Does Growing Inequality Mean the End of Upward Mobility?


Barack Obama's ascension to the presidency won't end racism, but it does mean race is no longer the dominant issue in American politics. Instead, over the coming decades, class will likely constitute the major dividing line in our society—and the greatest threat to America's historic aspirations. This is a fundamental shift from the last century. Writing in the early 1900s, W.E.B. DuBois observed, "The problem of the 20th century is the problem of the color line." Developments in the ensuing years bore out this assertion. Indeed, before the 1960s, the decade of Barack Obama's birth, even the most talented people of color faced often insurmountable barriers to reaching their full potential. Today in a multiracial America, the path to success has opened up to an extent unimaginable in DuBois's time.

Obama's ascent reflects in particular the rise of the black bourgeoisie from tokens to a force at the heart of the meritocracy. Since the late 1960s, the proportion of African-American households living in poverty has shrunk from 70 percent to 46 percent, while the black middle class has grown from 27 percent to 37 percent. Perhaps more remarkable, the percentage who are considered prosperous—earning more than $107,000 a year in 2007 dollars—expanded from 3 percent to 17 percent.

Yet as racial equity has improved, class disparities between rich and poor, between the ultra-affluent and the middle class, have widened. This gap transcends race. African-Americans and Latinos may tend, on average, to be poorer than whites or Asians, but stagnant or even diminishing incomes affect all ethnic groups. (Most housecleaners are white, for instance—and the same goes for other low-wage professions.) Divisions may not be as visible as during the Gilded Age.

As Irving Kristol once noted, "Who doesn't wear blue jeans these days?" You can walk into a film studio or software firm and have trouble distinguishing upper management from midlevel employees.

But from the 1940s to the 1970s, the American middle class enjoyed steadily increasing incomes that stayed on a par with those in the upper classes. Since then, wages for most workers have lagged behind. As a result, the relatively small number of Americans with incomes seven times or more above the poverty level have achieved almost all the recent gains in wealth. Most disturbingly, the rate of upward mobility has stagnated overall, which means it is no easier for the poor to move up today than it was in the 1970s.

This disparity is strikingly evident in income data compiled by Citigroup, which shows that the top 1 percent of U.S. households now account for as much of the nation's total wealth—7 percent—as they did in 1913, when monopolistic business practices were the order of the day. Their net worth is now greater than that of the bottom 90 percent of the nation's households combined. The top 20 percent of taxpayers realized nearly three quarters of all income gains from 1979 to 2000.

Even getting a college degree no longer guarantees upward mobility. The implicit American contract has always been that with education and hard work, anyone can get ahead. But since 2000, young people with college educations—except those who go to elite colleges and graduate schools—have seen their wages decline. The deepening recession will make this worse. According to a 2008 survey by the National Association of Colleges and Employers, half of all companies plan to cut the number of new graduates they hire this year, compared with last. But the problem goes well beyond the current crisis. For one thing, the growing number of graduates has flooded the job market at a time when many financially pressed boomers are postponing retirement. And college-educated workers today face unprecedented competition from skilled labor in other countries, particularly in the developing world.

The greatest challenge for Obama will be to change this trajectory for Americans under 30, who supported him by two to one. The promise that "anyone" can reach the highest levels of society is the basis of both our historic optimism and the stability of our political system. Yet even before the recession, growing inequality was undermining Americans' optimism about the future. In a 2006 Zogby poll, for example, nearly two thirds of adults did not think life would be better for their children. However inspirational the story of his ascent, Barack Obama will be judged largely by whether he can rebuild a ladder of upward mobility for the rest of America, too.

This article also appears at Newsweek.

Joel Kotkin is executive editor of and is a presidential fellow in urban futures at Chapman University. He is author of The City: A Global History and is finishing a book on the American future.

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Inequality on the rise again? Here's why.


The following are causes of increasing inequality and decreasing social mobility.

Breakdown in traditional marriage. The obvious thing is the disadvantage to children brought up without a father, or with a string of perverse male role models in their lives. But also, marriage across socio-economic groups, and subsequent “inheritance”, were powerful reducers of inequality.

Provision of services, etc, with public money, that primarily benefit the wealthy, and the neglect of infrastructure that was a greater benefit, proportionally, to lower income earners. The neglect of roads, and time wasted in congestion, has a disparate impact on the poor, who tend to depend more on motor vehicle use than middle class people who can choose where they live and can organise their life around public transport. The subsidy of cultural centres and art galleries benefits the wealthy at the expense of the poor. New Orleans was a classic illustration of the consequences of concentration on trendy cultural vibrancy and the like, by the local administration, at the expense of vital infrastructure that was fought tooth and nail by chardonnay greenies and NIMBY-ists.
Background reading: "Back To Basics", by Joel Kotkin

The “conservation” of land, and restrictive zoning, has a disparate impact on the poor, on the young and those who do not own properties, in favour of the more well-off who maintain their nice views and surroundings, while property values escalate out of reach of all who are not already on the gravy boat. An excellent article in this respect, is “Green Disparate Impact”, by Thomas Sowell. (The “poor” population of California is actually being driven out of state by escalating property values).

