economics

The phrase “economic mobility” refers to the likelihood that a child will end up in the same or a different economic strata than their parent.  Education is usually cited as a key to improving economic well-being intergenerationally. Conversely, but often unstated, is the idea that if a child of college graduates doesn’t attend college, than they should perhaps do worse than their parents.

What does the data say?

The figure below is from the Pew Economic Mobility Project.  Along the horizontal axis is the parent’s household income quintile: economic strata broken up into fifths from the lowest (left) to highest (right).  The bars represent the adult child’s income for those who didn’t graduate from college (red) and those that did (blue).

Often we focus on the left side.  Does attending college help poor and working class Americans?  The answer is yes. Only 10% of children born into the bottom 20% of household incomes will grow up and stay in the bottom 20%, compared to almost half of people who don’t go to college.    It’s similar, if less stark, for those in the 2nd to bottom quintile.

But what about the rich kids?  I want to look at the right side.  Notice that a quarter of kids born into the top quintile stay there even if they don’t get a college degree.  Half of non-degree earning children will stay in the top 40% of income earners.

Among the richest kids who do go to college, about 50% will remain in the top quintile.  There are lots of reasons for this, but one is paternal connections.  One study found that a whopping 70% of sons of the 1% had worked for the same employer as their father.  I wonder how high that number would be if we added daddy’s friends?

In sum, it’s hard to go up from down below, but it’s also relatively easy to stay sitting pretty if you’re already way up there.

Via Matthew O’Brien at The Atlantic. Cross-posted at Pacific Standard.

Lisa Wade, PhD is an Associate Professor at Tulane University. She is the author of American Hookup, a book about college sexual culture; a textbook about gender; and a forthcoming introductory text: Terrible Magnificent Sociology. You can follow her on Twitter and Instagram.

He’s makin’ more money than you’ll ever see.

That was the preferred argument of my friend, Tommy, a classmate who lived across the street when I was a kid.  I sometimes would disagree with Tommy about the talents or behavior of some celebrity — a rock star or an actor.  Today’s equivalent might be Ke$ha or a Kardashian. Tommy’s response was usually, “He’s makin’ more money than you’ll ever see.”  And that settled the issue as far as Tommy was concerned.  A huge income trumped just about anything.

In sociology, we talk about values. Introduction to Sociology texts usually define values as abstract ideas about what is good, ideas that people use as guides to action.  Maybe. But the definition I prefer sees values as “legitimations” — ideas about what is good that people use to justify behavior or to win arguments.  For Tommy, money was this kind of ultimate legitimation. His behavior did not evidence a strong value on money — we were only about eleven at the time — but his judgments did. Values are what we use to evaluate.

I thought of Tommy and values today when I read the transcript of a CNBC interview with Alex Pereene.  Pereene has recently gone on record criticizing Jamie Dimon, the CEO of JPMorgan. That bank currently faces an $11 billion fine for having dealt in shoddy mortgage-backed securities.  JP Morgan can afford it, of course, but $11 billion begins to be real money.  The question on CNBC was whether Dimon should continue as its CEO.

Pareene says no. The CNBC anchor, Maria Bartiromo then says.

Legal problems aside, JP Morgan remains one of the best, if not the best performing major bank in the world today. You believe the leader of that bank should step down?

Or as Tommy Fiedler would have put it, “His bank is makin’ more money than you’ll ever see.”

Here’s Pareene’s response:

If you managed a restaurant, and it got the biggest health department fine in the history of restaurants, no one would say “Yeah, but the restaurant’s making a lot of money. There’s only a little bit of poison in the food.”

CNBC then brings in a Dimon booster, Duff McDonald. Asked to respond to Pareene’s charge of corruption, McDonald says,

It’s preposterous. The stock’s touching a ten-year high. It’s a cash-generating machine. Sure they’ve had their regulatory issues . . .

In McDonald’s view, the charge of corruption is preposterous because JP Morgan is makin’ more money than you’ll ever see.

Bartiromo’s reaction is especially telling. She seems to take Pereene’s criticism of JP Morgan personally. I thought that anchors were supposed to be neutral and try to  draw guests out. But Bartiromo is openly hostile. She loudly interrupts Pereene and demands evidence of the bank’s questionable tactics. When Pereene gives an example, she defends Dimon by again appealing to the value on profits above all else.

Even with all these losses, the company continues to churn out tens of billions of dollars in earnings and hundreds of millions in revenues. How do you criticize that? [emphasis added]

Her assumption is that anyone who makes so much money cannot be criticized. Such criticism is immoral. The reporting about JP Morgan’s shortcomings is, she says,  “a witch hunt.”

The problem with legitimations is that they work only if everyone in the room shares the same values. Members of the same culture, almost by definition, share values, and effective arguments apeal to those values. Americans, for example, are suckers for arguments based on appeals to individual freedom. We find them very hard to resist. But people in other cultures might not find those arguments so persuasive.

