosecution of a former aide to the Rev. Martin Luther King Jr., whom Sessions went after for helping elderly African-Americans to vote absentee. While we don’t know exactly what Sessions’ agenda is, it’s a fair bet that vigorous enforcement of civil rights protections will not be high on his list.

In addition, Republicans will almost certainly be taking their voter suppression crusade national, especially given how successful it has been in putting up voting barriers to African-Americans, Latinos, and other people who might cast ballots for Democrats. Look for federal versions of voter ID laws, limits on early voting, and bans on same-day registration.

The Southern abortion rights model. As I’ve explained, not only are Republican eager to overturn Roe v. Wade; even with that precedent intact they may try to pass federal laws that make the whole country like the South when it comes to abortion. That would mean that it’s technically legal to get one, even as a series of onerous laws targeting both abortion providers and the women who seek abortions make them extraordinarily difficult to obtain.

The Southern environmental model. Trump has named Oklahoma attorney general Scott Pruitt to be administrator of the Environmental Protection Agency, in a clear sign that he believes the first two words of the agency’s name are no longer operative. This too could represent a nationalization of what prevails in the South, where officials in Republican-dominated states see environmental protection as essentially a nuisance for corporations and the most pressing environmental question is how many wells we can drill.

During the 2016 campaign, some commentators noted that Donald Trump’s rhetoric bore a disturbing resemblance to the backlash to Reconstruction a century and a half ago. Now, as one constitutional scholar recently told this blog, it’s not unreasonable to expect “the beginning of the end of the Second Reconstruction.”

Think of what is worse for the majority of Americans and that more or less sums up the Trump/Republican agenda.  The wealthy and large corporations will thrive, but the rest of us not so much.  

Hillary’s Economic Plan: Recommitting to Progressive Policies

If one looks at the history of America in the 20th Century, some of the things that built the middle class were progressive policies, Social Security being a major one, combined with strong unions as well as employers who truly saw their employees as capital and not a class of people to be financially raped and deemed expendable.  Today's Republican Party is at war with all of these essential elements.  In outlining her economic plan, Hillary Clinton has pledged to recommit to the progressive policies that (i) built the middle class and (ii) helped end the gross excesses of the Gilded Age (which the GOP want to restore).  A piece in Salon looks at Clinton's plan.  Here are excerpts:

Heading into Hillary Clintons’ big economic speech on Thursday, there was some concern among progressive groups that the Democratic presidential nominee was going to use the opportunity to nudge her policy agenda towards the center. She’d secured the nomination and no longer had to worry about Bernie Sanders’ challenge from the left, and her campaign was in the middle of a high-profile push to recruit Republican defectors away from GOP nominee Donald Trump, which left open the possibility that she might start moderating for the general election.

Well, Hillary’s speech seems to have put those concerns to rest. At least for the moment. She also put together an effective line of attack against Trump’s economic agenda, separating his populist rhetoric from the reality of his policy proposals.

Clinton hit a number of progressive themes and issues during her remarks in Warren, Michigan: she called for a large boost in infrastructure spending and the creation of an infrastructure bank, she committed to connecting every household in the country to broadband internet by the end of her first term, she offered a strong defense of the Consumer Financial Protection Bureau, and she backed tuition-free college for everyone except the wealthy.

This is the stuff that activists want to hear, and the progressive groups that were slightly wary of Clinton heading into the speech were pretty ebullient over Hillary’s TPP remarks. “These were Hillary Clinton’s strongest words yet against the TPP,” Progressive Change Campaign Committee co-founder Adam Green said in a statement. “For the first time, Clinton signaled she will personally work to kill the corporate-written TPP if it comes up after the election in an unaccountable lame-duck Congress.” The Roosevelt Institute also lauded Clinton’s speech in a statement released in conjunction with Democracy Corps: “With this economic speech, Secretary Clinton has made this election a choice about whether our economy works for all, not just the few, and that allows progressive economics to win a mandate in November.”

The flip side to Clinton’s renewed embrace of progressive economic policies was her dismantling of Donald Trump’s economic platform. She seized on the Trump plan’s reduction of taxes on so-called “pass-through” entities (calling it “the Trump loophole”) which would allow high-income households to pay far less in taxes on their income than they would under normal circumstances. The pass-through loophole is a massive tax break for the rich, one that would benefit Trump himself, as pass-through entities are “a cornerstone of the Trump Organization.”

Clinton also took a bite out of Trump for proposing a full repeal of the estate tax. As I wrote following Trump’s big economic speech this week, nixing what remains of the estate tax will benefit the super-rich almost exclusively. Hillary made this same point, tying estate-tax repeal to Trump personally and weaving in elements of greed. “If you believe that he’s as wealthy as he says, that alone would save the Trump family $4 billion. It would do nothing for 99.8 percent of Americans. So they’d get a $4 billion tax cut, and 99.8 percent of Americans would get nothing.”

On child care policy, her anti-Trump message was very much the same, given that Trump’s child care plan is a pro-wealthy heap of flaming trash that no one thinks is a good idea. “His plan was panned from the left, from the right, the center, because it transparently is designed for rich people like him,” Clinton said. “He would give wealthy families 30 or 40 cents on the dollar for their nannies, and little or nothing for millions of hardworking families trying to afford child care.”

These are sharp attacks because they strip away the absurd patina of populism that Trump likes to coat himself in with his protectionist ranting and broadsides against foreigners who steal our jobs. Those rhetorical flourishes have little to undergird them, and whenever Trump actually wades into policy details, he invariably ends up churning out proposals that explicitly reserve the lion’s share of benefits for people who do not need them.  

 I continue to be amazed how many Americans fall for the ruse that cuts in the estate tax would help them.  In reality, unless one's estate has a net value of well over $5 million, there is ZERO federal estate liability.  And with proper estate planning, married couples can lessen that impact.  On child care, with two working daughters, I know full well how crushing these costs are and how, unless has a truly well paying job, it can be cheaper to simply not work at all and be a stay at home mother - or father.