Must reads: A new national survey by the Pew Research Center and USA TODAY examines views on inequality, poverty, the minimum wage, and how much the government can or should do about these things, all along partisan lines. Nelson Schwartz writes in the New York Times on how the erosion of the middle class is affecting business. This curated collection of TED talks on business and social good includes the famous Ray Anderson, the talk from Dan Pallotta on charity funding (shared with us by Lisa Kleissner in her Influencer Interview), and six more. [Editor's note: This post was formerly headlined, "In Case You Missed It: Will Slow & Steady Win the Race?"]
A new study from Harvard and Berkeley economists at the Equality of Opportunity Project found that mobility hasn't changed much over the last 50 years.
The Economist comments:
This result has caused a huge stir, not least because it runs counter to public perceptions. A recent Gallup poll found that only 52% of Americans think there is plenty of opportunity for the average Joe to get ahead, down from 81% in 1998. It also jars with other circumstantial evidence. Several studies point to widening gaps between rich and poor in the kinds of factors you would expect to influence mobility, such as the quality of schools or parents’ investment of time and money in their children. Cross-country analyses also suggest there is an inverse relationship between income inequality and social mobility—a phenomenon that has become known as the “Great Gatsby” curve.
AEI's James Pethokoukis argues, "The key issue, then, is not whether mobility is getting worse but whether there is just too little opportunity, especially from the bottom". At MSNBC, Timothy Noah says that stability may just mean that US social mobility has been low for a long time, and addresses the question of how mobility can be flat while inequality rises if the two are linked:
Rising income concentration for the top one percent is not the country’s sole inequality problem. Equally troublesome is what the Harvard-Berkeley scholars call “middle-class inequality”—a divide between people who have college (or, increasingly, graduate) degrees and those who don’t. The main causes of growing middle-class inequality are the decline in private-sector union membership, stagnant high school graduation rates, and the ever-growing cost of higher education. The Harvard-Berkeley studies find “a robust negative correlation” between the middle-class type of inequality and “mobility across generations.” As with the Great Gatsby curve, they observe that places in the US with higher income inequality are less mobile.
A new study out of the University of Pennsylvania says that a rise of "assortative mating" is contributing to rising income inequality, while John McGinnis at the Library of Law & Liberty surmises that it will decrease mobility, "because it makes it more likely that children of smart and high-earning parents will also be smart and high-earning." McGinnis asks:
But why should we care about the degree of income mobility in society? Would greater churning improve society, such that, in every generation, the children of the poor would become rich and the children of the rich would become poor? This merry-go-round would open up prospects for the current poor but could also mean more conflict, as the rich would redouble efforts to use the law to keep their children on top.
About a month ago, Senator Marc Rubio re-launched a public conversation with the comment that "the greatest tool to lift children and families from poverty is one that decreases the probability of child poverty by 82%. But it isn’t a government spending program. It’s called marriage." David Fitzsimmons offers these illustrated thoughts:
In the Wall Street Journal, Ari Fleisher urged President Obama to back away from income redistribution to focus instead on the breakdown of the family. At Slate, Matthew Yglesias explains how "marriage 'lifts' families out of poverty not by increasing their incomes but by reducing what the federal government assumes their expenses to be. Single people often have roommates for the same reason."
The New York Times' Anne Lowrey finds in the evidence that "Uncle Sam tends to make a poor Cupid" and hears from sociologist Kristi Williams: "It isn’t that having a lasting and successful marriage is a cure for living in poverty...Living in poverty is a barrier to having a lasting and successful marriage." Michelle Goldberg in the Nation agrees based on the Shriver Report on women (one of our must reads from a few weeks ago) that pushing marriage is not the answer. Instead she argues:
If policy has a limited role in creating new sexual and romantic norms, though, it can respond to them. Other countries, after all, have found ways to ameliorate the stresses single-parent families are subject to. In the United States, as O’Leary points out, children from single-parent homes score twenty-three points lower on reading tests than children from two-parent families. In other developed countries, the average differential is five points.
