German Joys: Explaining America's Class Immobility

Via Andrew Sullivan, N. Asher, source of the above chart, suggests some reasons for America's class immobility:

What perhaps makes these figures even more striking is their standing in comparison to the rest of the developed world. One might expect that, given the unique importance our culture places on the idea of rewarding effort rather than class, we would be better than other nations at doing so. In fact, America ranks nearly last in terms of relative social mobility, just barely beating out the UK [1], and mobility has been steadily declining here since the 70′s [6]. Our neighbors to the frozen north foster nearly 2.5 times the mobility as our society allows: children born to lower income homes in Canada are more likely to work their way up the socioeconomic ladder, while those born to wealth are less likely to remain there [7]. The American dream is indeed alive and well; it’s just now residing in other countries.

So why is social mobility now so much higher in these other countries, and what can be done to improve it here? It’s worthwhile to note that social mobility is not a direct function of income distribution or inequality, though that connection is interesting to explore in its own right. Rather, it stems both from policies that eliminate barriers at the lower end of the socioeconomic spectrum and those which discourage inertia at the upper bounds. Access to quality education has been shown to be one of the primary drivers of upward mobility [8], as have access to health care [9] and various work supports [10]. Conversely, taxation and fiscal policy can have enormous influences on social mobility or lack thereof, particularly at the higher end of the income ladder [11]. It is discouraging, though not entirely surprising, then, that the US does such a poor job of this. Of the more than $740 billion in annual expenditures that can be at least partially tied to promoting social mobility (such as employer-related work subsidies, homeownership subsidies, education and training), $540 billion bypasses those with lower incomes entirely [10]; more than three-quarters of the largest subsidies go exclusively to households in the top quintile [10]. Conversely, only about a quarter of mobility spending reaches lower-income households, and that percentage is scheduled to decline even further in the coming years [10].