Social Mobility by Lee Elliot Major

Author:Lee Elliot Major
Language: eng
Format: epub
ISBN: 9780241317037
Publisher: Penguin Books Ltd
Published: 2018-08-19T16:00:00+00:00

Growing the Economy for All

Which brings us to another apparent panacea: growing ourselves out of trouble. If we boost economic growth we do not need to worry about inequality, or so the argument goes. Everyone would enjoy an increasing share of the cake, as the economic cake gets bigger overall. We would replicate the golden era of booming absolute mobility in the post-war years.

Some believe that social mobility is primarily driven by the availability of good jobs created by an expanding economy.13 This is the ‘room at the top’ argument: the claim is that it is the demand from the world of work that matters, not the supply of educational talent to fill it.

Most politicians prefer to focus on improving absolute mobility. What could be more popular than a world in which all travellers in life’s caravan are advancing more quickly than their forebears? When he was prime minister, Gordon Brown likened this to a ‘national crusade’.14 The plan rested on the (not so) small matter of rejuvenating Britain’s ailing economy.

The flaw with this plan is that, more recently, economic growth has mostly benefitted the better-off.15 The evidence shows that, unlike for long periods in the past when productivity and median wages grew at broadly similar rates, in the recent past median wage growth has lagged behind productivity growth.16 Therefore, ‘faster growth is necessary but not sufficient to restore higher intergenerational income mobility,’ conclude Lawrence Katz and Alan Krueger in their deconstruction of declining absolute mobility in the United States. ‘Evidence suggests that, to increase income mobility, policy-makers should focus on raising middle-class and lower-income household incomes.’17

Nine in ten American children born in 1940 went on to earn a higher income than their parents; but only one in two Americans born in the 1980s did so. The economists estimate that three-quarters of this decline in absolute mobility levels is down to widening income inequality, and a quarter is down to weaker economic growth. All the indicators point to a similarly bleak picture in Britain.

America and Britain’s emerging industrial model in the global economy of the twenty-first century is that companies directly employ elite university graduates as core workers, and contract out lower-level work to temping agencies and other contractors. For the global executives and private equity owners, that’s the obvious way to maximize profits: invest in talent and contract out basic work. But it has created a two-tier system between those pursuing the ‘royal route’ of seamless career progression and those stuck in dead-end, insecure jobs without a future. ‘It used to be that General Motors had people throughout the education and income distributions working there,’ says Katz. ‘Whereas, today’s large firms, the Apples and Goldmans, tend to mainly directly employ college graduates and elites.’18

In the post-war years society’s stragglers at the rear of the caravan could at least comfort themselves that life had got better compared with previous generations. Improving their relative position did not matter as much. Young adults of the twenty-first century are the generation whose luck ran out.

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