January 22, 2014
Vol: 21 No: 4

News

New report shows Washington residents are more likely to be downwardly mobile

by: RC Staff

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Economic inequality is an oft-heard phrase around the nation these days. In a Dec. 4, 2013 speech, President Obama called growing inequality and a lack of upward mobility as “the defining challenge of our time.”

It’s a subject that hits close to home: While Washington state residents are as likely as the average American to move up the economic ladder, they are more likely than the average American to move down, according to a new study by the Economic Opportunity Institute (EOI).

About 32 percent of Washington residents experience downward mobility, compared to 28 percent of Americans, according to “Chutes and Ladders: How Economic Mobility is Changing in an Inequality Society,” a study by EOI researcher Tatsuko Go Hollo.

Today only one-third of Americans experience upward mobility, defined as surpassing both their parents’ income and relative position on the economic ladder.

Factors that influence Washington residents’ economic standing include union membership, education, status at birth, race and the impacts of the Great Recession.

The “boom and bust nature of aerospace and high tech” has caused Washington’s economy to be more volatile than that of the nation, Go Hollo writes. She predicts it will continue to be this way, citing recent moves by Boeing to relocate its headquarters and shift some manufacturing out of the state as a sign that “Boeing jobs will never again be secure.”

Much of the aerospace industry in Washington is unionized, and union affiliation is another factor that can positively impact economic mobility. Washington has a relatively high rate of unionization, at 18.5 percent, but union affiliation has declined, mirroring the national trend. Go Hollo posits that this may increase downward mobility among middle and low-wage workers.

In Washington, the information sector has grown much faster than the rest of the nation, and more jobs in this industry raises the average wage and increases access to workplace benefits.

However, the fastest job growth in Washington comes at both ends of the spectrum. The Employment Security Department projects that high-earning engineers and low-wage home health aides will be among the fastest growing occupations between 2011 and 2021. 

“The result of this bifurcated growth is that income disparities have grown wider over the last few generations,” Go Hollo writes.

Education helps lift people to a higher economic level and those with a college degree are less likely to experience unemployment. Upward mobility is more likely with a college degree, downward mobility is more likely without one. But the cost of college has skyrocketed while government contributions have dwindled, leaving students to pick up the slack.

For students graduating from the University of Washington, the highest rates of debt are among those with the lowest household incomes. Undergraduates from families earning less than $25,000 per year graduate with an average debt of $21,256 in 2011, compared with $18,789 for students from families earning $75,000 or more in annual income. The average debt among Washington students graduating from four-year public institutions was over $20,000.

Another fact that comes into play is what the study calls “status at birth.” Those from low-income households are less likely to attend and graduate from college, while those from middle or high income households are more likely to do so. Increases in home equity are associated with increases in college enrollment.

Race matters, too. African Americans are more likely to be born into the bottom of the economic scale and are less likely to move up than their white counterparts. This is still true even after controlling for education, health, and parental background. For the full report, go to eoionline.org.

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Comments

Best report on the issue by far. Thank you for bringing this important issue to light.

HH | submitted on 01/22/2014, 6:44pm


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