Why our Current System Hinders Social Mobility

The farther apart the rungs on our economic ladder, the more difficult the climb for those at the bottom. Social mobility becomes more restricted as our wealth gap grows.

Social mobility is not simply a social issue, it’s an economic issue. Stagnant mobility bears a cost on all of us, through less taxable income, increased health costs, income-replacement subsidies and a failure to maximize talent and labor.

It doesn’t address the inequities in wealth distribution

The richest 3% of Americans own more than half of the country’s wealth, an increase of 45% since 1989, according to the Federal Survey of Consumer Finances.

The bottom 90% of Americans own less than a quarter of the wealth, a drop of 33.2% since 1989.

Income and wealth has significantly increased for the richest Americans, non-Hispanic whites, homeowners and the more educated, while significantly decreasing for African-Americans, low-income households, renters and individuals without a college education.

Low-income individuals have significantly reduced social mobility than those in the middle-class and higher.

It doesn’t address the disparities of resource distribution

It doesn’t build assets for working families.

An individual who was raised in poverty is less likely to graduate from high school or remain consistently employed.

Without education or basic skills, it has become highly unlikely earn a living wage.

It doesn’t address employment & income inequality

Unemployment is NOT the root of economic disparity for the 5th ward.

The 5th ward has average to high employment and some of the highest rates of multiple jobs.

About 26% of workers per residence are earning $15,000 or less from their primary job.

About 65% of workers per residence are earning $40,000 or less from their primary job.

About 17% of our workers don’t have high school diplomas.

Workers have less job security and fewer employee protections.

Workers have less of an asset cushion when unemployment does occur – leading to longer and more devastating financial setbacks.

It doesn’t address systemic barriers to mobility

Racial, socio-economic and gender discrimination

  • Inherit bias
  • Employer hiring & promoting practices
  • Employee pay gaps
  • Increased incarceration rates

A rigid social class system

  • 42% of children born to parents at the bottom of the income ladder stay there.
  • Socio-economic isolation disconnects low-wage workers from the social capital and networking required for upward mobility.
  • Socio-economic isolation results in fewer meaningful interactions across social classes, limiting empathy and understanding as well as perpetuating stereotypes.

Institutional punitive structures

  • See The Costs of Being Poor
  • The increased rates of incarceration
  • The inability to pay bail negatively impacts one’s current employment and opportunities for future employment, even if the individual is not found to be guilty.

Internal Barriers

Low-wage workers report feeling judged for “middle-class” knowledge gaps and that “they don’t belong” outside of their communities.

It doesn’t address the practical barriers limiting earning potential

Childcare Paradox

  • Low-income families with children under the age of 5 are more likely to identify child care problems as a major obstacle in their ability to take needed additional shifts to increase their income and in pursuing higher education or job-training programs to compete for better-paying jobs.
  • Low-wage jobs typically have inflexible and unpredictable hours as well as less control of their work schedule, making day-to-day and future planning more difficult for workers, particularly for those with children.
  • Work schedules can fluctuate daily, meaning parents have to constantly rework tenuous child care arrangements with relatives, neighbors and friends.
  • Few child care centers accommodate last-minute changes or evening and weekend hours.
  • There’s a lack of access to high-quality, flexible and reliable childcare and education.
  • Low-wage and hourly workers have fewer employment protections, meaning they are more susceptible to lose income and be fire should they need to miss work to care for a sick child or infant.

Financial Advancement Paradox

  • Individuals who don’t meet the minimum requirements to open a banking account aren’t able to build credit.
  • Insufficient credit assets make it more difficult for individuals to secure housing or get better-paying jobs.
  • The inability to qualify for affordable loans to cover unexpected expenses means even relatively small expenditures can cost individuals several times more than those with more financial stability.
  • Financial insecurity makes it more difficult for an individual to invest in long-term beneficial financial or career opportunities.
  • Increasing earnings in even moderate ways puts individuals in jeopardy of losing their eligibility for necessary services, meaning even a minor setback can leave individuals less financially stable than they started.

Time Costs

  • Unpredictable and erratic work hours make it difficult to take on a second job.
  • A lack of direct and/or reliable transportation between work and home can increase work tardiness and missed days.
    • 25% of 5th Ward households don’t have cars and rely on public transportation.
  • The time spent applying for individual programs and waiting for assistance negatively impacts available hours needed to earn more income.

Opportunity Costs

  • Individuals often aren’t able to afford a proper interview outfit to land a better-paying job or the work wardrobe needed once hired.
  • They have fewer resources and ability to afford to properly maintain a work wardrobe if are able to attain one.
  • An unsuitable appearance negatively affects an interviewee or employee’s confidence.
  • The less flexible work hours of a low-wage worker makes it more difficult to schedule interviews for better paying jobs.
  • Individuals who have to frequently move, don’t have permanent addresses or aren’t able to get proper identification have more difficulty getting hired.
  • Workers are allowed too little paid time off. (Evanston has moved to require employees are offered five sick days beginning in July 2017)

Health Barriers

  • Poor health limits a low-wage worker’s capabilities and increases missed days from work, leading to less income and potential unemployment.
  • Pregnant women who experience the severe stress that results from income or housing insecurities produce higher levels of the cortisol hormone. High cortisol levels have been shown to adversely impact child outcomes, such as lower IQ scores and an increased incidence of chronic health conditions when compared to siblings born under less stressful circumstances.