Britain’s dying dream of social mobility

Prospects for social mobility are bleak in Britain with the rich and poor destined to stay on the same rungs of the income or social ladder for successive generations.

Young people today face an unprecedented era of falling real wages, declining opportunities, and stark inequalities in income, wealth and education. The dream of just doing better, let alone climbing the income ladder, is dying.

These are the conclusions of Social Mobility and its Enemies, a new book by Professor Stephen Machin, Director of the Centre for Economic Performance, and Dr Lee Elliot Major, Chief Executive of the Sutton Trust, published by Penguin.

Failure to act now, warn the authors, will only store up greater problems for the future. Your life prospects in the future will be linked not just to the status of your parents but your great-great-great-grandparents. But policies to improve access to education and improve conditions in the workplace could lead to a more mobile society.

Most people agree with the principle that talent and hard work rather than background should determine success in life. Yet the authors identify the many enemies of social mobility: ‘opportunity hoarders’, privileged parents stopping at nothing to prevent their children sliding down the social ladder; exploitative employers failing to invest in their staff; and detached ruling elites, vowing to work for the many, but pursuing policies for the few.

Reviewing hundreds of studies and synthesising the key findings, the authors show the overwhelming evidence that confirms a causal link between inequality and social mobility levels. And far from acting as the great social leveller, the education system has been commandeered by the middle classes to retain their advantage from one generation to the next.

A quarter of adults in England do not have basic functional numeracy or literacy skills to get on life. Britain is losing the international race in basic skills. Meanwhile, the high proportions of privately educated elites have stayed remarkably constant for several decades across a range of professions.

The authors find a strong statistical link between areas suffering low mobility and areas that voted for Brexit – although it seems unlikely that leaving the European Union will make things better.

A realistic, if ambitious, aim for Britain would be to increase social mobility by around 40% – given the higher levels observed in similar countries. Equally, Britain could drop 40% on current levels and stay rooted to the bottom of the international rankings.

Stephen Machin comments:

‘Public policy debate has not focused enough on the obstacles to social mobility in the workplace. Jobs have emerged lacking security, progression, training and rights, many on low pay, with increased insecurity from short-term, temporary and even zero hour contracts. We need to find ways of encouraging employers to treat their employees as a long-term investment.’

Lee Elliot Major adds:

‘We need a new model of social mobility – including an education system that nurtures all talents, vocational, creative as well as academic. We need also to explore more radical reforms including the use of lotteries for admissions to the best schools and universities. They are the only way to sweep away the unfair advantages of the middle classes.’

Social Mobility and Its Enemies is a Pelican book published by Penguin on 27^th September.

Minouche Shafik, Director of the London School of Economics (LSE), will interview the two authors at a launch event at the LSE in the Peacock Theatre at 6-30pm on 29th October.

Stephen Machin is Professor of Economics at the LSE and Director of the Centre for Economic Performance.

Dr Lee Elliot Major is Chief Executive of the Sutton Trust.

 

Key facts from Social Mobility and Its Enemies

1. Declining social mobility

A quarter of sons born in 1958 from the poorest homes remained in the poorest incomes as adults, while 32% of those born into the richest homes stayed among the richest homes when they grew up.

Meanwhile over a third (35%) of sons born in 1970 from the poorest homes remained in the poorest incomes as adults, and 41% of those born into the richest homes stayed among the richest homes as adults.

In just one decade, Britain had become less mobile.

2. Britain’s low mobility driven by extremes

Britain’s low income mobility is driven in particular by stickiness among the richest and poorest in society. This pattern is also observed by sociologists who record greater immobility at the top and bottom of the social class hierarchy. It is mirrored in widening extremes in inequality in income, wealth and education.

3. Realistic aims for social mobility given international comparisons

A realistic, if ambitious, aim for Britain would be to increase social mobility to around 40% up on current levels in our country – given the higher levels observed in countries and regions with cultural, historical and economic similarities. Equally, the lowest social mobility areas suggest that Britain could drop 40% drop on current levels and stay rooted to the bottom of the international league table.

