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Rich Shopper, Poor Shopper and the End of Economic Mobility

downward spiral staircase
Photo by Tobias Helbig via Getty Images.

Paul Solman frequently answers questions from the NewsHour audience on business and economic news on his Making Sen$e page. Here is Wednesday’s query:

Alvera Pritchard: I found the Rich/Poor Shopper segment quite depressing in the sense that this shoves more people into the 99 percent. Even though I came from a working-class family, my mother was still able to purchase a lambswool or cashmere sweater for me as a Christmas gift. I was taught the importance of purchasing quality goods and have practiced this successfully. Now, this seems increasingly difficult to do unless one subscribes to conspicuous consumption. Thankfully, I’m not a shopper so my dollar will not be supporting the high end trade but rather hopefully the more creative alternatives.

Making Sense

Paul Solman: Yes, Ms. Pritchard, you’re alluding to the infamous “race to the bottom”: the downward spiral of lower wages leading to lower-priced goods leading to even lower-wage jobs and down and down it goes, round and round it goes. Black magic indeed.

Watch: Rich Shopper, Poor Shopper

What’s more disturbing is recent research on economic immobility, summarized by Harvard political science professor Bob Putnam about a year ago in one of our inequality stories, “Many Americans Feel ‘Stuck in a Rut’ as Economy Improves, but Inequality Grows“:

“One of our competitive advantages as a — as a society, which used to be that we were very mobile, and we were constantly getting new infusions of talent and so on at the top, and — and that people down near the bottom had a hope that, if they didn’t do well, their kids could do well in past in America.

“That a poor kid could grow up in a tenement, go off to city college, do well, and himself end up in the next generation pretty well-off. That’s what’s becoming less likely in America. And I think that undermines a crucial part of the American myth or the American dream or the American social contract.”

Putnam is now working on a book about economic immobility. The data we have suggests it has increased dramatically, that the United States is far less mobile than in the past. But, Putnam says, that data is retrospective, “looking in the rear-view mirror.” Looking ahead, “out the windshield,” shows today’s young people — not yet included in official economic mobility studies — as clustering into two distinct classes that have less and less to do with one another, and whose fates seem sealed as never before. The kids of the top 25 percent or so — roughly, the upper-middle class of Americans, those with four-year college degrees — generally come from two-parent homes, have ever-higher test scores on average, engage in ever-more extracurricular activities. The bottom 30 percent or more are single-parented, have ever-lower test scores, fewer activities and have far fewer friends. The immobility gap as measured, Putnam says, is “about to fall off a cliff.”

From the “right” side of the political spectrum, Charles Murray comes to much the same conclusion in his new book “Coming Apart.” We recently spent a day with Murray and will broadcast the video soon.

This entry is cross-posted on the Making Sen$e page, where correspondent Paul Solman answers your economic and business questions

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