We've all heard of The American Dream — that all men are created equal, endowed with certain unalienable rights, such as life, liberty and the pursuit of happiness. Many would also assert that upward mobility has long been a part of the quintessential American Dream, with income equality having everything to do with equality of opportunity.
Ample research has been poured into every angle of economic mobility: the impact of geography, education, the economic class of the family you're born into and more. A recent IRS-sponsored study, entitled "Mobility Report Cards: The Role of Colleges in Intergenerational Mobility," has performed a deep dive into such questions, resulting in some pretty important findings that all college hopefuls should take note of.
Join us as we dissect the ins and outs of economic mobility in the U.S., including an exploration of the relationship between income inequality and economic mobility, the dangers stagnant mobility can have on the economy and the impact of higher education. We'll also reveal how The College of St. Scholastica is bucking some nationwide trends and paving new paths for economic mobility in Minnesota and beyond.
Defined in its most basic sense, economic mobility is the ability of individuals to move up or down the income distribution, according to the Federal Reserve Bank of San Francisco (FRBSF). This has long been touted as a fundamental American value.
The vantage point through which we view and measure economic mobility is in analyzing both absolute and relative mobility:
• Absolute mobility refers to one generation's ability to achieve a higher economic status than the generation prior. As reported by the FRBSF, this metric can be measured as "the percentage of adults whose incomes are higher than that of their parents at the same age."
• Relative mobility refers to the extent to which individuals increase rank in the income distribution relative to their parents. This, according to the FRBSF, is measured by calculating "the percentage of adults who are in a different income rank from that into which they were born."
Playing into the long referenced 'rags to riches' narrative is the notion that anyone who is willing to devote themselves to hard work and dedication can pull themselves up by their bootstraps and achieve the desired state of upward mobility. Critics, however, cite evidence that the U.S. lacks policies to ensure the opportunities that the American Dream purports. In fact, economic mobility in the U.S. has fallen below that of most developed countries.
So, what are the ramifications of a stagnant economy, and how can hardworking Americans ensure they're on the right side of these statistics relating to economic mobility?
It has been reported that economic mobility in America hasn't changed in a half-century. While some view stagnant mobility as a partial win in that it is not worsening, others will argue that standing still is simply not good enough.
Rising economic inequality in the U.S. inevitably means the gaps in our economic ladder are widening. According to the Brookings Institution, the combination of rising inequality and stagnant mobility means the citizens who reside at the bottom rung of the ladder are both stuck there and stuck with "worse outcomes relative to others than in the past."
It has long been accepted as fact that college graduates make more money than those with a high school diploma or less. In fact, college grads earned approximately 56 percent more than high school grads in 2015. This is the largest such gap in the history of the Economic Policy Institute's reporting on these figures, which originated in 1973.
This data supports the notion that there is a direct correlation between higher education and income inequality. The conversation rising to the forefront today, however, is the relation between higher education and economic mobility, ensuring that individuals have the opportunity to buck the trends of prior generations and move up the economic ladder.
The study referenced above has used IRS data in tandem with information from the National Student Loan Data System to analyze the earnings of college graduates ranging in age from 32 to 34. In doing so, the study was able to measure the success of every college and university in the U.S. in transitioning students from the lowest 20 percent of incomes to the highest 20 percent.
It was concluded that higher education is certainly an "engine of upward mobility."
Another important takeaway from this study is that results can vary greatly from institutions that operate within the same level of admissions. That is to say, two institutions whose admissions standards are considered compatible can be found to yield significantly different results concerning economic mobility for their graduates. This means the quality of the institution a college hopeful selects can make all the difference.
Using big data to identify new pathways to upward mobility, The Equality of Opportunity Project — of which the Mobility Report Cards study is part — operates within a mission to "develop scalable policy solutions that will empower families to rise out of poverty and achieve better life outcomes."
The IRS-based study has revealed that some colleges are even more economically segregated than we once thought. In comparing The College of St. Scholastica (CSS) to its peer schools, here is what the study found as it relates to economic diversity and student outcomes:
• CSS was ranked as the top Minnesota school for overall mobility index, representing the likelihood that a student from CSS moved up two or more income quintiles.
• In fact, 21% of CSS students moved up two or more income quintiles as graduates, and 2.2% moved from the bottom to top income quintile.
• CSS was ranked 3rd among all Minnesota schools regarding the chance a poor student has to become a rich adult, landing within the top 5.3% of all schools nationwide. This finding is based on the share of children who were from the bottom fifth of incomes as students and moved to the top fifth as adults.
• CSS was also ranked the 3rd highest among Minnesota schools relating to median student incomes at age 34 and is within the top 8.8% of all schools nationwide.
The research has revealed that while some elements that may impact an individual's chances in achieving economic mobility may be out of our control, attending a high-quality higher education institution can have tremendous bearing. In fact, it's been proven that a quality college education can actually counter the effects of birthright.
The most effective thing you can do to ensure you're on the right path is to conduct some research to help you select a college or university that yields proven results. As the Equality of Opportunity Project has unveiled, The College of St. Scholastica prepares its students for success and upward mobility.
Whether you're interested in earning your degree on-campus or online, there are a number of different options that await you at the historical CSS. You can learn more about this institution that is chock-full of heritage and academic esteem by visiting our article, "8 fascinating facts about The College of St. Scholastica."