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The recession will increase inequality

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I'd been hoping that the recession would do a little bit to lower inequality in the country. But Brookings Institution inequality and mobility expert Isabel Sawhill says that the opposite is going to happen. In a forthcoming paper for the Tobin Project, she argues that the recession is likely to worsen inequality because losing your job has consequences beyond temporary unemployment: It makes it likelier that your next job is worse, and that your skills deteriorate, and that your economic position is forever weakened compared with what it would have been if you hadn't lost your job. (For more on the long-term impact of recessions on workers, see this terrific Atlantic article.)

Sawhill further argues that we're seeing inequality accelerators emerge: Marriage is good for your income and more prevalent among richer people. Same goes for education. And marriage and educational attainment both get passed onto the next generation (that is to say, if your parents are happily married and highly educated, you have a better chance of being happily married and highly educated). So it's not just that the rich have more money, but that they have, and are passing on, the skills and social structures that seem to support higher incomes while avoiding the joblessness that will hold lower-income workers back for decades.

The effect of all this isn't just on inequality: It's on mobility. Increasingly, the average American's chances of moving from one income bracket to another are pretty crummy, both in absolute terms and, as you can see in the graph atop this post, as compared with European countries. More on this in this report.

By Ezra Klein  |  April 20, 2010; 1:50 PM ET
Categories:  Inequality  
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Comments

This is why I get so frustrated when conservatives drop in to knock down the "liberals just want everyone to be equal" strawman. I can't think of any modern liberal off the top of my head who is arguing that we should structure society such that everyone has equal outcomes. Not one person.

The problem liberals see isn't inequality, it's massive inequlaity of opportunity, and it's tied to pretty much every issue we discuss. So conservatives, please do me a favor and stop saying we liberals want no one to be rich, or that we want everyone to be rich, or whatever nonsense unless you can point me to some significant liberal(s) who are arguing for total equality. It's the argument of an unserious person.

Posted by: MosBen | April 20, 2010 2:08 PM | Report abuse

"I'd been hoping that the recession would do a little bit to lower inequality in the country"

Please expand on this by explaining how exactly you were hoping the disparity would be addressed?

Also -- it's okay to say stable families do better economically. Everybody knows that. You don't have to call it "social structures."

Posted by: NoVAHockey | April 20, 2010 2:10 PM | Report abuse

sadly, mosben, i don't think there's a majority in this country who support equality of opportunity, however unserious a perspective that is.

Posted by: howard16 | April 20, 2010 2:21 PM | Report abuse

"This is why I get so frustrated when conservatives drop in to knock down the 'liberals just want everyone to be equal' strawman"

It's much more frequently argued that liberals want to punish success. Or spread the misery. Because it's fair. And occasionally I've heard arguments that sounds like that--that fairness and equality are priorities over everybody benefitting, but some more than others. But arguments should always address what is actually being discussed in the argument, rather than extreme extrapolations.

That being said, less mobility can mean a lot of things. What are the average incomes, and, more specifically, what is the average purchasing power? What are the poverty levels, and when do we start measuring, and who is "breaking out", demographically? What are the relative sizes of the poor and middle classes? How many TVs and VCRs and X-Boxes to the poor own in each country? Is poverty calculated pre or post-entitlement?

Whatever. What's clear to me is that the countries with the most legalized prostitution and/or marijuana demonstrate the best overall mobility. So the path forward is clear.

Posted by: Kevin_Willis | April 20, 2010 2:23 PM | Report abuse

NoVAHockey, even stable families get into economic difficulties, and social structures is much more than stable families: it is the web of contacts and capabilities that being affluent provides you (for example, a child of well-off parents can afford to spend a summer interning at the high-powered law firm that the child's mother's old college classmate is a partner at whereas that chance to make connections of future value is denied the the child of parents of moderate means, even if both families are comparably emotionally stable).

Posted by: howard16 | April 20, 2010 2:26 PM | Report abuse

"it is the web of contacts and capabilities that being affluent provides you"

That may be true to an extent, but I don't think that's the point Klein was trying to make. And families of course can have financial problems for a variety of reasons. But that doesn't chance the fact that marriage is social-economic benefit.

But I think the larger point of his post is that he was hoping the recission would resolve some of the inequity. I'd like to see an explanation of how.

