There’s No Mobility….Like Social Mobility!

There’s No Mobility….Like Social Mobility!

Posted 8th November 2013

There’s No Mobility…..Like Social Mobility!

Jeremy Nicholls November 2013 Social Mobility 2

The recent coverage of social mobility in the 2013 State of the Nation Report and from Phil Collins in the Times, and just how low it is, is pretty depressing. Basically the increase in mobility in the 60s and 70s wasn’t really about public policy or driven by education but resulted from changes to economic structure and an increase in the number of opportunities for white collar workers which provided lots of opportunities for people to ‘move up’ a class. Social mobility appears to be falling internationally as well with mobility in the country built on the idea of mobility, the US, now lower than in the UK. The increase in families needing help with food against a background of higher house prices seems counter intuitive (though not enough houses and the impact on house prices of those with very high incomes explains that.)

Of course there are still examples of people being socially mobile and of course public policy has an effect. It is just that it is not a very big one. The other forces that drive both increases and decreases in social mobility are greater. Depressing enough but it gets worse. Despite increases in the number of people worldwide who have moved out of extreme poverty, from less than $1 a day, there have been increases in inequality within countries and, not surprisingly, the higher the inequality the harder it is for people on low incomes to move up. Part of the problem is that unless the number of jobs, and especially jobs with higher incomes, is increasing someone has to be going down for everyone who goes up. This is neither a popular political message nor is it something that those on higher incomes are keen to see happen. And with the higher levels of resources and connections to similar people than those wanting to be upwardly mobile, those on higher incomes will resist the risk of going down. So it will get worse. Depressing.

But it’s much worse than this. The idea of mobility, from blue collar to white collar, from working to middle class has been driven by the experience of our parents for whom this was a massive change. But the idea of middle class is a massive con trick that we have all fallen into or are being encouraged to hang onto. It is not really just that middle class incomes are also under pressure in many parts of the world or have even been declining in some, it is that whether you think you are working class or middle class the reality is we are all in the class that works, every day, saving if we are lucky for a time when we retire where, unless you are fortunate enough to have a contract where your pension relates to your salary, you are now likely to be worse off when you do retire. There are really only two classes, working class, which includes those who want to work but for whom there are no jobs, and the not needing to work class.

I would be interested to know what the mobility rates look like between these two classes, especially since the not needing to work class has substantial wealth where people derive their income not from earnings but from their assets, shares, land, property. I have my suspicions. Of course the number of people in this not needing to work class is growing but I suspect at a lower rate than the increase in population. And it is possible to join it if you win the Lottery or write a blockbuster and the press interest in these examples fuels the belief that we might all make it.   Depressing.

And back to that growth in opportunities in the 60s and 70s. There doesn’t seem to be much chance of that happening again in the UK. Technological advances are increased the rate at which capital has replaced labour and increased the ability of capital to create returns from anywhere in the world. It would seem the number of jobs requiring higher skills is falling as a proportion of all jobs and the proportion of low paid low skilled jobs increasing. This is not just a UK phenomenon. Even though opportunities are increasing in what were countries with lower rates of GDP, this reflects a global sharing of employment opportunities, a kind of entropy in jobs reflected in the widening inequality within countries. And so we all become low wage economies where the distribution of opportunities for work continues to skew towards lower paid jobs, except of course for that increasingly thin veneer of the not needing to work class. A double, or is it triple blow for chances of social mobility.

And then there is the combination of global poverty and the fact that those in poverty can switch on their televisions or access social media and see those who are not in poverty. What effect does this have?

And so I am depressed, wondering whether this moment, these last few decades have only been a passing moment for rising incomes and social justice, fuelled by our exorbitant use of fossil fuel. What intervention could move us to a world in which our global wealth does not become increasingly unequal, a world where there are variations but without the tendency for these to widen, a world with chances of upward and yes downward mobility.

This is where I go back to think about the drivers of investment flows which are what drive patterns of innovation, products and services. These are driven by the existing distribution of resources, demand and price signals for where to invest for returns. We can do a little but not much on the first two. But we have the opportunity to change the framework that is so important in determining price signals. Yes I am afraid that’s right that means financial accounting practice and the public policy on which this is built, hardwired into countries legislation on company reporting. We can change this, perhaps to create a basis for economic activity that doesn’t tend towards widening inequality.

At least the thought that we can do something about this keeps me optimistic.