This brief CNBC interview hints at cultures or moral worlds in collision. In the CNBC world, people take the value on making money for granted. When they encounter someone who does not share that value, who is not persuaded by arguments based on it, they act as though threatened by some uncomprehending and dangerous alien, a creature from another world. It is a clash of cultures, a clash of values, and the way we discover those is not by watching what people do (values as guides to action)  but by listening to how they justify what they and others do (values as legitimations).

Cross-posted at Montclair SocioBlog.

Jay Livingston is the chair of the Sociology Department at Montclair State University. You can follow him at Montclair SocioBlog or on Twitter.

Compared to some European countries, the United States has a weak tradition of labor-based activism.  All too often, this leads to the invisibility of labor issues.  Take for example, this commercial for Simply Orange® brand orange juice. In an attempt to present their product as a natural alternative to other brands, Simply Orange juxtaposes images of natural orange growth with common phrases relating to the structure of a manufacturing organization. The tree is their “plant” (a marvelous pun), the orange blossoms are the “workers” that produce the fruit, and the sun itself becomes “upper management.”

Even though this commercial is humorously centered on the process of producing orange juice, there is not a single human being present in any of the images. It is a story about making a product in which nobody actually makes anything! This message cleverly sells the product, but it also obscures the real labor that went into growing, picking, and juicing the oranges and downplays the contributions to the process made by real people. All that productive effort is condensed into the image of an orange blossom, as if it can be assumed that such production will just naturally occur like an annual blooming.

The reality of orange juice production is much less sunny. According to statistics recently compiled by the Southern Poverty Law Center, there are roughly 20,000 undocumented workers in Florida that are subjected to harsh working conditions as growers compete with imported oranges in a “race to the bottom” for a cheaper production process. The illegal status of many of these workers makes them easily exploited for substandard wages, because they are often afraid to challenge the policies of their employers.

In a Marxist theoretical perspective, the way that these workers are rendered invisible by the public image of the commercial is a prime example of alienation: a tension in modern capitalism in which the workers in a mass-producing industry are separated from the fruits of their labor. Where at first it was merely the physical product that was taken from those who produced it to be sold in the market, now the credit for even participating in the process is being abstractly torn away.

This commercial also challenges the realities of the labor process, associating modern concepts of work organization such as “the plant” and “upper management” with images of natural growth. These associations allow the commercial to imply that their methods of labor organization are somehow rooted in a simpler way of doing things that is more harmonious with the natural order. By hearkening back to these roots, the organization is rendered harmless, as if to say the complexities of modern labor relations do not apply to the simple production of orange juice. All together, the choice to portray the associations in this commercial serves to hide the realities of agricultural production in the United States and limit the viewer’s potential curiosity about the way the process really works.

Evan Stewart is a Ph.D student at the University of Minnesota studying political culture. He is also a member of The Society Pages’ graduate student board, and you can follow him on Twitter. 

Earlier this week, Marty posted about the increasingly huge share of income going to the richest Americans. And as we’ve seen in the past, Americans tend to way — way — underestimate how unequal the U.S. is.

This video (via Upworthy) does a great job illustrating the distribution of wealth, and how it compares to Americans’ perceptions of both the real and ideal distribution. Even if you know all this stuff, and can recite the statistics, the visual representation of exactly what that means is still jarring.

Gwen Sharp is an associate professor of sociology at Nevada State College. You can follow her on Twitter at @gwensharpnv.

The great majority of Americans might find the post-recession expansion disappointing, but not the top earners.

The following table reveals that our economic system is operating much differently than in the recent past.  The rightmost column shows that the top 1% captured 68% of all the new income generated over the period 1993 to 2012, but a full 95% of all the real income growth during the 2009-2012 recovery from the Great Recession.  In contrast, the top 1% only captured 45% of the income growth during the Clinton expansion and 68% during the Bush expansion.

Of that weren’t enough, the next chart offers another perspective on how well top income earners are doing. In the words of the New York Times article that included it:

…the top 10% of earners took more than half of the country’s total income in 2012, the highest level recorded since the government began collecting the relevant data a century ago… The top 1% took more than one-fifth of the income earned by Americans, one of the highest levels on record since 1913 when the government instituted an income tax.

We have a big economy.  Slow growth isn’t such a big deal if you are in the top 1% and 22.5% of the total national income is yours and you can capture 95% of any increase.  As for the rest of us…

One question rarely raised by those reporting on income trends: What policies are responsible for these trends?

Cross-posted at Reports from the Economic Front.

Martin Hart-Landsberg is a professor of economics at Lewis and Clark College. You can follow him at Reports from the Economic Front.

