One of the nagging questions I have had about the Occupy Wall Street movement is why now. Income inequality is nothing new. And while it appears that the recession has been worse on the unemployed and the working poor than the rich, recent data from the U.S. Census Bureau show that for the first time in a while the U.S. income gap appears to be holding steady and not increasing as it has been steadily over the past two decades. So why now?
The reason is that the Occupy Wall Street is really not about income inequality, but about opportunity inequality, and it's the later that appears to be hitting all-time highs now. This week's cover story in TIME by Rana Foroohar, titled What Ever Happened to Upward Mobility?, examines the opportunity gap in America and why it has gotten so uneven. A recent study from the Pew Charitable Trust found that Americans born in the a family that was one of the bottom fifth in terms of wealth, only had a 17% chance of making into the top two-fifths as an adult. It now appears, as Foroohar points out, that a number of recent studies have shown that it is now easier to move up the income ladder in Europe than it is in America. So much for the land of the opportunity.
What happened? Foroohar says there are a lot of reasons. But Foroohar says the two biggest trends driving income inequality are China and other emerging market countries, and technology - two forces that are in effectively stealing away America's good paying middle class jobs.
But the causes of inequality and any resulting decrease in social mobility are also very much about two megatrends that have been reshaping the global economy since the 1970s: the effects of technology and the rise of the emerging markets. Some 2 billion people have joined the global workforce since the 1970s. According to Goldman Sachs, the majority of them are middle class by global standards and can do many of the jobs that were once done by American workers, at lower labor costs. Goldman estimates that 70 million join that group every year.
In order to rebuild the mobility in this country, Foroohar suggests we should draw on the experiences of European nations and others that have been able to preserve income mobility in their countries. Foroohar says the best medicine for boosting mobility in the U.S. is to improve the education system. What's more, Foroohar says European nations have been able to maintain smaller income gaps by providing stronger safety nets for the lower classes, such as universal healthcare. Another interesting point Foroohar makes is on tax policy. Politicians often complain about the complexity of the U.S. tax code and how that holds back the economy. But Foroohar says the more mobile European nations have fewer corporate loopholes, longer tax codes and generally higher rates, and at least on an equality and mobility standpoint their nations' economies seem to be performing better. Lastly, Foroohar says, in Nordic nations and in Germany, places with lower income gaps than American, Unions get seats on corporate boards in order to help balance out worker pay and CEO pay. That makes a lot of sense. To read the whole story, click here. (The stories are available in full to magazine subscribers.)
Also in the cover package, TIME columnist Fareed Zakaria writes about how our declining education system is finally catching up with us. Zakaria makes a compelling case for why we should think about the education problem and the income gap problem together. Zakaria's full article is here.
Also, TIME has partnered with non-profit Opportunity Nation to help put together a summit that is happening this week in New York on declining mobility in American society and the state of the American economy. Both Fareed Zakaria and TIME's managing editor Rick Stengel will be speaking at the conference, and Rana Foroohar will be leading a panel discussion on how we can boost job training, and hopefully lower unemployment, in the U.S. Rick Stengel writes about his thoughts on mobility and the Opportunity Nation conference in his piece in this week's magazine, and you can read that here.
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