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Thursday, August 1, 2013

Inequality and Education

At The Wall Street Journal, Arthur Brooks writes:
We have a robust and growing economy for high-income Americans. Those at the bottom see few prospects for growth and little reason for optimism. Nevertheless, a 2013 analysis by researcher Mark M. Gray at Georgetown University found that Mr. Obama mentions the poor less than any president in decades. In his public statements and official communications on social class, he mentioned the poor only a quarter of the time; in contrast, Ronald Reagan talked about the poor in two-thirds of his public pronouncements. This is puzzling indeed.

Census Bureau data show that in 2006-11, real annual income for the top 20% (quintile) of Americans fell by about 5% but rose almost 2% in 2010-11—and shows signs of continuing an upswing. For the bottom quintile, income fell by over 11%, and there was no upswing.
In 2011, workers in households earning between $40,000 and $60,000 had a 7.8% unemployment rate. In households earning under $20,000, unemployment was 24.4%. The unemployment for households earning more than $150,000 was 3.2%
 ...[T]he But the real problem—and crisis—is declining opportunity. The Federal Reserve Bank of Boston has shown that in 1980, 21% of Americans in the bottom income quintile rose to the middle quintile or higher by 1990. Those who started off in the bottom quintile in 1995 had only a 15% chance of becoming middle class in 2005. That is a one-third decline in mobility in under a generation.
According to research from the Pew Charitable Trusts published in 2009, four out of five children whose parents are in the top income quintile enroll in college, and 53% finish. Despite Pell Grants and other aid, only one in three children from the bottom quintile go to college—and just 11% graduate. More troublingly, the government's growing direct and indirect subsidies to pay for higher education end up inflating tuition rates and push college even further out of reach of people of modest means.

The New York Times reports:
Researchers at Georgetown University have found that at the most competitive colleges, only 14 percent of students come from the lower 50 percent of families by income. That figure has not increased over more than two decades, an indication that a generation of pledges to diversify has not amounted to much. Top colleges differ markedly in how aggressively they hunt for qualified teenagers from poorer families, how they assess applicants who need aid, and how they distribute the available aid dollars.
Some institutions argue that they do not have the resources to be as generous as the top colleges, and for most colleges, with meager endowments, that is no doubt true. But among the elites, nearly all of them with large endowments, there is little correlation between a university’s wealth and the number of students who receive Pell Grants, which did not exceed $5,550 per student last year.