Obama on "Income Inequality"

Tuesday, December 31, 2013

              James Pethakucis

Why Obama frets about income inequality, not family breakdown

The Obama White House argues hard that rising US income inequality makes it tougher for Americans to climb the economic ladder.

When President Obama gave a big speech on “social mobility” earlier this month – liberal pundits called it the “most important” of his presidency – he mentioned inequality more than two dozen times to pound the point home. And Team Obama has much publicized its chart illustrating the “Great Gatsby Curve” which suggests strong correlation globally between high income inequality and low earnings mobility.

How many times in such an important speech did Obama mention anything about American family breakdown perhaps impeding economic mobility? Just a couple of passing references.

Yet the issue of family breakdown deserves at least as much attention, if not more, from Obama than income inequality. Using data on local jobs markets from the Equality of Opportunity Project, e21 economist Scott Winship can’t find much of a statistical relationship between inequality – particularly of the 1% vs. 99% sort — and economic mobility. The EOP authors also find “a high concentration of income in the top 1% was not highly correlated with mobility patterns.”

e21

What does seem to be highly correlated with mobility is family structure. In these communities, the share of families with single moms predicts mobility levels “quite well all by itself,” according to Winship’s analysis.  Again, this result is not real surprising. Researchers on the left and right have found that kids raised by both biological parents fare better financially, educationally, and emotionally. And as the EOP scholars conclude: “Some of the strongest predictors of upward mobility are correlates of social capital and family structure.”




A cynic might suggest emphasizing family dysfunction, particularly among those without a college or high school diploma, doesn’t fit into the Democrats narrative as neatly as blaming Republicans for slashing taxes and weakening labor unions – both of which Obama mentioned in that speech.

If true, that’s too bad since one thing most Americans agree on is the ability of kids to climb the ladder should depend more on their skills and will than parents’ investment portfolios.  And one thing most economists agree on is that US economic mobility could be better. While the US middle class is fairly mobile, not so much for kids born at the very top and bottom.  Even the smartest kids have only a 1-in-4 chance of making it from the bottom fifth to the top fifth.

Or maybe Obama simply doesn’t believe there is anything government can do to reverse the decline of the two-parent family where it’s struggling the most. As social scientist Lane Kenworthy writes in his new book, Social Democratic America, the “best bet with respect to family decline … is to offset the adverse impacts.” Kenworthy goes to advocate a broad and bold progressive agenda including universal early education and one-year paid parental leave. Kenworthy: “I believe our array of social programs will increasingly come to resemble those of the Nordic countries. It is in this sense that I say America’s future is a social democratic one.” Interestingly, Kenworthy thinks too much emphasis is placed on income inequality and taxing the 1% rather than raising living standards at the bottom via social programs financed through a value-added tax.

If that’s where Obama and Washington progressives believe America should be headed, they should explicitly say so. Of course, calling for massive new government spending financed by massive new taxes on the middle class might not win the Democrats too many elections any time soon. Much easier, I guess, to bash the rich and the Republicans.