Recent decades have seen sharply rising incomes for the rich, modest progress for the middle class, and little or no progress for the poor. How can more people achieve the American Dream? Ron Haskins, co-author of the book Creating an Opportunity Society (Brookings Institution Press, 2009), proposes a concrete agenda to achieve that goal. According to Haskins, more education, more work and stronger families are the way forward. Data presented in his book show that graduating from high school, working full-time and marrying before having children virtually guarantee a middle-class income.
Today, Ron Haskins and Politico senior editor Fred Barbash answered your questions about expanding economic opportunity in America. The transcript of this chat follows:
Fred Barbash-Moderator: Welcome all and welcome to our guest Ron Haskins. Let’s turn it over to our readers.
12:31 Ron Haskins: Hi Fred; thanks for having me.
12:31 [Comment From Adrianna: ] How does economic mobility in America compare to mobility in other countries?
12:33 Ron Haskins: Thanks for the question Adrianna. Although Americans often think of our nation as one offering exceptional economic opportunity and mobility to people of all backgrounds, there are good studies showing that a number of other developed nations have more mobility than we do. In one of the prominent studies, for example, the correlation between the income of fathers and sons at the same age is higher in America than in several Scandinavian countries and even the UK. The apple in America falls closer to the tree than in many other nations.
12:34 [Comment From Fred:] Are there any concrete steps people can take to ensure future success?
12:37 Ron Haskins: In our book, we emphasize the importance of something we call the “success sequence.” Young people can fulfill the success sequence by doing three things: 1) finishing at least a high school education; 2) getting and holding a job; and 3) getting married before having a baby. If young people meet these three conditions in this order, they will have less than a 2% chance of winding up in poverty and will also greatly increase their chances of joining the middle class.
12:37 [Comment From Ann:] What are the one or two factors most responsible for rising inequality and poverty and stagnant opportunity in America?
12:40 Ron Haskins: There are two factors that are most directly responsible for rising inequality and poverty. The first is one that afflicts all Americans in the bottom, say, 15 to 20 percent of the wage distritubtion. Their wages have gone up and down, but are virtually the same now as they were 30 years ago. If wages at the bottom are stuck — and we know that there will always be people at the bottom — then it will be very difficult for these people to gain income. The second factor that has had a devastating impact on inequality and poverty is the dissolution of the American family.
12:42 Ron Haskins: If we had the same poverty rate today as we had in 1970, poverty would fall by nearly 30 percent. Keep in mind that this huge decline in poverty — far greater than any decline ever produced by new programs or policies — would occur without any new government expenditures.
12:42 [Comment From Karl Knapstein] Ron your answer to fred sounds kind of 2008 do you think things have changed?
12:48 Ron Haskins: Karl, this is a great question. Our book was completed just as it started to become obvious that we were in a deep and serious recession. Most of the policies and programs we recommend in our book would work best in a normal economy. I have faith that the economy will come roaring back and that jobs will one day be abundant again. I think all our recommendations would help individuals do well even in a bad economy, but they would be much more effective in a good economy. I worry more about the changing nature of the American economy than I do about the economy generating enough jobs. It have become increasingly true that a good job requires a good education. We still have lots of decent jobs that pay, say, $50,000 or $60,000 a year, but even these usually require some post-high school education (not necessarily college). But education has been stagnant for a long time; will Americans figure out they need more education and once again start trooping to post-high school institutions?
12:48 [Comment From Ben:] You report in your book, based on earlier work with you colleague Julia Isaacs, that black Americans are much less successful than whites in passing along their economic advantages to their children. What is the cause of this disturbing problem and what should we do about it?
12:52 Ron Haskins: Ben’s is another terrific question. All three of us (Sawhill, Isaacs, Haskins) were surprised by this finding. The truth is we have not found good evidence that provides an explanation of why it is so much harder for black Americans to pass on their advantages to their children. I am guessing that family composition is playing an important roll. About 70 percent of black children are born outside marriage and about half of the rest experience their parents’ divorce. We now have an extensive literature showing the kids from single-parent families are disadvantaged in many ways — perhaps one of them is difficulty retaining at least an economic status equal to that of their parents.
12:52 [Comment From Matthew:] How realistic is it that wages for people in the bottom 15 to 20 percent will be raised? It seems like businesses would raise a stinkstorm over any federal effort to increase minimum wage.
12:54 Ron Haskins: Good question Matthew. I have little confidence that wages at the bottom will rise very much, especially because of international competition. The best hope would be that people now at the bottom would get more education and become more productive, thereby allowing employers to pay them more.
12:54 [Comment From Daniel:] do you think poverty rates have reached their peak? can we expect these rates to drop in the next few months?
12:56 Ron Haskins: The Census Bureau publishes poverty rates every year. Our most recent official data are for 2008 — and as you might guess the rates went up for almost every group. When we get the data for 2009 in August of next year, everyone thinks they will go up, perhaps substantially. Poverty will probably not begin to decline until unemployment begins to increase.
12:56 [Comment From Leonard:] Why is inequality getting so extreme in our country?