Posted by: NoVAHockey | April 20, 2010 2:47 PM | Report abuse

howard16, perhaps I wasn't clear in my original post. My bad. What I meant was that the "unserious position" was the argument conservatives sometimes make that liberals want total equality. Now granted, there are conservatives who are completely reasonable and don't make this sort of case, but it's also not an argument limited to crazy fringe people on the interwebs. It's like the "liberals want the U.S. to fail" argument. There are many conservatives who think that's an unreasonable thing to say, perhaps even a majority, but it/was is made by mainstream/respected/whatever conservatives more frequently than a fringe idea.

Now whether there's a majority who think everyone should have a fair shot at social mobility, well, that's another argument, I think. What I'm saying is that that's generally the liberal position that I hear liberals make. How to define what a "fair shot" is, is again another and difficult debate.

Kevin, I don't know that I've ever heard someone say that fairness and equality are more important than un-equally distributed society-wide benefits. What I do hear fairly frequently is that some in-equality is fine but that it can get out of hand. It's not inequality per se; it's the degree.

Posted by: MosBen | April 20, 2010 3:23 PM | Report abuse

"What's clear to me is that the countries with the most legalized prostitution and/or marijuana demonstrate the best overall mobility."

Where does this come from? I did live in Denmark for a while and know that they do not have legalized marijuana or prostitution (at least if they did, I was not aware of it while there). What I do know is that in Denmark at least the average income is less than in the U.S., poverty rate is lower, educational opportunity higher, and small business start-up rate is higher (and success of small businesses, e.g. less failing after 5 years) is higher. What is so bad about this type of situation? As opposed to here where my father tried to start a small business, could not purchase health insurance for himself and his family given the $36,000 a year that was wanted (in 1991) on the individual market, had health problems, almost went bankrupt, and had his small business fail due to the health/medical costs issue. I've witnessed my family in my lifetime slip from solidly middle-class to bordering on lower-class due to these setbacks.

Posted by: s_leisz | April 20, 2010 3:28 PM | Report abuse

MosBen, sorry, i'm the one who wasn't clear: i was saying two things.

one is that you are right about conservatives.

the second is that thanks to the power of 50 years of right-wing messaging, i doubt that a majority even supports the concept of equality of opportunity as meaningful.

Posted by: howard16 | April 20, 2010 3:31 PM | Report abuse

"I'd been hoping that the recession would do a little bit to lower inequality in the country"

NoVAHockey, Ezra's saying that he hoped the recession would reduce the income of the wealthiest more than it would the income of the poorest. It's an unserious comment. The point of fighting inequality is to improve the lives of the poor, not to drag everyone down.

Posted by: tomtildrum | April 20, 2010 4:06 PM | Report abuse

A couple interesting notes from the study: First, they left out the value of employer provided health care from the income. Second, family income has been rising more quickly than individual income. Family structure is key, as a double-income family is going to compare quite differently from an economic mobility standpoint.

My child-centric viewpoint on this is that there is always going to be inequality, some parents are better than others, some kids learn faster than others. Some of this is genetic, some of it isn't. When kids show up to school at age 4 or 5, some percentage will already be reading, counting to 100 and ready to go. Others will not yet have seen a book or know how many fingers they have. Unless you remove children from their parents, and make things like the President's mother rising before dawn to help him study illegal, these sort of differences will remain.

The recent response to this is to avoid tracking (actually a response suggested in the Corak paper where Brookings got that graph), throw all kids the same age into a room, regardless of how disparate their abilities and teach so that the slowest kid in the room can follow along. By slowing down schools, we slow down the performance of the best students. If we attempt to give children materials on their level, we are accused of segregation or not giving equal opportunities.

Perhaps this graph doesn't mean what you think it means. Perhaps we have more non-random variation than other countries? We certainly have a varied cultural mix- some cultures and subcultures that encourage lots of studying and educational attainment, and some cultures that do not. In any case, reading the initial study was interesting. It is very speculative, and they didn't actually use longitudinal data to make the comparison.

I think the clear answer here is that it is a big so what? Unless there is a clear cause for this, something distorting opportunity, it might just be the right answer.

Posted by: staticvars | April 20, 2010 5:49 PM | Report abuse

I've always wondered about these comparisons and how valid they are. Sweden has about 1/4 the population of California, for example. What if this type of study were done on similar populations (to those of Sweden and Norway) in the US? What if we compared the mobility of people in California with those in Mississippi? That of the folks in the Bay Area with those in Utah? I'm willing to bet that the spread would be almost as great as what is seen in the graph above.

I am in agreement that the cohort of young people just starting their adult lives now is in for a tough time. We should be trying to help this group of folks out..not saddling them with additional new taxes.

Posted by: Beagle1 | April 20, 2010 7:17 PM | Report abuse

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