WASHINGTON – Policy changes are vital to promoting greater mobility across income levels, said panelists on opposite sides of the political spectrum on Tuesday at an Urban Institute forum on intergenerational economic mobility.
According to the Economic Mobility Project from the Pew Charitable Trusts, two-thirds of adult children have more family income than their parents did at the same age, which points to economic mobility in the United States. But findings also confirm ‘stickiness’ at the top and the bottom of the income distribution, said Sheila Zadlewski, director of the Urban Institute’s Income and Benefits Policy Center.
“About four in 10 children born to low-income parents remain in that income group as adults,” Zadlewski said. “And about the same share of children born to parents in the upper end of the income distribution remain in the highest-income group as adults.”
‘Stickiness’ may be caused in part by a majority of mobility spending operating within the tax code and being concentrated mainly on higher-income households, said Eugene Steuerle, a fellow at the Urban Institute.
“Lower-income households, generally speaking, do not benefit from most of these tax subsidies,” he said. “Most programs for the poor are not able to promote mobility, and sometimes they may even discourage it. Future growth in programs is still concentrated in those tax subsidies that are not available to lower-income households.”
Heather Boushey, a senior economist at the Center for American Progress, said the the study found overwhelmingly that the vast majority of mobility funds are directed at families at the top.
“[It] really does not bode well for mobility moving forward,” Boushey said. “Especially with the high level of income inequality and the recession, which is again making it more difficult for especially low-income families to make those long-term investments.”
Steuerle said the jury is still out on whether or not President Barack Obama’s budget will promote long-term mobility, but panelists noted that, overall, people remain optimistic about their economic futures.
“Recent Pew polls confirms that Americans still very much believe in opportunity,” Zadlewski said. “Eight in 10 think it’s possible to get ahead, despite the current economy we’re living in, and two-thirds believe that their children will have a better standard of living than they do.”
Zadlewski said absolute mobility, or the measure of whether living standards rise for everyone over time, and relative mobility, the measure of how people change positions on the economic ladder within a generation, are both needed to explain overall mobility.
Harry Holzer, professor of public policy at Georgetown University and a fellow at the Urban Institute, said focusing on secular trends in the labor market like human capital will help achieve long-term mobility revitalization.
“Right now, we know the labor market is horrendous, and it’s going to be like that for several years to come,” Holzer said. “Human capital is really important [for the long run].”
Gaps in the labor market between growth levels and the trending of skills supply and demand are detrimental to mobility too, Holzer said.
“Those gaps are troubling and certainly contribute to inequality at a point in time, and to not enough mobility over time,” he said.