The growing opportunity gap facing American children

The growing inequality that triggered the Occupy protests, such as this one in Bennington, Vermont, is now registering as an issue with politicians at the highest level. Wikimedia Commons/Daniel Case, CC BY-SA

On rare occasions, a book frames an issue so powerfully that it sets the terms of all future debate. Robert Putnam’s Our Kids: The American Dream in Crisis may do just this for the growing gulf between America’s rich and poor.

I was a member of Putnam’s research team for Our Kids during my studies at the Harvard Kennedy School, where Putnam is a professor of public policy – so I can offer some insights into the research, and explain why the team is optimistic about its impact.

Our Kids is woven from two very different strands of research: part hard data-crunching, part ethnography. One part of the team analysed immense longitudinal datasets to draw out novel insights, then synthesised these with existing research. Another part of the team travelled across the country to bring this data to life through detailed, and often disturbing, first-hand accounts of the lives of Lola, Sofia, Elijah and another dozen American children.

What the research reveals is a country dividing in two. Children in wealthy families have access to more opportunities than ever before, while children in working-class families are thwarted by mounting barriers.

Putnam’s hope is to make the opportunity gap the core issue of the 2016 presidential election. He has aligned the stars to make this happen. Our meetings would sometimes begin with Putnam introducing a hypothetical: if he happened to have a meeting scheduled with Jeb Bush this Friday, what are the two or three messages we would want to get across, and how would we do it?

Putnam has in fact been meeting with President Barack Obama (a former participant in Putnam’s Saguaro Seminar), Hillary Clinton’s team, Paul Ryan and the current Republican frontrunner for 2016, Jeb Bush. Obama has since put income inequality and social mobility at the top of his agenda, and Bush has called the opportunity gap “the defining challenge of our time”.

The purpose of Our Kids is to set this debate into full swing across the country. David Gergen, a former adviser to four US presidents including Obama, has called the “path-breaking” book a must-read for both the White House and the wider public.

Inequality of opportunity: a ‘purple’ problem

Inequality of opportunity is what Putnam is fond of calling a “purple” problem: it transcends the political divide between red and blue states (that is, Republican and Democrat). Around 95% of Americans agree that “everyone in America should have equal opportunity to get ahead”.

This is perhaps unsurprising. Equality of opportunity is the cornerstone of the American Dream, as defined by James Truslow Adams:

… [a] social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable … regardless of the fortuitous circumstances of birth or position.

Whatever truth this dream once held, the data is indisputable. It is widely recognised that social mobility in the US is among the lowest in the OECD.

What Our Kids adds is evidence that this gloomy social mobility data is the tip of the iceberg. The worst is yet to come: social mobility:

… seems poised to plunge in the years ahead, shattering the American dream.

Rearview mirror driving

Putnam has long argued that social mobility measures provide only a “rearview mirror” take on the problem. This is because standard measures assess how social class passes from parents to their children, and logically we can only calculate this once the children have entered their 30s and 40s and demonstrated their full earning potential.

This means today’s social mobility data are a lagging indicator, which only tell us what was happening in children’s formative years 30 to 40 years ago.

To look out the front window and see where America is now – and where it is going to next – we need to look carefully at the formative influences shaping young people today.

Trouble ahead

Our Kids begins with a journey to Putnam’s home town of Port Clinton, Ohio, where he graduated high school in the class of ‘59. This town is the origin of the book’s title: Port Clinton townsfolk called all the community’s children “our kids”.

The research team found that most of Putnam’s classmates, whether born rich or poor, went on to enjoy better lives than their parents. If we set the influence of race aside, social class was only a modest influence on the lives of Putnam’s generation.

Yet the pathways followed by his generation’s children – and their children’s children – have been starkly divergent. These pathways are illuminated by interviews with young people across the country. They were revelatory even for the research team. Young people who live near one another, but who sit on opposite sides of the class divide, experience utterly different worlds.

The statistical data shows that these individual stories are representative of the lives of millions:

  • The stable nuclear family is as strong as ever for rich families, while an incredible 70% of poor children live in single-parent families – up from just 20% in the 1960s.

  • More than half of American families live in neighbourhoods segregated by class, clustering rich kids in high-quality schools and poor kids in low-quality schools.

  • Most Americans now meet and marry within their class. Rich kids end up with two high-earning breadwinners and a powerful network to draw upon, while poor kids live with a single parent on a low income, and often find themselves in caring roles.

  • While parents’ extracurricular “enrichment spending” on top-decile kids has doubled since 1970 to almost $7,000 per year, bottom-decile kids still receive only $750.

  • The gap in elementary and secondary school performance between children from poor and rich families has grown by 30-40% over the past 25 years.

  • College attendance is now class-based rather than merit-based. A child is more likely to end up with a college degree if they are not-so-smart or hard-working (bottom third of test results) but are rich, than if they are smart and hard-working (top third in test results) but are poor.

Each of these measures is connected to future earnings. This is why social mobility is set to collapse: today’s low-income children face a deluge of developmental barriers, the effects of which will play out over the next few decades.

The long-term costs of the opportunity gap are expected to be immense, and result from lost labour productivity, increased crime and public health impacts. Holzer and his team estimate that today’s total cost of poverty is at least US$500 billion per year. If Our Kids is right, this cost will continue surging upward.

Meeting the challenge

Soaring income inequality is a primary cause of the growing opportunity gap. The team’s research suggests that the most important prescription is to restore working-class income. Even small increases in income appear to have substantial positive effects on opportunity indicators, from marriage stability to SAT scores.

The next most promising intervention is early childhood education, which has been shown to have positive effects on academic performance, criminal behaviour and lifetime income, with an attractive rate of return.

Other levers include social norms, such as shifting the stigma from unwed parenting to unplanned parenting; reducing incarceration rates through softer sentencing for non-violent crimes, such as many of those associated with the drug war; and replacing failed community ties with formal mentoring and coaching programs, for both children and their parents.

Low-income children face myriad disadvantages and these call for an equally diverse set of responses. Yet the main message is clear. Americans’ incomes must once again be made more equal.

The Australian story

I am now beginning research into Australian social mobility at the Melbourne Institute at the University of Melbourne, which houses a major new research program in intergenerational disadvantage as part of the ARC Centre of Excellence for Children and Families over the Life Course.

Are Putnam’s findings becoming true of Australia too? US poverty, inequality and social mobility figures are among the very worst in OECD datasets. In comparison Australia looks in reasonable condition. Nonetheless, Australia is below the OECD average on each of these measures and should aspire for better.

Unfortunately we are heading for worse. One thing we share with the US is our direction of travel. Productivity Commission data shows that inequality has increased sharply since the 1980s, with almost all income growth since then accruing to the richest 20% of Australians.

The last federal budget proposed perhaps the boldest steps yet down the American path, most notably with the push to increase the costs of education and health care and to shift the relative tax burden from the wealthy to the poor.

The American Dream is not uniquely American, and inequality of opportunity is a “purple” problem in Australia too. When deciding what constitutes “fair” policy, our political leaders should be aware that unchecked income inequality and slashed safety nets will have disastrous effects on equality of opportunity.

Putnam’s research provides a glimpse into one possible future for Australia. We should think carefully about the kind of country we want for our kids.