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  1. Economy and Politics
  2. Inequality and Discrimination

Is It Actually Getting Harder to Be More Successful Than Your Parents?

By:
Mark Gimein
5 min read
Sen. Elizabeth Warren (D-Mass.), at the Democratic National Convention Monday night, decrying income inequality. - Toni L. Sandys—The Washington Post/Getty Images
Sen. Elizabeth Warren (D-Mass.), at the Democratic National Convention Monday night, decrying income inequality. Toni L. Sandys—The Washington Post/Getty Images

Just how much trouble is America in? It’s hard not to ask that as the two political conventions go on. The Democratic Convention in Philadelphia is certainly not the festival of nightmares that Donald Trump presented at his party's gathering in Cleveland. But there’s plenty of anxiety to go around.

“I’m worried,” Massachusetts Sen. Elizabeth Warren told the Philadelphia convention on Monday, “Worried that opportunity is slipping away for people who work hard and play by the rules.”

Except ... is it? Is it really true that opportunity has declined dramatically?

The short answer is probably not, with some caveats. That’s not the answer that either the left or right really wants, but opportunity — the ability to move up in social class — seems to be surprisingly resilient. Yes, inequality has risen: The very rich are a lot richer. But the giant fortunes at the top have had surprisingly limited effects on progress up the economic ladder. This is the kind of progress Warren talked about when she said she was a “janitor’s daughter who became a public school teacher and a professor and a U.S. senator.”

The research on opportunity over generations is mixed. Some things are clear: There are higher returns to education, which is economics-speak for “it’s harder to get ahead without going to college.” But when you look overall at the chances of getting from the bottom to the upper end of the economic pyramid, overall most (though not all) the research says it hasn’t changed a great deal.

The Equality of Opportunity Project, the premier nonpartisan effort to quantify shifts in opportunity, has found that in the last 45 years the chances of getting from the bottom fifth of income to the middle or top has stayed pretty much the same. This is really not the result that anybody, including the economists and mathematicians behind the research, anticipated. It’s surprising result because we know that the rich are certainly much, much richer, and in general countries with greater inequality have less mobility, too — the further apart the steps on the ladder, the harder it is to climb.

Raj Chetty, the Harvard mathematician who led the Equality of Opportunity research, explains this by pointing out that much of the rise of inequality we’ve seen is at the “extreme upper tail” of the income distribution. In other words, what’s really shifted hasn’t been the income of the public school teacher or the college professor (though Warren, as a law professor, was likely at the upper end of that). It’s the jump to the company founder and Internet mega-millionaire. The road from janitor to teacher to professor is still accessible, even if the wealthiest slice of the upper class are hidden behind ever higher hedges and longer driveways.

This isn’t the last word on the subject. Bhash Mazumder, a Federal Reserve economist, believes there was a real shift in mobility in the 1980s, when college became a more essential prerequisite to economic success. It’s also possible that the data just doesn’t capture recent changes in the economy. The Equality of Opportunity Project research tries to look at the incomes of people born as late as 1993, but really they are just at the very beginning of their adult earning lives.

So there are caveats — economists may yet be missing a shift that has made opportunity harder to come by. The evidence that wages are stagnant is too extensive to be worth going over (median wages actually hit a high point in the 1970s). The cost of education, a major election issue, keeps going up faster than inflation. Both of those developments are worrisome.

That said, still unclear from the economic data is whether it’s actually harder for a janitor’s daughter to become a professor than it was in the past. And, let’s note, such a rise was never easy. What has changed is that the highest reaches of the upper class are further away from the rest, with a very few fortunes (many from Silicon Valley) that have grown greater in size. The path to those few fortunes is narrow indeed, but it's only one of the paths to American prosperity.

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