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Study shows class counts

3:20:41 PM CDT - Tuesday, May 06, 2003

By Amy Geiszler-Jones

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David Wright

Americans, bolstered by a popular culture that revels in rags to riches stories, have the notion that they can do better than the generations before them and move up the class structure.

But a study co-authored by WSU sociologist David Wright indicates that might be more fiction than fact.

The study shows that class mobility has decreased over the past few decades. While the study shatters the myth that working hard will lead to a better station in life, it shores up the idea that "the rich are getting richer."

Wright and fellow sociologists Robert Perrucci from Purdue University and Earl Wysong of Indiana University compared incomes and occupations of 2,749 father-and-son pairs from 1979 to 1998 and found few sons had moved up the class ladder. Nearly 70 percent of the sons in 1998 had remained either at the same level or were doing worse than their fathers in 1979.

The study also shows that at the upper level, the affluent sons were moving into better positions more frequently than their fathers had.

"We all know the rich are getting richer," says Wright. "Why aren't the people at the bottom seeing an increase?"

The answer probably has much to do with whom you know and where you've gone to college, as well as your family's stock and investment portfolio.

"Twenty years ago, going to college was enough," said co-author Perrucci. "Now, it has to be an elite school."

In the study, the trio of sociologists say there are four types of "capital" that determine where you end up on the class scale. They are social capital — whom you know; credential capital — which includes where you received your education; consumption capital — which refers to income and wages; and investment capital — which is stocks and bonds.

The fact that the top class of American society has access to most, if not all, of those forms of capital secures their class status and ensures their wealth keeps growing, the study shows. The majority of Americans has access to consumption capital, but is limited in their access to the other three types.

"There is not very much class mobility in the United States, and there never has been," says Wright. "What mobility has existed has been mostly for the people that are affluent, the people who have the resources to become richer. The majority of us do not have access to resources that will help us become richer. What it does allow us to do is basically stay where we are."

Not much separates someone in a lower-paying job, like in the fast food industry, to a professional worker — both workers' ability to remain in their class depends on their paycheck, or consumption capital, Wright explains. A CEO of a major company isn't that dependent on a paycheck to maintain their class status.

"He has enough investment capital and enough credential capital to live on that," says Wright. "All his money generates more money." That's not the case with most of America's workers.

The rich are definitely in control of the investment capital. In 1999, the top 1 percent of the wealthy owned 51.4 percent of all stocks, while the next 9 percent owned 37 percent, Wright notes. The bottom 90 percent — the majority of Americans — only had 11 percent of the stocks.

Another reason for the stagnation in class mobility is that better-paying jobs aren't being created. In the 1970s, better-paying manufacturing jobs were more available, but many of those jobs have gone overseas. The jobs that are increasing in America are those in the service or retail industry, but those don't pay as well.

The market is also being flooded with college graduates. Each year about 650,0000 jobs are created   that require a college degree, but 1.6 million people graduate from college each year, Wright says.

"That's why today about 28 percent of people with a college education work in a job that requires a high school education or less," he says. "That's a sad statistic."

And those college-level jobs are paying less than what they did in the 1970s, according to labor statistics.

But Americans love those Horatio Alger-type stories, in which someone who works hard can be successful.

That's because people continue to think that they have an opportunity to occupy the richer end of the income scale, even though studies and statistics show there's an ever-widening income gap, with primarily the rich getting richer, Wright says.

When Wright suggests to students in his Social Inequality class that in addition to a minimum wage, America should have a maximum wage of about $80,000 — studies have shown that any earnings past $70,000 becomes discretionary income — no student buys into that idea. Everyone believes they have the potential to surpass that maximum wage, yet the reality is that not many will, Wright says.

The study used data from the National Longitudinal Survey of Youth, conducted by the Bureau of Labor Statistics. The NLSY is a nationally representative sample of 12,686 youth, who were ages 14-22 years old when they were first surveyed in 1979. The educational and occupational data of the respondents' fathers were also collected.  Since then, the NLSY has followed specific age cohort groups over several years. Cohort members are re-interviewed at various intervals to continue collecting data on their jobs and incomes.