Also, in "The Housing Bubble and the Boomer Generation", Robert Bruegmann argues that this phenomenon has resulted in "the greatest wealth transfer in history", in favour of older, existing home owners, at the expense of young, first home buyers.

Increases in regulatory expense, and the costs of obtaining licenses for commercial activity and the like, tend to inequality. A James Wattie could start up a food canning business in his garage. DEFINITELY NO LONGER.
This phenomenon is well covered in the book “The Mystery of Capital” by Hernando DeSoto. Interestingly, well-established larger businesses like this phenomenon, as it keeps competition to a minimum, hence the little-publicised support of many wealthy people for regulatory, socialist politics. Incidentally, that is not “Capitalism” although the cunning socialists “spin” the issues so it gets blamed on “Capitalism”. (The correct term is Socialist Parasitism). More recommended reading: “Intellectual Class Wars”, by David Horowitz, "Freedom of Opportunity, Not Equality of Opportunity" by George Reisman, and “Scratching By: How Government Creates Poverty as We Know it”, By Charles Johnson:

The subsidy of tertiary education with public money. Tertiary education itself, tends to increase inequality. To use taxes, which must remain necessarily high on low income earners, to subsidise this, only worsens the situation. An outright free market situation with all students paying fees, and a broader use of direct student-based “scholarships”, would actually produce less inequality than the system we have now, and would produce much better results in terms of relevant qualifications. I suggest too, that many of the poorer folk who do make it to Uni under the current system, could be tending to make poorer choices of qualification, which would be eliminated by better guidance under a scholarship-based system especially scholarships funded by private enterprise which knows of its needs for people with certain qualifications.

Lastly, the trend for wealthier people to have children later in life, and have less of them, while poorer people still have larger families, tend to start earlier, and the worst of all are, sadly, early-starting solo mothers; this is a guaranteed recipe for cross-generational poverty.

Middle Class

There is an excellent essay in the Prospect magazine of December 2008 titled "Lulled by the Celebritariat".

It is by the son of Michael Young who first coined the term meritocracy in his famous book "The Rise of the Meritocracy".
Michael's son, Toby, argues that we never got the meritocractic educational elite predicted by his father; instead we got the celebrity class.
The celebrities get enormous incomes for little work (consider the fees for movies and TV series) and yet these may not generate so much envy as within a meritocracy because so many people of all classes believe they can make it into the Celebritariat.
A remarkable survey found that 11 percent of UK 16 - 19 year olds said they "were waiting to be discovered".
And of course The X Factor, Britain's Got Talent and Pop Idol and their equivalents in the US, Australia and NZ encourage them to believe success and stardom is really there to be taken. And now U Tube makes direct access possible.

The good news too is that the Celebretariat has a high turnover. Family dynasties are rare in spite of Paris Hilton there is always Peaches Geldof.

The great advantage of being a modern celebrity is that it confers great wisdom in everything from Climate Change to Ending Poverty in Africa. My mother raised me to be active in the theatre but she never expected the theatre would make me (or her) rich. But today's stage mothers work incredibly hard and spend large sums of money in training their "gifted" children for future stardom. And this is not a cultural campaign – it's about funding their retirement.

Owen McShane, Kaiwaka, New Zealand.
Director, Centre for Resource Management Studies.


"The great advantage of being a modern celebrity is that it confers great wisdom in everything from Climate Change to Ending Poverty in Africa."


With such an emphasis on things like affirmative action and set-asides (and other perks of victim politics) I hardly think the US would be considered a hard-core "meritocracy."

Who is talking like a victim now?

I don't like affirmative action and set-asides any more than you do, but the prevalence of those things is hugely exaggerated. Ask any immigrant--the U.S. is more meritocratic than anywhere else in the world.

your comment


I don't disagree at all. But I am worried about the nature of our economy becoming skewed away from middle class upward mobility.

Our opportunity society is built around both notions and realities. The work of previous generations - notably the New Deal, the GI Bill, the Interstate Highway Act, the Reagan tax cuts even - helped with this fundamental idea of empowerment. The question is where do we go from here?


inequality, manufacturing, unions, taxes, education

Thanks Joel Kotkin

If you want to reduce inequality over time, make it easier for people to save money over time and reduce the harm caused by high inflation. High inflation has been a major problem for our country since the Federal Reserve was created and the passage of Amendment Seventeen. High inflation is especially harmful to poor people, people on fixed incomes, and people who have saved money.

