Why it's harder to earn more than your parents | The Economist

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I look down on him because I am upper class
I look up to him because he is upper class
I know my place
In the 21st century...
...you might think climbing the social ladder has got easier...
...but actually it’s getting harder
In many rich countries the class you’re born into still dominates...
...your chances of making it
No one talks about these sort of hidden privileges...
...that are going on underneath the surface
Even in America...
...the so-called land of opportunity...
...your chances of climbing up the income ladder...
...are some of the lowest in the rich world
What the data suggest is that we’re not...
...such a land of opportunity after all
Don’t shoot
This lack of social mobility is causing serious political rifts
When people feel they just don’t have a shot
That’s what leads to disaffection
It leads to radicalism in politics
So what’s gone wrong? And what can be done...
...to improve social mobility?
So this is where I grew up...
...feels like a lifetime ago to be honest
As a child, Sophie Pender lived on a council estate...
...and says hardly anyone thought...
...she would make anything of her life
It’s hard to expect anything from...
...someone who has grown up where...
...their dad is an alcoholic and a drug addict
I think people just expect them to follow the path...
...that their parents have taken
But Sophie has defied expectations
She now works for a top law firm...
...and is passionate about helping working-class people, to get ahead
People have felt comfortable insulting me...
...because in their mind they think...
...well if you’re working class you can change that
The onus is on you
If you live on a council estate that’s your fault
But actually, it’s a whole host of factors that mean...
...that someone might not have had...
...you know, the opportunities available to them
Sophie is the exception to the rule
Britain has a social-mobility problem
If you’re born at the bottom here...
...your chances of moving up the income ladder are lower...
...than in many other rich countries
There’s just a 9% probability of moving...
...from the bottom of the income ladder...
...to the top
It’s even lower in America
But to put that in context...
...you’re almost 50% more likely to make it to the top...
...if you live in places like Canada or Denmark
This is known as relative social mobility
Part of the reason for these differences...
...is the level of wealth, income inequality...
...and welfare provision in each country
I think America is the poster child...
...for rising income and wealth inequality
The way I like to think about it...
...is that when you have a lot of income inequality...
...the rungs on the ladder of opportunity are much further apart
And that makes it harder to climb that ladder
Those at the very top of the ladder...
...have also pulled away from everyone else
In 1975, the share of taxable income...
...going to the top 1% in America was 9%
By 2018, that had more than doubled
And declining social mobility is bad news for American society
The fact that if you are not from that privileged background...
...that you feel like your kids are set up for failure to some degree...
...that’s a very powerful political impulse
It’s been a real source of energy for populist movements...
...on the left and the right...
...not just in America but also across the world
It used to be much easier to get ahead
September 2nd 1945, and America’s joy...
...bubbled over into unrestrained jubilation
After the second world war...
...countries such as America and Britain...
...enjoyed a social-mobility boom
Government is big business, but far from the only one
An expansion in professional and managerial jobs...
...allowed many working-class people...
...to move up the income ladder
And as result, if you were born in the post-war years in America...
...you had a 90% chance of making more money than your parents
A picnic
It’s for the children
But this didn’t last
From a high in the 1940s, absolute mobility has been falling
And the generation of children...
...born in the 1980s had just a 50% chance...
...of making more money than their parents
One team of economists have dubbed this phenomenon...
...the “fading American dream”
Since the second world war in America...
...absolute mobility has declined
And those chances have declined...
...pretty steadily for each younger generation in America
So if you’re part of the millennial generation...
...you should be pretty disturbed by all of this
There’s one divide which has become especially significant
Whether you’ve been to university or not
In rich countries, there has been an economic shift...
...away from manufacturing...
...towards more service-based industries...
...which means there are now fewer openings...
...for those without a degree
Education has now become the new determinant...
...of people’s incomes and life chances...
...much more than it was 50 or 60 years ago
Now that revolution has minted winners...
...particularly in highly paid service-sector jobs...
...doctors and lawyers
For the lower and middle class...
...it condemns them to a bit more of a precarious financial situation
So what can be done to bridge this social divide...
...and widen access to higher education?
In Britain, a new breed of state schools like this one...
...have sprung up, catapulting kids from lower-income families...
...into top universities
So now let’s solve this problem and then talk about...
...what that "K" value means in the context
The NCS is located in Newham...
...London’s second-poorest borough
While nearly half the students here are on bursaries...
...or qualify for free school meals, an indicator of deprivation...
...last year 95% went on to top universities in Britain
We are humans, we have the same capacities
We should be able to do the same things
Most will be the first in their family to get a degree...
...let alone one from an elite university
My parents haven't gone to university...