4. Economic benefits

The argument for greater social mobility for Britain has become an economic as well as social one. We estimate that modest increases in Britain’s social mobility would lead to an annual increase in the country’s GDP of around 4.4%. To put this figure into context, a 4% loss in GDP would be suffered in a major recession.

5. Inequality and social mobility

There is compelling evidence across and within countries that extreme inequality when children are younger leads to greater inequality of opportunity when they are adults. Political debates over whether to aim for equality of outcome or equality of opportunity are a false dichotomy. The two principles are inextricably related. We need to address both unhealthy inequality and improve social mobility.

6. Multidimensional Inequality

Inequality is multidimensional. It’s not just about the pay we receive but the assets we own – cultural, social and financial.

In 1980 the worker 10% from the top was earning 2.75 times more than the worker 10% from the bottom. By 2017 the difference was four times. The graduate pay premium is particularly big in Britain. Meanwhile, people on the top-tenth rung of the wealth ladder are over 80 times wealthier than those on the bottom-tenth rung.

A bigger divide has emerged in the chances of becoming a home owner. For those born in 1958, there was a gap of 14 percentage points in the likelihood of becoming an owner-occupier between those brought up in rented accommodation and those from home-owning families. But for those born in 1970 the gap is had stretched to 22 percentage points. ‘Generation rent’ is just another manifestation of low social mobility in Britain.

7. Geographical factors and political divides

There is a strong statistical link between areas of low mobility and areas that voted to leave the European Union. Our own analysis of the data confirms the link between social mobility and voting patterns across the country at local authority level. Brits with little chance of moving up tended to vote out.

Research in the United States finds several factors correlate with low social mobility: high income inequality, high social segregation in housing, less social connectivity in communities, fewer two parent families, and poorly performing schools.

8. Falling absolute mobility

Workers’ wages have declined in real terms. In the decade from 2008 the median worker’s wages decreased by 5% in real terms. They are worse off than their counterparts in the labour market ten years earlier

Declining real wages signal falling absolute social mobility. In contrast, their parents, three decades earlier, were enjoying increasing wages compared with the generation before. We are now facing a situation where many children’s living standards are no better than their parents were. The dream of just doing better, let alone climbing the social ladder, is dying.

9. Lost souls of education

A quarter of adults in England do not have basic functional numeracy or literacy skills to get on life. This extrapolates to around 10 million unskilled adults across Britain.

The trend for Britain contrasts with increasingly skilled populations in other countries: we are losing the international race in basic skills.

10. Private school elites

The high proportions of privately educated elites have stayed remarkably constant for several decades across a range of professions. The privately educated not only make up large proportions of today’s political and professional elites, but leading people in other areas of public life, including the film and TV industry, the arts, music and sport.

There is an increasing pay premium from studying at private school. In 1991, privately educated 33–34-year-olds were earning 25% more than their state-educated counterparts. In 2004, the pay premium had increased to 41% more.

11. Education arms race

The graduation gap between rich and poor nearly trebled between 1981 and 2013. After two decades, the graduation rate for those from the poorest families (18%) had still to exceed the rate for those from the richest families in 1981 (20%).

(The graduation rate from the poorest fifth of homes grew from 6% to 18% between 1981 and 2013, while the rate from the richest fifth of homes grew from 20% to 55%.)

There is a growing wage premium for graduates compared to people without degrees. In 1980, male graduates earned on average 46% more than their non-graduate counterparts. In 2017 this earnings uplift was 66%.

Far from acting as the great social leveller, education has been commandeered by the middle classes to retain their advantage from one generation to the next. The education haves and have-nots are in effect creating the earnings haves and have-nots.

12. Mobility prospects

The prospects for future social mobility are bleak as the leading indicators all point in one direction. Declining real wages signal falling absolute social mobility – meaning fewer opportunities for the current generation. Extreme and persistent inequalities in income, wealth, housing and education are likely to impede social mobility in the future.

Advantage and disadvantage at the extremes of society is set to extend over a longer time period than just one generational jump. Increasingly prospects will be linked not just to the status of parents but great-great-great-grandparents.