income-inequalityWhen it comes to household income, progressives tend to start with their intuitive understanding of fairness (i.e., some people have a lot more income than others), move to the solution (redistribution of income and wealth from those who have more to those who have less), and only then to develop a metric that justifies implementing their solution: income inequality.

Because of this roundabout approach, you rarely hear progressives argue that income inequality is a problem since for them it just is an injustice — and that wealth redistribution is the primary solution. When conservatives and libertarians disagree about whether it even is an issue we should be concerned with, we are considered heart-hearted apologists for an immoral capitalist system.

The truth, however, is that we don’t care about income inequality because relative differences in income tell us nothing about fairness or the just distribution of wealth. What we care about — what everyone should care about — is whether people have adequate opportunities to increase their household’s income, and hence, improve their standard of living. While there is no truly adequate gauge to measure such opportunities, we can get a fair estimate based on measurements of social mobility.

Social mobility is the ability of an individual or family to improve (or lower) their economic status. Since it is often measured in income, it is also called income mobility or economic mobility. (I prefer the term “social mobility” because increases in status can often be more important than income as a gauge of one’s standard of living. For instance, a person may make choose to forego greater income in order to accept a job, such a college professor, that has a high social status and increases one’s life satisfaction because of their job.)

The two main types of social mobility are intergenerational (i.e., a person is better off than their parents or grandparents) or intragenerational (i.e., income changes within a person or group’s lifetime). Both are important in determining whether social mobility is increasing or decreasing.

What increases social mobility? As a recent article in the New York Times explains, there are four broad factors that appeared to affect income mobility:

1. The size and dispersion of the local middle class,
2. Two-parent households,
3. Better elementary schools and high schools, and
4. Civic engagement, including membership in religious and community groups.

By contrast, as James Pethokoukis notes, there was little or no correlation between mobility and the sort of stuff that left-liberals might prefer to focus on: taxes (tax credits for the poor or higher taxes for the rich), college tuition rates, or the amount of extreme wealth in a region.

While income inequality has a simple solution (e.g., take money from group A and give it to group B), social mobility is more complex and reliant on social and cultural factors. If we truly want to help all Americans, though, there are a few things we could do: encourage parents to stay together, improve our local schools, and get involved in our communities. Doing that would improve the quality of life for millions of Americans in a way that worrying about the size of our neighbor’s paycheck can never do.


  • Aaron Earls

    What I found interesting, or perhaps telling, was the NYT story’s overwhelming focus on location as the culprit, while all but ignoring the social factors like a stable home life and involvement in church.

  • Curt Day

    I can see why income inequality is not important to some. Consider the income disparity here and compare that with the other industrial countries. Those who are afraid of change, which would be ironic for those who believe in mobility, see this comparison as shedding negative light on the status quo here.

    It is true that income inequality does not tell the whole story but neither does it have nothing to say. It is snapshot of an accumulation. And it is odd that with such an income inequality seen in this country that only personal responsibility is targeted as providing the solution. To be able to do that is nice work if you can get it.

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  • Ben C

    What Progressives don’t seem to understand is that income inequality is the sign of a healthy economy; if incomes were all the same (more or less) that would mean the economy is homogenous in its production and employment, e.g. an agricultural society as existed in Medieval Europe where 98% of the people were peasants working on manors. Yet a modern, technologically driven, market economy will have a high diversity in employment (industrial, service, etc.), which is the reason for income disparities. What Progressives never ask is, “What is income?” and “Why do people get paid what they do?” Income of course is tied to productivity – any basic economics text or econ 101 class teaches that. And productivity does not equal merit; people are not paid based on merit or some kind of intrinsic value (as some liberals would have us believe), but on their productivity. Productivity itself is determined by supply and demand of the labor force and what employers are willing to pay for certain kinds of labor and the availability of people with special skill sets or training to do unique jobs (e.g. the labor force for janitors or fast food employees is much high than for medical doctors or engineers). Productivity is not solely dependent upon the individual and how smart or talented they are or how well they can work. There are many other inputs – equipment and technology, management, co-workers, transportation costs, competition, and corruption – that all determine the relative output value of each individual worker.

    So annual incomes are not arbitrary numbers set by greedy businesses and CEOs. In fact how much a person is paid, or how much they could possibly be paid, is often driven by many numerous factors outside the control of businesses. For someone to come along and try to arbitrarily set income levels in the name of “justice,” “equality,” or “fairness,” not only demonstrates a remarkable amount of hubris, but a complete ignorance of how incomes are determined in market economies. To try and force everyone’s income to be equal is actually the epitome of unfairness and injustice.

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