...so I didn’t really have, like, mentors to guide me
And, like, now, me aspiring to go to, like, Oxbridge, that’s a huge deal
Coming from, like, a working-class background...
...immigrant parents, they really like to push...
...the education thing so much...
...because they want their sacrifice to matter
They want children to break the class barriers that maybe...
...maybe acted as an actual barrier for them
Head teacher Mouhssin Ismail grew up nearby...
...and left a six-figure salary as a lawyer to run the school
He is passionate about boosting social mobility
Where you were born shouldn’t dictate where you end up
And just because you’re not born...
...with a silver spoon in your mouth...
...but if you’re talented, you should be able to realise your potential
He keeps the school’s performance in constant view...
...on his office window
He says improving students’ life chances...
...means running a so-called “super curriculum”
Soon as you hit this wall and go outside of the box...
...the potential energy is infinity
And today it’s quantum mechanics
So we’ve got this idea that when we're inside the box
I think the difference between...
...what we do and what other schools may lack...
...is the forensic focus on the fundamentals
Being unashamedly academic...
...unapologetically ambitious for our young people
You’ve got it all worked out
It probably helps that the school only takes the very brightest
Last year they had 4,000 applications for 300 places
How many pieces of clothing are we taking?
And schools like this are starting to make a difference...
...by challenging private fee-paying schools...
...bastions of Britain’s class system
You’re not so clever
You can’t afford the fees
Schools like Eton College...
...have long been pilloried in comedy sketches like this...
...for disproportionately feeding Britain’s elite
Just over a third of the nation’s prime ministers...
...were educated there
But private schools’ hold over elite universities is declining
In 2016, around 40% of UK admissions to Oxford and Cambridge...
...came from private fee-paying schools
Despite the fact that only a small proportion...
...of children attend them
But by 2020, that figure had dropped to nearer 30%
You need to have the largest possible attempt...
...to drill down in societies to find talent wherever it is...
...the hidden Einsteins, as it were
And I think this is one area where Britain is doing quite well...
...compared with the United States
America is one of the only countries in the world...
...to have legacy admissions...
...where colleges can actively discriminate...
...in favour of the children of alumni
43% of white students who graduated from Harvard...
...between 2014 and 2019...
...didn’t get in on academic merit alone
This helps perpetuate a cycle...
...where if your parents are wealthy, you’re more likely to graduate...
...than if your parents are poor, and did not go to college
What they've created in America is a national ruling class...
...based on educational certificates
They’re absolutely obsessed by educational credentials
If you’re unfortunate enough to look at the social pages...
...of the New York Times, it’s full of saying that so-and-so...
...with a degree from Harvard married so-and-so
Credentialism has become the new mark...
...of being a member of the upper classes
In America...
...there have been some high-profile efforts...
...to equalise the system of university admissions
Kawika Smith has been at the forefront
Hi Honey
Good to see you
It’s good to see you
How’s the community been?
We’re trying to build more people like you
Yes
There’s not enough being done...
...to help low-income students in America
Growing up, he dreamt of going to UCLA...
...but didn’t get the grades he needed in his SATs...
...the standardised tests used in college admissions
It’s a money gimmick
SATs were first introduced in 1926...
...as a way of increasing the pool of people admitted to Harvard...
...but it didn’t work out like that
In recent years, Asian and white students...
...have consistently done better on the tests than black...
...and Hispanic students
And wealthier pupils also outperform their poorer peers
According to the most recent data...
A student with a family income under $20,000...
...can expect to score 136 points less on their writing SAT...
...then someone with a family income of over $200,000
It is susceptible to being prepared for
So access to test preparation and particularly expensive...
...test preparation is disproportionately available...
...to students from higher-income families...
...and it’s really not a level playing field at all
Along with a coalition of community groups...
...Kawika took the University of California...
...to court over its use of SATs
And after a lengthy legal battle...
...the university dropped the tests from its admissions process
The University of California system...
...will no longer consider SAT scores for admission
It could reshape the college admissions process...
...across the entire country
But the result came too late for Kawika...
...who never made it to UCLA
The lawsuit was never about me
It was affirming, because I knew that generations...
...coming after me will no longer have to experience...
...that level of discrimination
Many more colleges are now reconsidering...
...their use of SATs and legacy-admissions policies
But some argue tinkering with the admissions system...
...will do little to improve deep-rooted inequalities
A lot of the emphasis focuses on elite institutions
I think that, that misses the point for inequality, poverty
The composition of UC Berkeley student body...
...I think matters substantially less than we seem to think
It is more important to think about...
...disparities in graduation rates from high school...
...than it is the composition of elite student bodies
The young people of today deserve the same opportunity...
...to earn success and accomplishment
You have a better chance of improving social mobility...
...if you start young
Kids from wealthier families...