Repeatedly at SocImages, we’ve offered data showing that the middle class is shrinking.  The rich are getting richer, while a rising percentage of Americans are having trouble making ends meet.  One measure of this is the number of households that include both adults and their adult children.  About 12% of 25 to 44-year-olds lived with their parents in 1960, that dropped to 9% by 1980 and, in 2010, topped out at 17%.  Almost one-in-five adults were living with their parents at the turn of this decade.

There are two scenarios, here, however.  One indicates the decreasing financial well-being of the elderly: parents move in with their children because they can’t afford to live alone, perhaps after retirement.  The other indicates the decreasing financial well-being of young and mid-life adults: children are moving in with their parents because they can’t get a good start to life.

It turns out that the first scenario is actually on the decrease, while the latter is on the increase.  The rise in co-residence is a consequence of the failure of our economy to integrate young people into jobs that pay a living wage.  Literally, a growing number of Americans — both young people and those in mid-life — can’t afford to leave the nest.  And, no, this didn’t start with the recession, it started in the ’80s.

We’ve done a decent job trying to ensure that the elderly don’t live in poverty, it’s time to start working on making sure the rest of America doesn’t either.

Thanks to @toddgorman for the link!  Cross-posted at Pacific Standard and The Huffington Post.

Lisa Wade, PhD is an Associate Professor at Tulane University. She is the author of American Hookup, a book about college sexual culture; a textbook about gender; and a forthcoming introductory text: Terrible Magnificent Sociology. You can follow her on Twitter and Instagram.

Re-posted in honor of Grandparents’ Day.

My Christmas present to my mom one year was time off from childcare. For several days while I was back home, I took over all of her usual duties regarding her grandkids; as she tries to support two daughters who are divorced with kids and struggling to get by, taking care of grandkids had expanded to take up most of her non-working life. She was incredibly excited to have the free time to finally go to the dentist and do other basic errands for herself.

MetLife and Generations United just released the results of a study of grandparents’ contributions to the support and care of their grandkids. It illustrates how grandparents serve as a support system, providing both childcare and financial assistance.

The data come from a national sample of 1,008 grandparents over age 45. A caution: the survey was conducted online, though they say the sample was weighted to be representative of the full population, not just the online population.

On average, grandparents have 4 grandkids:

Thirteen percent of the sample reported caring for their grandchildren on a regular basis. Of those, a third watch the grandkids at least 5 days per week, while over 40% babysit less often, and 15% are raising their grandchildren:

Most grandparents reported that one of the reasons they watch their grandchildren is because they enjoy it, but their answers also make clear that grandparents are playing a key role in filling the gap in care during periods when parents are at work but kids aren’t in school:

Grandparents also serve as a form of economic safety net. It’s not surprising that grandparents buy stuff for their grandkids; we often depict grandparents as spoiling their grandkids with lots of toys and luxuries. But grandparents also provide more direct support. Of this sample, 62% had provided financial assistance in the past 5 years, and of those, 43% said they are providing more help than they used to because of the economic crisis. These graphs show the amount and type over the past 5 years:

And the money isn’t just going for toys and fun stuff. Clothing, general financial help, and educational expenses are the most common types of assistance, though the biggest average levels of giving are for investments, followed by educational expenses and helping buy a home:

A third (34%) said they continue to provide financial assistance even though they think it’s going to cause problems for their own financial futures.

For another aspect of the essential support grandparents provide, check out Philip Cohen’s earlier post on poverty and the number of kids living with their grandparents.

Gwen Sharp is an associate professor of sociology at Nevada State College. You can follow her on Twitter at @gwensharpnv.

As the Wall Street Journal reports:

Four years into the economic recovery, U.S. workers’ pay still isn’t even keeping up with inflation. The average hourly pay for a nongovernment, non-supervisory worker, adjusted for price increases, declined to $8.77 last month from $8.85 at the end of the recession in June 2009, Labor Department data show.

In other words, as the chart below illustrates, the great majority of workers are experiencing real wage declines over this expansion”

Growth also remains sluggish, increasing “at a seasonally adjusted annual pace of less than 2% for three straight quarters — below the pre-recession average of 3.5%.”  But by intensifying the pace of work and reducing the pay of their employees, corporations have been able to boost their profits despite the slow growth.

The following chart from an Economic Policy Institute study shows the continuing and growing disconnect between productivity and private sector worker compensation (which includes wages and benefits) using two different measures of compensation.

As the Economic Policy Institute study explains, “there has been no sustained growth in average compensation since 2004. The stagnation began even earlier, in 2003, when considering wages alone. Since 2003, wages as measured by both the ECI and the ECEC (not shown) have not grown at all — a lost decade for wages.”

The point then is that we need a real jobs program, one that is designed to create new meaningful jobs and boost the well-being of those employed.  Government efforts to sustain the existing expansion have certainly been responsive to corporate interests.  It should now be obvious that such efforts offer workers very little.

Martin Hart-Landsberg is a professor of economics at Lewis and Clark College. You can follow him at Reports from the Economic Front.