CA residents most likely to go from poor to rich

CA residents most likely to go from poor to rich

income-inequality

A new study undercuts Occupy-style rhetoric and adds nuance to a key public-policy debate.

A massive statistical analysis of upward and downward economic mobility in the United States that is getting big play on The New York Times website is loaded with fodder for interesting comments about American life. Here are the key conclusions drawn by David Leonhardt, the NYT’s often-excellent economics columnist/reporter:

“The study — based on millions of anonymous earnings records and being released this week by a team of top academic economists — is the first with enough data to compare upward mobility across metropolitan areas. These comparisons provide some of the most powerful evidence so far about the factors that seem to drive people’s chances of rising beyond the station of their birth, including education, family structure and the economic layout of metropolitan areas.

“Climbing the income ladder occurs less often in the Southeast and industrial Midwest, the data shows, with the odds notably low in Atlanta, Charlotte, Memphis, Raleigh, Indianapolis, Cincinnati and Columbus. By contrast, some of the highest rates occur in the Northeast, Great Plains and West, including in New York, Boston, Salt Lake City, Pittsburgh, Seattle and large swaths of California and Minnesota.”

Not just Silicon Valley — San Diego, Sacramento and L.A., too

But Leonhardt doesn’t make enough of California’s singularity in this latter category. Included in the NYT package is a chart showing the likeliness of sharp upward economic mobility by city. The chances of a child who grew up in the bottom fifth of family income (less than $25,000 a year) ending up in the top fifth of family income (more than $107,000 a year) are better in California than anywhere in the U.S. Here are the Top 10 cities for sharp upward mobility:

1. San Jose

2. San Francisco

3. Seattle

4. San Diego

5. Pittsburgh

6. Sacramento

7. Boston

8. New York

9. Los Angeles

10. Washington D.C.

Six of the top nine cities are in California. In every one, at least one in 10 really poor kids ends up in the top fifth of income.

That certainly counters the Occupy-style rhetoric one encounters in the Golden State’s faculty  lounges and, too often, in newsrooms.

The value of impulse control — and the rise of ‘assortative mating’

But then the whole debate over income inequality in the U.S. has always been full of straw men, vapid class warfare and extreme rhetoric. The most significant gap in the U.S. isn’t between the wealthiest 1 percent and everyone else. As Charles Murray has documented, it’s between the 30 percent of people who tend to get married, avoid getting in trouble, value education and who have impulse control and the 70 percent of people who are less likely to have consistently positive habits and behavior.

There’s also assortative mating. The doctor no longer marries the nurse, the lawyer no longer marries the secretary. The doctor marries another doctor, the lawyer another lawyer, etc. Here’s a snippet of  The Economist’s excellent 2011 take on the rise of the “cognitive elite,” changing marriage patterns and other underemphasized facts about U.S. life.

“’Assortative mating’ further entrenches inequality. Highly educated men are much more likely to marry highly educated women than they were a generation ago. In 1970 only 9% of those with bachelors’ degrees in America were women, so the vast majority of men with such degrees married women who lacked them. Now the numbers are roughly even (in fact women are earning more degrees) and people tend to pair up with mates of a similar educational background.”

This is a profoundly important finding that shows more than anything else why Murray’s 30-70 gap is what matters, not the Occupy palaver. But it’s not nearly as good TV as saying the richest of the rich are out to subvert 99 percent of Americans for their own benefit.

8 comments

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  1. Steve Mehlman
    Steve Mehlman 25 July, 2013, 09:54

    Nearly every day in the “Dog, we read about how California is going to hell, how government regulations and taxes are “stifling” opportunity, how everyone needs to move to Texas. And then we read this post about there being more upward mobility in California than elsewhere.

    I’m not an economist, but common sense tells me that one of these is not true. My money is on the New York Times’ “often-excellent economics columnist/reporter.”

    Reply this comment
  2. queeg
    queeg 25 July, 2013, 09:54

    Finally the answer why CWD trolls are not mainstream….they continually make bad choices….maybe it comes from wearning tight ball caps at their fast food careers….more study is needed…

    Reply this comment
  3. admin
    admin 25 July, 2013, 10:23

    Steve: We never have questioned that there are a lot of rich people in California. And I’ve written many times about how geeks with 180+ IQs will keep coming to Silicon Valley to start or join high-tech companies. Those people also are smart enough to avoid California’s high taxes and regulations.

    The problem is for the rest of us with IQs <180. We can't afford to live here. And good manufacturing jobs for the middle class are being destroyed. Silicon Valley's median home price, for a small flat, now is $1.4 million. How are the rest of us supposed to afford that?

    -- John Seiler

    Reply this comment
  4. Steve Mehlman
    Steve Mehlman 25 July, 2013, 10:41

    John, I think the difference between us is that you place sole blame for the loss of middle-class jobs on government, while I believe that corporate greed–such as taking jobs out of the country to maximize profit–is also a critical factor.

    Reply this comment
  5. admin
    admin 25 July, 2013, 10:50

    Steve: I blame crony capitalists a lot, too. But how can even having a high-wage middle-class job allow one to buy a $1.4 million modest home in Cupertino?

    The problem is regulations on property use, beginning with the California Coastal Commission. But also including NIMBY restrictions favored by conservatives and Republicans to keep their own property values high. And the Crony Capitalists, eating caviar in their mansions, don’t care if the rest of us live in hovels, or have to move to Dubuque just to afford a home.

    — John Seiler

    Reply this comment
  6. Hondo
    Hondo 25 July, 2013, 11:08

    I’ve always said California has more economic assets than any place on earth. Yes, there are still ways for a Steve Jobs to become a billionaire. They still exist. But those roads are getting fewer, with more road blocks and potholes. California also has the highest income disparity in the country. California could still lead the nation, and the world, in getting out of these down times.
    If we could just get out of the new’ Steve Jobs’s way.
    Hondo….

    Reply this comment
  7. us citizen
    us citizen 25 July, 2013, 12:10

    Well since the govt pushed the laws which govern business, then it is the govts fault. Companies would not be leaving if they didnt have to.

    PS,,,,,,,can you change the type to a bolder type face on your new site? This type is hard to read and I have a big screen and good eye site.

    Reply this comment
  8. mjury
    mjury 25 July, 2013, 13:51

    The top fifth makes $107,000? That is chump change in the Golden State. Most public school administrators make far more than this, as do civic directors and upper-level managers. I am a teacher not even to the top of my salary schedule, and I am only $25k away from that number. And we are the lowly servant who chooses to educate for love and not money. Bah!
    $107k does not go far in this state. Add one more variable to this analysis: apply cost of living from each area to show the purchasing power of these statistics.

    Reply this comment

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