...tend to outperform lower-income children...
...as early as primary school
But there is a simple way to boost young children’s chances...
...and it was demonstrated in this small island nation
The story began in the late 1980s
So at that time I would say...
...there was a lot more poverty than there is now
Some of the homes that we went into...
...they were really, really very poor
Christine and Novelette were part of a pioneering scheme...
...to help some of the poorest children get ahead
So we are here with the toys
As health workers, they would visit families every week...
...bringing homemade toys and games
Once they see the uniform...
...always looking out for you
You know, and say is the nurse coming? The nurse is here
These are the original toys they brought door to door...
...many made from household rubbish
You would ask the child if they know any of the pictures...
...and most of them would know ball because you know...
...Jamaicans are into football...
...so every little child knows a ball
This is made from old socks
The mothers’ reactions were mixed...
...there were a few wondering what am I going to do...
...with these things, seeing that they were made out of...
...plastic bottles and so on
But after a few visits, they loved it
The scheme was the brainchild...
...of physician Sally Grantham-McGregor...
...who was working in Kingston at the time
Nobody appreciated the importance of play...
...there were no books, there were no toys
The children were just sitting there in the backyard
We called them the yards, doing nothing
They had nothing
So that’s where I was coming from...
...to try and improve equity a little bit
The homemade toys and books helped the kids to develop...
...language and cognitive skills
What was unique I think...
...was that we wanted to work with the mothers
And we wanted to make it as cheap as possible, but still effective
I feel very proud because...
...I see that other people can come and, you know...
...doing the same thing that we used to go out and do...
...and they are benefiting from it
Sally’s team, together with economists...
...followed the children who had taken part in the experiment
The results were extraordinary
20 years after the experiment...
...the children were earning 25% more than the control group
And at the 30-year follow-up...
...they now earned 43% more per hour
I mean at the time when we started...
...I was just desperate to make an improvement at all
But with the long-term follow-up showing such benefits...
...it’s incredibly encouraging
The challenge now is to do it at scale
Reach more children
Versions of the Jamaica programme...
...have now been set up across the world
One of the most recent is in China
Thanks to rapid industrial development...
...many people here have lifted themselves out of poverty
Meaning the country has a high rate...
...of what is known as absolute mobility
But your chances of moving from the lowest rungs...
...of the income ladder to the top are still very low
It’s possible to have a society...
...with high absolute mobility...
...but still very low relative mobility
And you can think of emerging-market economies...
...like India and China
China, in particular...
...has taken 800m people out of extreme poverty...
...in the last few decades
But it’s an incredibly unequal society as well
It’s not just when and what you’re taught as a child...
...which can determine your life chances
It’s also where you’re brought up
In America...
...even moving a few blocks can make all the difference
This is the street I lived on, it literally looks like an alley
Dawn used to live in one of the poorer areas of Seattle
You kind of feel worthless...
...you know, being here
You don’t think much of yourself being here
But thanks to a groundbreaking programme...
...she has moved to a new part of the city
It’s like the kids who made fun of me in sixth grade...
...saying that you microwave your chicken to warm it up
It partly kind of saved me, a little bit...
...because it has finally allowed me to feel like...
...things are getting better
That everything that I’ve been doing all these years...
...are leading up to a better life
Under the scheme, people who receive housing vouchers...
...to help cover their rent...
...are supported and helped with the costs of moving...
...to areas of greater opportunity
It’s part-funded by the Gates Foundation...
...and based on the work of a group of economists
Using decades of data from the Census Bureau...
...they built a so-called “opportunity atlas” for America
It’s a heat map tracking how much children born...
...in the late 70s and early 80s, would go on to earn as adults
According to the atlas data, where you grow up really matters
If you grew up in a low-income family...
...in Harding County, South Dakota, for example...
...you can expect to earn much more than your parents
But if you’re raised in Hoke County, North Carolina...
...your household income at 35 is likely to be just $22,000...
...among the lowest in America
The pattern that jumps out is the incredibly high mobility rates...
...of the Great Plains and Upper Midwest
If you ask many people what’s the highest-mobility place...
...to grow up in the country, they’ll often say...
...you know, very highly educated cities on the coast
But the highest mobility rates by far are in places like...
...Iowa and Nebraska
These are places where children from low-income families...
...really have just outstanding outcomes
It's not entirely clear what makes these places...
...engines of opportunity
The researchers think it’s connected to role models
Most of the areas of greatest opportunity...
...have a high number of two-parent families...
...as well as good schools...
...and low levels of segregation
According to the atlas data...
...children growing up in Dawn’s old area...
...can expect to earn $12,000...
...a year less than those who grow up in her new neighborhood
I literally feel like I’m one of the lottery winners
But even the scheme’s advocates acknowledge moving people...
