Foreign Policy
Summer 1998

The Not-So-Great Leveler

Income inequality has been worsening in the United States since the early 1970s. Before 1973, all groups enjoyed healthy income gains, particularly the middle class. However, since 1979, the rich have gained far more than the middle class, while the income of the poor has fallen in absolute terms. A recent study found that the richest 1 percent of families (average annual income: $800,000 for a family of four) captured 70 percent of the total rise in family income in the United States between 1977 and 1989.

America has always been considered a land of opportunity, where parents believe in the possibility of a "better life" for their children. Does upward mobility mean growing inequality is unimportant, since, with effort and a bit of luck, those at the bottom can still move toward the top?

Not exactly. First of all, we know that historically high rates of mobility in the United States resulted from fast economic growth that was shared across the board. Today, growth benefits the wealthy far more than the middle class, let alone the poor.

Second, although many families do move from one income category to another over time, individuals have suffered larger downward, and smaller upward, income changes since the 1970s—with the exception of the rich, whose earnings have jumped dramatically.

Third, though education has always been seen as the great leveler, it now reinforces initial advantages instead of compensating for initial handicaps. Because most elementary and secondary schools fail to provide students with basic skills, they no longer effectively make up for deep inequalities among children—in terms of their home environments, parents’ help and expectations, preschool experiences, and out-of-school activities.

In addition, the high-school diploma—once a ticket to the job market for the working class—has lost its value. U.S. employers now insist on a college education as a measure of competence. And the children of the rich have always been more likely to go on to college. In 1995, 83 percent of high-school graduates from the wealthiest families (the top 20 percent of all households) enrolled in college, compared with 34 percent from the poorest (the bottom 20 percent).

So, if America is to remain the land of opportunity, elementary and secondary education must work for the poor. Otherwise, inequality of income will come to reflect not just differences in motivation, work effort, and sheer luck among players in a fair game, but different rules for rich and poor.

—N.B.