The less the federal government taxes individuals and businesses the higher that state governments may be able to tax individuals and businesses. Sometimes, I think state governments spend money more wisely than the federal government and provide services better than the federal government.

Congress should eliminate the Federal Reserve or veto many of its decisions. If the majority of the United States Senate wants a Federal Reserve decision to be vetoed, it should be vetoed. If a majority of the United States House of Representatives wants a Federal Reserve decision to be vetoed, it should be vetoed.

Before Amendment Seventeen was passed United States Senators were chosen by State Legislatures which gave State Legislatures a say on trade agreements, Treaties, national debt, military issues, and many other things.

An Amendment to the United States Constitution should be passed that allows each State to have at least 3 United States Senators and allows each State Legislature to choose at least 1 United States Senator. I discuss Article 6 of the Constitution and other Amendments to the United States Constitution on my profile.

Businesses especially small businesses need capital to stay in business. The federal government should stop taxing interest from savings accounts, dividends, capital gains, and estates. Businesses will have an easier time obtaining loans and investments for hiring workers, research and development, and plant and equipment. Many middle class people, union members, and government employees who have mutual funds would benefit from capital gains and dividends not getting taxed. Many people may have an easier time saving for college tuitions, down payments on homes and fixed rate mortgages, and retirements.

"How Wall Street Can Bail Itself Out Without Destroying The Dollar" by Thom Hartmann is located at

He writes "For us, this Securities Turnover Excise Tax (STET) was a revenue source. For example, if we were to instate a .25 percent STET (tax) on every stock, swap, derivative, or other trade today, it would produce - in its first year - around $150 billion in revenue. Wall Street would be generating the money to fund its own bailout. (For comparison, as best as I can determine, the UK's STET is .25 percent, and Taiwan just dropped theirs from .60 percent to .30 percent.)"

I think it makes sense to have a .25 percent Securities Turnover Excise Tax "on every stock, swap, derivative, or other trade". Some of the money obtained from the Securities Turnover Excise Tax should be used to help fund Social Security and Medicare. Some of the money obtained from a Securities Turnover Excise Tax should go to state governments.

Our country needs to care a lot more about manufacturing if we want to help poor people move into the middle class and help middle class people who are in the middle class stay in the middle class. I discuss ideas dealing with social security and manufacturing on my profile.

Unions (union members) need to buy the majority of stock in many small companies and startups and make the decisions. Unions may benefit if capital gains and dividends stop being taxed.

People should be allowed to use public money to send their children to private k-12 schools including private k-12 religious schools via vouchers. Amendment One of the United States Constitution mentions "free exercise" of religion. Vouchers may help many more small schools and other schools be created. Competition may get many public k-12 schools to provide better results. Forcing poor children to go to lousy schools in high crime areas does not make sense. I read about functional illiteracy dealing with reading and writing when I was in junior high school more than 23 years ago. I read that there were more functional illiterates dealing with reading and writing at that time than there were people living in Canada at that time. What do you think the consequences of functional illiteracy dealing with reading and writing are?

Our governments and businesses should care a lot more about cooperative education in our junior high schools, high schools, and colleges similar to what takes places at Northeastern University so students are better prepared for work. I recommend people read some about different educational systems in Europe.

Governments and businesses should help fund and run free educational websites that will have top teachers and students helping to teach via video, audio, and notes k-12 courses, college courses, and graduate school courses. Teachers and students could be compensated. Poor children and middle class children who are able to use computers at homes and/or at libraries may benefit from top teachers and top students living in many different states.

Governments and businesses should spend a lot more money on libraries. I obtained a great deal of my education going to the Nashua Public Library in Nashua, New Hampshire when I was growing up. The only way many poor children may be able to obtain decent educations now is by going to libraries.

Governments and businesses need to spend a lot more money on buses within cities and buses between cities to make it easier for people to get to jobs and from jobs. The less money that families have to spend on automobiles, auto insurance, gas, and other automobile costs the more money they may have for college educations, down payments on homes and fixed rate mortgages, and other things. I am a regular user of the Manchester Transit Authority which runs buses in Manchester, New Hampshire and if it is better funded it might be able to have evening bus service and Sunday bus service. Many senior citizens depend on buses.

I graduated from the University of New Hampshire in 1992 with a BA Degree in Political Science and a minor in Economics.

I ran for United States Senate in 2002.

My website is


Ken Stremsky