Chutes and Ladders: Economic Mobility in an Inequality Society

January 10th, 2014 | Economic Opportunity Institute

Today, EOI released a new report highlighting the crisis of economic inequality in Washington state, brought on by ever-higher barriers to upward economic mobility for middle-class and low-income workers – including stagnating wages, declining workplace benefits, underemployment and low retirement savings.

“Through the middle part of the 20th century, the American economy grew, workers became more productive and working families across the economic spectrum enjoyed rising standards of living. A prosperous middle-class grew as the result of policies that invested in public goods and shared prosperity,” stated Tatsuko Go Hollo, a policy associate at EOI and the report’s author. “Today that trend is moving in reverse.”

The report notes that only one-third of Americans experience upward economic mobility, and another third experience downward economic mobility. In Washington, however, residents are more likely to fall down the economic ladder: 32% of Washington residents experiencing downward mobility compared to 28% nationally.

The biggest driver of downward economic mobility is low job growth in middle-class, family- wage jobs. According to the report, overall job growth has been strong over the past decade – jobs increasing by 34% from 1990 to 2012 compared to 22% nationally. But growth has been concentrated at the very top and very bottom rungs of the economy. While high-income tech jobs have grown immensely, low-income jobs – in sectors like food service, accommodation and hospitality/leisure – are outpacing overall job growth. In those low-wage sectors, jobs grew by 45% from 1990 to 2012, compared to total nonfarm job growth of 34% over the same period. Without middle-class jobs, income disparity has widened over the past half-century.

The crisis of widening income inequality has been compounded by uneven wage growth across income earners. Middle-class and low-income workers have seen stagnated wages over more than three decades. However, those in the top 10% have experienced a 31% increase in hourly wages. The top 20% of income earners are the only workers who have experienced increased wages since the start of the Great Recession.

It doesn’t have to be this way for Washington’s working families. Lawmakers in Olympia and D.C. can champion legislation that strengthens working families and grows economic prosperity. This legislative session, EOI will be working across Washington to pass economy-boosting policies including paid sick and family leave, retirement savings programs and Pay It Forward.

You can read the entire report here. To stay engaged with EOI’s work to pass policies that widen and strengthen the middle-class, sign up for our e-newsletter.

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Posted in State Economy

Comments

  1. bill wald says:

    “Middle class” is a statistical fiction because most people can’t handle big numbers and have been taught to think “bell curve/median” The bottom 80% may be 20% poor and 40% “middle class” but in terms of social class, the median population are working poor with good (union contract) jobs.

    Yes, the US has social classes, the people on the top of the hill, the people on the other side of the tracks, and the rest of us. The social classes can be defined by bell curve statistics.

  2. Tatsuko Go Hollo says:

    Middle class can be defined by many different terms, and there are certainly differences in social and quantitative classifications. We urge lawmakers to focus on policies that reclaim economic prosperity and opportunity, so the vast majority of workers and their families will benefit.

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