12:59 Ron Haskins: Leonard poses a difficult question. Although our inequality rates are higher than those of other countries, we still have lots of economic mobility in our country. Furthermore, I have recently written a detailed analysis in National Affairs arguing that there are some serious measurement issues and that if these are corrected it becomes clear that since the 1980s, the entire income distribution has moved up. The top has moved up the most, so that increases inequality, but the middle and bottom have moved up some as well. So it could be worse.
1:00 [Comment From Suzanne:] Do you have any thoughts on how we measure poverty and unemployment? The numbers we get from government agencies just don’t seem accurate.
1:02 Ron Haskins: A lot of people are asking the same question as Suzanne. I think there is a lot of agreement that our measurement of unemployment is pretty good. There are some problems, especially for people who don’t have a fixed address, but in general we’re getting accurate information about unemployment. Poverty is entirely different. There is widespead agreement that the official federal measure of poverty is lousy. In 1995 the National Academy of Science proposed a new measure and now several states are adopting measures based on the National Academy measure.
1:04 Ron Haskins: In addition, members of congress have introduced legislation to change the official poverty measure to be more like the National Academy measure. I would not be surprised to see us adopt a new measure within the next several years, but there are still a lot of technical problems with all the new measures.
1:04 [Comment From Wes:] I saw that you wrote a blog post last week about California’s work-to-welfare policy. Can you explain this and briefly discuss your thougths on it?
1:07 Ron Haskins: Wes’s question about the situation in California is timely. Roughly what California did was tell about half of their welfare caseload that they were no longer subject to work requirements. Their budget people figured out that it would cost less just to give people cash welfare than to both give them cash welfare and simultaneously help them find a job or to get training and then find a job.
1:10 Ron Haskins: In my view this policy is shortsighted. In the long run, adults and their children will be better off if parents work. Most of the welfare cases are single mothers. These mothers have shown over the past decade, when welfare was reformed to require more work, that they are capable of holding down a job and earning at least $11,000 or $12,000 a year. Federal and state policy then provides them with additional income or benefits from the Earned Income Tax Credit, food stamps, child care, Medicaid, and other programs. In some cases, these mothers can get a package of earnings and public benefits (including cash) in excess of $25,000. Further, the public wants able-bodied people to work. Work is the way to go and California is making a big mistake.
1:10 [Comment From bea:] do you think high divorce rates have impacted inequality today?
1:14 Ron Haskins: Bea want to know if divorce is playing a role in inequality. It seems to me that it clearly is. I mentioned earlier that if the nation had the same divorce rate we had in 1970, poverty would fall by about 30 percent. If poverty falls, so does inequality. But there are many other causes of inequality including low and stagnant wages and immmigration. But I believe the biggest factor is stagnant education. If we could get more of our young people to finish high school and finish some post-secondary education, we could have major impacts on inequality and mobility.
1:14 [Comment From Suzanne:] But I do feel like our unemploymenty numbers don’t tell the full story about our current recession. What about the milions of people who are underemployed: working part time or in positions not suited to their talent levels?
1:16 Ron Haskins: No statistic tells everything. I agree with Suzanne that another bad consequence of recessions– in addition to rising unemployment — is that many people who want to work full time must work part-time. We have measures of underemployment and from time-to-time these numbers are published. But the biggest worry is unemployment itself.
1:17 [Comment From Sam. H.] i’m wondering what your opinion is on the value of college degrees. With so many people graduating from college – and even going on for other degrees, like MA – do you think college degrees are worth “less”? It seems like they’re a dime a dozen.
1:20 Ron Haskins: Sam’s question is being asked by many young people today. The evidence we have now is that a college degree brings great benefits to whoever holds one. If there is point of diminishing returns to a college degree, we haven’t reached it yet. Not only do young people with a college degree earn more than young people with less education, but the change over time in this difference is remarkable. The more education you have, the more your income has been rising over the last two decades — and the bigger the gap between your income and the income of the people with less education than you.
1:21 [Comment From Kenneth:] You’ve been emphasizing education as one of the best avenues out of poverty. Does this include things like trade schools? I feel like there is too much emohasis on getting a college degree.
1:23 Ron Haskins: Kenneth’s question is exceptionally important. I do not agree that we have too much emphasis on a four-year education, but I do agree that young people who go to trade schools or attend two-year colleges are also setting themselves up for economic success. In fact, those skilled jobs that pay $50,000 or $60,000 a year I referred to earlier mostly do not require a four-year degree. Young people can make a perfectly respectable living by going to trade school. In addtion, they could go back to college later if they want to — and many do.
1:23 [Comment From Carl:] Do we need to rebuild the social safety net that we destroyed over the past 20 years?
1:26 Ron Haskins: I do not agree with Carl that we destroyed the safety net over the past 20 years. For poor and low-income workers, we have greatly expanded social programs, including Medicaid, child care, preschool education for their children, food stamps, and the Earned Income Tax Credit. I would agree with Carl that people who expect to survive on welfare find it more difficult to do than in the past. I think we need some changes in the major cash welfare programs, and I expect that congress and the president will pay careful attention to this issue next year when the 1996 welfare law must be reauthorized.
1:27 Fred Barbash: That’s about all the time we have for today. Thank you everyone for your questions – sorry we couldn’t answer more. And thank you Ron for your great answers.
1:27 Fred Barbash: Join us again next week – same time, same place. Bye for now.