It Could Take Five Generations for a Low-Income US Family to Reach Average Income in America

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Social mobility in America has a lot of friction: children of wealthier people tend to grow into affluence, and children of low-income parents tend to struggle to move up the income and education ladder, according to A Broken Social Elevator: How to Promote Social Mobility, a new report from the OECD.

The Organization for Economic Cooperation and Development studied member nations’ economies, demographics, income and opportunities to gauge each country’s social mobility.

Social mobility, the OECD explains, is multi-faceted. It can refer to inter-generational mobility between parents, children, and grandchildren. Alternatively, social mobility can look at intra-generational mobility, over the course of a person’s lifetime.

Social mobility can move upward or downward: while parents want to see their children move up the social ladder in terms of income and well-being, the risks for downward movement are manifold across the world, both in developed and developing nations.

“As countries reach high levels of development, progress necessarily slows down in some key dimension, such as education or health: not everybody can or wants to hold a PhD and health cannot improve indefinitely,” the OECD observes.

The global report can be accessed here. In this Health Populi post, I’ll focus on the United States details compared with the rest of the world.

The first figure illustrates where the U.S. lies in social mobility compared with peer OECD nations. The X-access represents the number of generations it would take for a low-income family living in the particular country to reach average income status. The OECD average is 4 generations.

For America, it’s 5 years, the same as for citizens of Portugal, Ireland, Korea, the United Kingdom, Italy, Switzerland, and Austria. Denmark has the “quickest” social mobility upward, at two generations. The Nordic countries Norway, Finland and Sweden are second at 3 generations. In Spain, New Zealand, Canada, Greece, Belgium, Australia, Japan, and the Netherlands, it takes 4 generations to hit average income.

 

U.S. citizens believe that parents’ fortunes and advantages play a major role in peoples’ lives, where 50% of Americans say parents’ education is important to succeed in life. This is unique compared with people living in other OECD countries, only 37% of whom agree with the education statement.

U.S. parents are sobering up to the risks of social mobility in America for their children: in 2018, 51% of U.S. parents identified the risk that their children would not achieve the level of the parents’ status and comfort was a top-three long-term concern.

In the U.S., social mobility is not evenly distributed across the generations. 42% of sons with low-earning fathers grow to have low earnings, too; only 8% of these sons reach the top earnings group, shown in Figure 2.

Conversely, sons of richer fathers in the U.S. tend to reap high earnings themselves.

For education, another mobility metric, 60% of children in the U.S. with high educated parents complete a college degree. Less than 15% of children with low-educated parents complete college.

Other studies on social mobility in the U.S. have found inequity of social mobility based on neighborhoods – the thesis that our ZIP code is more important than genetic code for health – which applies here. See this study by Raj Chetty and colleagues for the details on this phenomenon.

Health Populi’s Hot Points:  Why should we all care about social mobility – particularly those of us who work in health/care?

The two main predictors of poor health are growing up in families with little or no wealth and having parents with poor health, the OECD data show. Children from disadvantaged families face barriers on that social mobility elevator for both earnings and health, which are inter-related.

“Inequalities in health status persist in most OECD countries from one generation to the next, in part because health endowments and behaviours are transmitted from parents to children,” the report asserts.

To mitigate these risks, the OECD makes the case for greater public investment in health in children. “The lack of investment in children can have long-term (and potentially irreversible) negative consequences,” OECD notes, citing a wide range of research into the issue. Money itself matters for children’s cognitive development and school attainment, as well as social, emotional and behavioral development, the research supports. “But additional money spent has a significantly larger impact for lower-income households, which speaks in favour of an effective targeting of child benefits towards families with lower incomes,” OECD adds.

Early intervention is a critical success factor: public sector programs help even before birth, during a mother’s pregnancy, for pre-natal and then post-natal care that deliver health and social services direct-to-citizens at home to address transportation, stigma, and other barriers.

 

The Spring 2018 Fiscal Survey of States was published by NASBO, The National Association of State Budget Officers, today, finding that States’ Medicaid spending growth will slow “considerably,” NASBO calculates, in Fiscal 2019.

All states face long-term spending pressures for healthcare, pensions and education, the report warns.

Back to the OECD recommendations for “inclusive growth.” Universal access to health care as a “first-level buffer against adverse circumstances” bolsters household financial health, noting that, “Health conditions can have significant consequences on household incomes, either because they can lead to difficult access to or early withdrawal from the labor market and/or because they imply increased expenditures if out-of-pocket payments are high.”

Universal healthcare access is not only insurance for health — it’s also a risk management tactic to avoid long-term negative impacts on ill health’s impacts on family income.

We’re talking here about basic social determinants of health: citizens’ access to good jobs, fair incomes, healthcare, education. Ultimately, well-being is underpinned by a citizen’s perception of financial security, OECD concludes, which bolsters, “subjective well-being through pathways such as stress (and the related unhealthy behaviors); prosperity concerns (with people’s expectations on future outcomes influencing the current behaviors); and, identity.”

The U.S. is stuck in a desperate cycle of social immobility for those people who are, essentially, immobilized. Greater focus on social determinants, with universal healthcare for all Americans, will help to get that social mobility elevator moving again. The unthinkable question is: do we have five generations to simply wait for this to happen?

In the future when you think about “mobile” and “health,” consider adding this definition to your personal/professional dictionary.