...to better places is simply too costly and labour-intensive...
...to be a scalable solution to improve social mobilty
This is never going to be a broad-based solution...
...because we can’t just move everyone around
But on the other hand...
...if you even just take the incredibly narrow view...
...that children who grow up...
...in higher-opportunity neighbourhoods...
...will themselves grow up to earn more as adults...
...and pay more taxes as adults...
...you can actually get the programme to pay for itself...
...due to these higher outcomes
Moving up the social ladder...
...isn’t just about increasing your earnings
It can also be linked to something which is harder to quantify...
...social capital
The invisible networks that help perpetuate the advantages...
...those from wealthy backgrounds enjoy
Social capital is having people that you can turn to
Oh do you know someone in this industry?
Oh can you help me with the CV?
The really, kind of like, subtle favours that people can call upon
Sophie may be successful now...
...but she is keenly aware of the importance of social connections...
...which she lacked when she started out
I think that I had gone to uni expecting to make friends...
...on the basis of my academic interests and my intellect
And what I realised was that actually university was this like...
...extension of a public-school system that exists in the UK
And it was really strange to me, I didn’t have the networks
People would make comments about my accent
They would say, you sound really “Essexy”...
...you sound really “chavvy”
Sophie has founded a group dedicated to changing this
So we’re going to let the defences down
Let the side down, that’s nice yeah
This is the 93% Club
So-called after the 93% of students...
...who attend state schools in Britain
Effectively what we’re doing...
...is we are packaging up privilege...
...the kind of privilege that you can’t see...
...but is definitely operating in our society
And we give it back to students...
...from lower socioeconomic backgrounds
Today, members are having head-shots taken for LinkedIn profiles...
...as well as meeting professional mentors...
...from some of Britain’s most successful firms
And actually the, you know, something that...
...you think sounds quite mundane...
...but if you explain to someone why...
...that was the most challenging thing you did...
...it will come across way better
The 93% Club now has nearly 50 branches in universities...
...across the UK
For some of the newer recruits...
...the group has been a lifeline
Whether you realise it or not, your class or your upbringing...
...ends up playing such a pivotal role in the rest of your life
It gives you opportunities and trains you, for example...
...a private-school parent, might check the CV for the child, but...
...for example for someone like me...
...I can’t get my mother or father to check my CV...
...because of the fact that they’re not educated enough
It will take more than passionate individuals...
...to improve social mobility
It requires governments to commit to improving both...
...access to education and wealth redistribution
It’s a huge task...
...but the post-pandemic world...
...offers a unique opportunity for change
Social mobility and more generally income inequality...
...has really come to the fore of the policy discussion
If there’s a silver lining of the pandemic...
...sometimes it takes a big shock like this...
...in order to really get people focused on all of these inequalities
I think we’ve dramatically expanded...
...what might be possible over the past year...
...relative to the way people thought about these problems...
...15 or 20 years ago
Hi, I’m Idrees Kahloon and I’m the Washington...
...correspondent for The Economist
If you’d like to read my briefing on social mobility...
...then please click on the link that’s opposite me
And if you'd like to watch more of our “Now & Next” series...
...then please click on the other link
Thank you very much for watching...
...and please don’t forget to subscribe
It used to be much easier to get ahead
After the second world war...
...countries such as America and Britain...
...enjoyed a social-mobility boom
An expansion in professional and managerial jobs...
...allowed many working-class people...
...to move up the income ladder
And as result, if you were born in the post-war years in America...
...you had a 90% chance of making more money than your parents
But this didn’t last
Kids from wealthier families...
...tend to outperform lower-income children...
...as early as primary school
But there is a simple way to boost young children’s chances...
...and it was demonstrated in this small island nation
In Britain, a new breed of state schools like this one...
...have sprung up, catapulting kids from lower-income families...
...into top universities
While nearly half the students here are on bursaries...
...or qualify for free school meals, an indicator of deprivation...
...last year 95% went on to top universities in Britain
I look down on him because I am upper class
I look up to him because he is upper class
I know my place
In the 21st century...
...you might think climbing the social ladder has got easier...
...but actually it’s getting harder
In many rich countries the class you’re born into still dominates...
...your chances of making it
No one talks about these sort of hidden privileges...
...that are going on underneath the surface
Even in America...
...the so-called land of opportunity...
...your chances of climbing up the income ladder...
...are some of the lowest in the rich world
What the data suggest is that we’re not...
...such a land of opportunity after all
Don’t shoot
This lack of social mobility is causing serious political rifts
When people feel they just don’t have a shot
That’s what leads to disaffection
It leads to radicalism in politics
So what’s gone wrong? And what can be done...
...to improve social mobility?