AMERICANS do not go in for envy. The gap between rich and poor is bigger than in any other advanced country, but most people are unconcerned. Whereas Europeans fret about the way the economic pie is divided, Americans want to join the rich, not soak them. Eight out of ten, more than anywhere else, believe that though you may start poor, if you work hard, you can make pots of money. It is a central part of the American Dream. The political consensus, therefore, has sought to pursue economic growth rather than the redistribution of income, in keeping with John Kennedy's adage that “a rising tide lifts all boats.” The tide has been rising fast recently. Thanks to a jump in productivity growth after 1995, America's economy has outpaced other rich countries' for a decade. Its workers now produce over 30% more each hour they work than ten years ago. In the late 1990s everybody shared in this boom. Though incomes were rising fastest at the top, all workers' wages far outpaced inflation. But after 2000 something changed. The pace of productivity growth has been rising again, but now it seems to be lifting fewer boats. After you adjust for inflation, the wages of the typical American worker—the one at the very middle of the income distribution—have risen less than 1% since 2000. In the previous five years, they rose over 6%. If you take into account the value of employee benefits, such as health care, the contrast is a little less stark. But, whatever the measure, it seems clear that only the most skilled workers have seen their pay packets swell much in the current economic expansion. The fruits of productivity gains have been skewed towards the highest earners, and towards companies, whose profits have reached record levels as a share of GDP.The data are not all that startling. As the article notes, the U.S. is known for its huge gaps in economic attainment. Nevertheless, the article argues that labor market polarization will remain a structural feature of the U.S. economy for some time. (Be sure to take a look at some of the empirical economic studies cited.) Now, articles in The Economist often lack a byline, although the dateline for this story indicates the piece was filed in Washington, D.C. So it could be that Adrian Wooldridge was the author, as he is the The Economist's Washington Bureau correspondent, and the author of The Right Nation: Conservative Power in America. It turns out that Wooldridge has got a provocative piece in the new Policy Review that argues that there's some renewed interest in "psychoeconometric" studies of individual-level factors in economic attainment. In other words, it's not structural economic influences that determine labor market mobility. Wooldridge sets up his piece like this:
Liberal scholars, politicians, and activists hate looking at individual cultural attributes in explanations of wealth and poverty. But a look at the direction of fiscal and social policies in the last decade reveals that neoconservative remedies have pretty much prevailed (e.g., Clinton "ended welfare as we know it"). This is not to say that personal stories of people trying to adapt to real and dramatic structural economic change are not troubling. It does suggest the continuing power of the American work ethic and of the culture of rugged individualism. For a look at journalistic coverage of the structural changes in the U.S. economy, see the series titled "The New Deal" on economic turbulence at the Los Angeles Times and the series on "Class in America" at the New York Times.
This essay tries to look at social mobility from the other end of the telescope. It looks back to an Anglo-American world where people started off with the opposite assumption from that of today’s journalists: not that we should be surprised that people follow their parents into their jobs but that we should accept that as the natural state of affairs. It focuses on a group of thinkers who tried to grapple with the emerging problem of social mobility — but whose first instinct was not to look at social forces but at individual characteristics. Why do some people climb up the social ladder while others stay put? What personal characteristics account for the fact that some people “get ahead” in life and others fall behind?
The purpose of this examination is threefold. The first is to remind people that there are two issues involved in any study of social mobility: the social forces that determine the shape of society and the individual qualities that determine the life chances of particular individuals. This is something that the Victorians instinctively understood but that their descendants, particularly since the 1960s, have tended to forget. The second is to remind people that explanations of individual social mobility have varied widely over the years, from individual character to individual intelligence to blind chance. And the third is to argue that the second of these theories — the one concerned with individual intelligence — is much the most interesting. This is the school of thought that flourished from the mid-nineteenth century to the mid-twentieth and that helped to reshape educational systems from America (through the sats) to Britain (through the 11+) to India and Singapore. This school of thought has lost ground in recent years as social scientists have questioned the science of individual differences and policymakers have made equality rather than equality of opportunity the aim of social policy. This loss of ground, however, has led not to a more egalitarian society but, on the contrary, to the calcification of a once mobile society on the basis of social privilege.