From the Center for American Progress, Ben Olinsky offers "6 Policies to Combat Inequality"--one of which is to expand apprenticeships, based on their recent report which says apprenticeships are a logical step in addressing the skills gap, but America has forgotten how effective they are. Increased uptake, however, requires overcoming a few hurdles, for example:
[U]nions have invested significant resources into developing high-quality apprenticeship programs through joint apprenticeship committees; a broad expansion of apprenticeships into new sectors and nonunionized workplaces would face the challenge of moving forward without that significant expertise and support.
Robert Goldfarb in the New York Times says the post-recession competition for jobs is tough for young college graduates up against more experienced applicants for whom an entry-level salary is better than nothing. Goldfarb proposes that there is a longer-term competitive advantage for employers that build bridges for this young workforce through training programs and apprenticeships.
New York Times' illustration by Koren Shadmi[/caption] Job training programs elsewhere on the globe have found some success. England’s National Apprenticeship Service reports that apprenticeships are growing in popularity among both employers and young people. Finland's top employer and tech giant Nokia, in the wake of selling their mobile phone division to Microsoft, created the Nokia Bridge exit program which has “helped [redundant ex-employees in 13 countries] to find a new job, offered training for a completely new profession, or helped entrepreneurs set up their own companies,” a surprising example of another way employer-provided training and support may address job-seeker struggles. Far from getting on board with the global apprenticeships trend, according to the Wall Street Journal’s Peter Downs, American companies are actually cutting back on the money going into training, which he says will only hurt them in the end:
In the face of greater competition, many American employers are slashing training budgets and running employment software that rejects every applicant who doesn't already have the perfect combination of training and experience to perform the job on day one. Then employers lament that job applicants don't already know how to do the jobs that they want them to do.
Secretary of Labor Thomas Perez champions the success of paid apprenticeships for family-supporting veterans as well. “Clearly, apprenticeships are a win-win: they provide workers with sturdy rungs on that ladder of opportunity and employers with the skilled workers they need to grow their businesses.”
A recent Time Magazine article explained explores how a bias against “tainted altruism” can be bad news for givers, charities and ultimately, beneficiaries:
Newman and Cain cite the cautionary tale of Daniel Pallotta, former head of a for-profit company that raised money for AIDS research and other causes, and over the course nine years, generated a whopping $305 million in donations. As head of the company, he earned $400,000 per year. That fact was not widely known, but once it was made public, he was hit with a storm of criticism and his company went out of business. In a 2008 article in the New York Times titled, “The Sin of Doing Good Deeds,” columnist Nicholas Kristof reported that revenues from a single charitable fundraiser dropped from $71 million when Pallotta was in charge to just $11 million after. So who’s immoral now—Pallotta or his critics?
[This is the same Dan Pallotta whose TED talk is in this week’s must-reads.] You may enjoy this December edition of the Guardian’s Global Development Podcast, a conversation on whether critics are right to be suspicious of big philanthropy. The Tampa Bay Times has created a new "Charity Checker" website, which “for the first time, aggregates the ratings and reviews already offered by several of the nation's most prominent watchdog organizations.” Meanwhile, the Chronicle of Philanthropy recently highlighted a clash between a new and a long-established way of measuring donation estimates which come up with very different results, with potentially a lot at stake:
Nonprofit board members use the reports to see how they measure up with similar charities, to craft strategies, and to hire and fire people based on how well they perform compared with similar nonprofits, says Mr. Sharpe. “This is not harmless,” he says of the wide gap between the two groups’ results. “People’s lives are affected.”
Finally, you may be interested in this report and guide from the US SIF Foundation on mission-related and impact investing for foundations. Root Capital has a new issue brief on the emerging business case for financial institutions to conduct due diligence on the social and environmental practices of their borrowers.