Do Poverty, Inequality, and Mobility Have a lot in Common? Not Really.

“Despite the stellar success of ordinary people lifting themselves out of poverty through production and access to a stable market, the income inequality narrative has come to dominate our current public policy discourse, especially in the United States.”

One unfortunate pattern that has emerged recently in public policy debates regarding economic mobility (a measure of how much a person earns compared to the earnings of their parent(s) at the same age) is the now routine intertwining of the concepts of economic mobility, poverty, and income inequality. These issues are not the same, and the policy responses to address them vary. Conflating these distinct concepts is not only misleading but can even create negative long-term unintended consequences that undermine efforts to boost social mobility and poverty alleviation.

On a global scale, the reduction of absolute poverty is one of the most under-discussed success stories of our modern era. According to data from the World Bank, 36 percent of the world’s population was living in extreme poverty in 1990. By just 2011, that number had been reduced by more than half, with just 15 percent of the world’s population living in extreme poverty. This progress can be traced directly to the rapid spread of global capitalism—the most important lesson being that the most destructive form of exclusion is exclusion from a well-functioning market system. But just as global capitalism has lifted millions out of extreme poverty, many policymakers and academics insist that it has caused (or at least grossly exacerbated) another social problem: income inequality.

Despite the stellar success of ordinary people lifting themselves out of poverty through production and access to a stable market, the income inequality narrative has come to dominate our current public policy discourse, especially in the United States. The cliché, “The rich are getting richer and the poor are getting poorer” might help policymakers pursue increasingly broad wealth redistribution agendas, but the truth is far less alarming. The rich are getting richer, but the poor are getting richer too, just not necessarily as quickly. Though there is plenty of room to improve upward economic mobility in the United States, it remains the case that roughly three in four American adults (and the vast majority of poor children) live better than their parents did, after taking the rising cost of living into account.