Conversation Starters

• Between 1979 and 2000 the real income of households in the lowest fifth (the bottom 20% of earners) grew by 6.4%, while that of households in the top fifth grew by 70%.
• The family income of the top 1% grew by 184%—and that of the top 0.1% or 0.01% grew even faster.
• Back in 1979 the average income of the top 1% was 133 times that of the bottom 20%; by 2000 the income of the top 1% had risen to 189 times that of the bottom fifth.
• In 2001 the top 1% of households earned 20% of all income and held 33.4% of all net worth. Not since pre-Depression days has the top 1% taken such a big whack.

On Social Mobility, or Lack thereof
Take the study carried out by Thomas Hertz, an economist at American University in Washington, DC, who studied a representative sample of 6,273 American families (both black and white) over 32 years or two generations.

• 42% of those born into the poorest fifth ended up where they started—at the bottom. Another 24% moved up slightly to the next-to-bottom group. Only 6% made it to the top fifth.
• On the other hand, 37% of those born into the top fifth remained there, whereas barely 7% of those born into the top 20% ended up in the bottom fifth. A person born into the top fifth is over five times as likely to end up at the top as a person born into the bottom fifth.
• There is also growing evidence that America is less socially mobile than many other rich countries.

Results from other studies/research:

• The years from 1880 to 1960 were a period of great corporate behemoths. These produced a new class of Americans—professional managers. They built elaborate internal hierarchies, and also accepted their responsibilities to both their workers and their local communities. But since the 1970s the pressure of competition has forced these behemoths to become much leaner—to reduce their layers, contract out some activities, and shift from full-time to part-time employees. It has became harder for people to start at the bottom and rise up the company hierarchy by dint of hard work and self-improvement. And it has also become harder for managers to keep their jobs in a single company.
• If you are among the poorest 5% of the population, your chances
  of achieving an average income are only one in six. If you are among the poorest 1%, they become very dim indeed.

The Role of Schools

• Over the past 25 years, globalisation has increased rewards for intellectual skills, pushing up the value of a degree. The income gap between college graduates and those without university degrees doubled between 1979 and 1997.
• The education system is increasingly stratified by social class, and poor children have a double disadvantage. They attend schools with fewer resources than those of their richer contemporaries (school finances are largely determined by local property taxes). And they have to deal with the legacy of what Michael Barone, a conservative commentator, has labelled “soft America”. Soft America is allergic to introducing accountability and measurement in education, particularly if it takes the form of merit pay for successful teachers or rewards for outstanding pupils.
• Three-quarters of the students at the country's top 146 colleges come from the richest socioeconomic fourth, compared with just 3% who come from the poorest fourth (the median family income at Harvard, for example, is $150,000). This means that, at an elite university, you are 25 times as likely to run into a rich student as a poor one.
• In most Ivy League institutions, the eight supposedly most select universities of the north-east, “legacies” make up between 10% and 15% of every class. At Harvard they are over three times more likely to be admitted than others. The students in America's places of higher education are increasingly becoming an oligarchy tempered by racial preferences.
• The budget squeeze on states in 2001-04 forced them to increase fees at state colleges, traditionally the places where the children of less wealthy parents went. Those children also face increasing competition from richer kids squeezed out of the Ivy League. As a result, a student from the top income quarter is six times more likely to get a BA than someone from the bottom quarter.
• College graduates tend to marry college graduates. Both go out to work, so in the households of the most educated the returns to a university education are doubled. College-educated women are also postponing children for the sake of their careers. On average, they have their first child at 30, five years later than in the 1970s and eight years later than their contemporaries who have not been to college. At the bottom of the heap, you see the opposite: women have children younger, often out of wedlock and without a job.

Labels: admissions, class, economics, economist, education