September 26, 2013 | Commentary on Economy, Economic Mobility, Economic Freedom

We Know What the U.S. Needs

International comparisons of economic mobility are tricky. They presume that mobility is a function of opportunity and merit. But “immobility” can arise from a variety of factors.

For example, social rigidities more commonly associated with developing economies — where economic success can depend on traits like bloodline or religion — can produce intergenerational persistence of higher or lower earnings. In meritocratic countries, the high returns of education can also perpetuate income differences across generations: parents who value education are more likely to raise children who value education.

Similarly, relative mobility statistics are not ideal for illustrating general flourishing in a country. The more mobility there is, the more people are moving down the economic ladder, as well as up. Compared to our European counterparts, it’s true that we’re technically slipping on this basis, especially for those starting at the bottom. But this focus neglects strong absolute mobility in the U.S.: 93 percent of those born into the bottom quintile surpass their parents’ income, a truer mark of opportunity.

Until recently, analysts were often stuck with aggregated statistics that concealed as much as they revealed. That’s why the new data on city-by-city variation in Americans’ economic mobility is so groundbreaking.

Areas with similar levels of inequality and middle class sizes can vary drastically in terms of mobility. Often, the variance can be explained by differences in the makeup of families within the community – like the rate of divorce or single motherhood. So more nuanced data are allowing us to better understand where people are moving up the ladder and, more important, why.

Upward mobility does not require the often chaotic openness of a developing economy. We don’t need to recreate the Wild West. Rather, we need a heightened focus on the social conditions of the poor, security for those in the middle and opportunity for all. For U.S. policy makers, the primary objective should be to sustain the fundamental institutions of mobility: family, education and a culture of work and saving.

- Donald Schneider is a research assistant in the Center for Policy Innovation at the Heritage Foundation.

About the Author

Donald Schneider Research Assistant

Originally appeared in The New York Times.