Income inequality is on the American mind, with an economic crisis upon us, tensions on the streets, and a growing sense that an increasingly remote elite is controlling an increasingly disproportionate share of the nation’s wealth. Concerns are emanating from right, left and center. One prominent observer is now even arguing that an age of “neo-feudalism” is nigh.
Utah Foundation recently explored income inequality in a series of briefs in our “Significant Statistics” series. Our research found that the picture varies among counties and even within counties. Davis County, for instance, appears to have a relatively low level of income inequality countywide even as it maintains a high median income. The area that contains most of Salt Lake City had the highest income inequality of any measured area along the Wasatch Front, while the southwest portion of the county had among the lowest levels of inequality. Statewide, median incomes in more-rural areas tend to be much lower than in urban areas.
Zooming out to the global level, the nations with the lowest levels of inequality tend to be clustered in Central Europe and Eastern Europe. The U.S., meanwhile, dwells down in the rankings with developing countries.
But what do we make of all of this? Does this mean the U.S. should strive to emulate one of the most equal countries — like, say, Belarus?
Clearly, there’s more to the picture. Perhaps the question is not what place is the most equal, but whether we have a strong middle class and vigorous social mobility.
A robust middle class provides a pipeline of human capital for employers to thrive, entrepreneurs for the next generation and a consumer base for goods and services. It may also infuse a community with a sense of well-being.
Vigorous social mobility, meanwhile, is the base premise of the “American dream”: With hard work, a good education and decent life decisions, you can achieve at least a middle-class existence and a higher standard of living than your parents.
But according to one panelist at a recent Utah Foundation Breakfast Briefing, the bottom 10% of income earners in Utah saw their real income decline between 1990 and 2014, and the median earners saw no real change — even as the top 1% enjoyed an increase of more than 75% in real income. Nationally, meanwhile, panelists alluded to a creeping feeling that “the game is rigged” to favor a small elite at the expense of the social mobility of hard-working regular people, causing resentment and social division.
There are ethnic dimensions that arise in inequality discussions in parts of Utah. The state has a solid population of recent immigrants from Latin America, many of whom arrive with low skill levels. To boost their social mobility, it will be critical to equip these Utahns with the tools that allow for middle-class incomes.
Immigration itself may be a factor in income stratification. Three of the five states with the highest income inequality — New York, California and Florida — also rank among the top five in immigrant population. But that may simply be a snapshot in a longer-term process of social mobility among immigrant families in those places.
In fact, let’s stipulate that there is certainly nothing inherent in being from Latin America or an immigrant that lends itself to falling behind the eight-ball. My own grandmother arrived here from Honduras as a teenager with the expectation that she would get an education; she went to nursing school and became a nurse. My wife, who is Colombian, arrived in the U.S. with a Ph.D. and works in the biotech field. Her brother, an electrical engineer, moved to Canada, where he works for a power company. All achieved a high degree of social mobility, and education made that possible.
Beyond anecdotes, Utah Foundation’s research has shown that English language skills and post-secondary education attainment are pivotal to intergenerational educational success and economic mobility. With that in mind, forthcoming research will focus on how to boost attainment levels.
Utah overall has the second-lowest level of income inequality in the nation. If we want to build on that strength, we must maintain a robust middle class and ensure vigorous economic mobility. In the long run, education may offer the best hope of achieving those goals.