A country by the rich people, for the rich people
Those at the top rungs of America’s wealth ladder aren’t planning on coming back down, and that means not letting anyone else up.
Inequality is flourishing in the U.S., says Richard Reeves, an English-born Brookings Institution scholar. Reeves has just published a new book, Dream Hoarders: How the American Upper Middle Class Is Leaving Everyone Else in the Dust, Why That Is a Problem, and What to Do about It.
If nobody leaves the upper 20%, then nobody new moves in—
Reeves doesn’t exactly portray America as the land of opportunity that the founders wanted it to be.
Nowadays, according to Reeves, Americans in the upper 20% of the economic scale, which he defines as annual household income of $112,000 or more and an average of $200,000, are perpetuating their status into the next generation with remarkable success. And if nobody leaves the upper 20%, then nobody new moves in.
Here’s how it happens: Well-educated people with high earning power are marrying each other (“assortative mating”), and devoting all their resources to their children. Their family arrangements resemble a Stanley Kaplan version of Spartan military camps dedicated to preparing kids not for war, but for matriculation at good university so they can maintain their upper 20% status.
Also, through local zoning restrictions preventing new housing supply, upper-middle-class parents ensconce their families in good neighborhoods with good schools that nobody else can afford.
They use the mortgage interest deduction, which turns out to be a regressive policy, to buy as much house in the best area possible. And they stuff tax-advantaged 529 college savings plans — another regressive policy boondoggle — with as much money as they can.
Finally, their children also benefit from unpaid internships after college or during summer vacations — a luxury giving them a leg up on their less-affluent counterparts in gaining eventually paid employment.
Topping it off are legacy policies at universities favoring the children of alumni who might not otherwise meet admission requirements. All of this hinders upward social mobility, which is lower in the United States than in other countries.
In a recent telephone interview, Reeves spoke about the central themes in his book. An edited transcript follows:
Q: As an immigrant to the United States, how long did it take you to realize how stratified the classes were here?
Reeves: It was a combination of looking at transitional matrices [tables showing mobility] during the day — the U.S. is pretty sticky at the top — and listening to people talk and operate on the weekends and evening. In the U.K. we do class in plain sight. Here’s it’s more quiet. There’s a kind of collective national self-denial about it.
If it’s not ‘‘til death do us part,’ it’s at least ‘til the last high-schooler departs.’—
Q: You write: ‘Far from abandoning marriage, college-educated Americans are busily rehabilitating the institution for the modern age, turning it into a child-rearing machine for a knowledge economy.’ All of that sounds like a pretty unerotic business.
A: America is where the most powerful women in the history of the world are more likely to get and stay married. It might have been hard to imagine that the most educated and economically powerful women would get married at high rates. But there is an acknowledgment that this is the best way, especially for the kids. If it’s not “‘til death do us part,” it’s at least “til the last high-schooler departs.” So there is some empty-nest divorce, but not much. People are getting married later so they have their more romantic experiences before marriage.
Q: Why are upper-middle-class parents ‘helicopter parents’ now? is it a reaction to how parents behaved in the 1960s and 1970s?
A: There’s always been a class gap in parenting — a kind of “concerted cultivation” on the part of the upper classes. But class gap has grown, and now we’re actually starting to see the first signs of that gap closing. It’s because of this knowledge that human capital — how your raise your kids — really matters. The upper-middle-class got that memo, and now others are getting it too.
It can be an economically irrational decision of college educated moms to stay home. So what’s the utility? It’s helping the kids. Now both parents are convinced that everything that happens to their kids results from what they do. So we have stereophonic parenting instead of monophonic parenting.
Q: You say the race is being run fairly, but the preparation for it is unfair or unequal. Should upper-middle-class parents who hover over their children so intensely see some reward for that?
A: Yes, there should be a reward for getting it right. The upper-middle-class is doing it right, and now others are getting the message. We shouldn’t penalize parents for their efforts.
Q: Are some parents driving their kids crazy?
A: Sure, there are costs on the margins. There was an event at my kids’ school encouraging parents to back off. The message was kids should be self-propelled because when they get to Harvard they won’t have you there to help. But I heard a father behind me say, “I’ll worry about that once my kid is at Harvard.” Overall, evidence of damage is thin so far. It’s enjoyable to poke fun, but the evidence shows that what the upper-middle-class is doing is working.
Q: Can you put a number on how much movement into and out of the upper 20% is desirable? How much stickiness is tolerable?
A: It’s hard to put a number on it. It’s a bit of a trap in some ways. One benchmark is to look at metrics over time. Another is to look at other nations. And then there’s moral intuition. I want coefficients to come down so that we can’t predict as easily [that lower-middle-class kids will remain lower-middle-class adults.]
Your salary should go up if you’re an outstanding teacher and if you teach poor kids.—
Q: Your proposal to pay the best teachers in the worst schools the highest compensation is interesting. Should there be a greater disparity in teacher pay in general?
A:. There should be more disparity in teacher pay. Who does the current system hurt? Not my kids. It hurts poorer kids. And that’s a problem. An ideal teacher pay scale would consider how good the teacher is and what percentage of kids in the class or school is poor. Your salary should go up if you’re an outstanding teacher and if you teach poor kids. A lot of people say you can’t just throw money at problems, but this is one you can throw money at. Even teachers respond to incentives.
Q: You note in the housing section that there must be a change of attitude because so many of your proposals have to take place at the local level. Besides your book, how can people’s minds be changed about the stickiness of socioeconomic status and opportunity hoarding?
A: First, the recent presidential election might help highlight the problem. Also, people are becoming more aware as evidenced by some of the housing articles this week. (During our email exchange setting up the interview, Reeves and I talked about this article from the New York Times on proposed legislation in California to force local communities to loosen up zoning and this Wall Street Journal article on lack of new housing in Venice Beach, Calif.)
Q: Was the post-war boom from 1945 to 1970, with its higher-paying middle-class jobs and greater mobility, just a lucky period to which we shouldn’t compare our current situation?
A: That era is the mental default of our policy makers. You always see what you grew up with is the norm. We shouldn’t expect 4% growth for a quarter of a century. I’d run down Massachusetts Avenue naked if we could have that.
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