An expanding earnings gap in the United States is creating a chasm between the nation's wealthy few and its cash-strapped majority. And, it feeds off a growing divide in educational opportunities afforded to rich and poor kids, according to stories in The Atlantic magazine and The New York Times. The parallel expansion of those gaps could hobble U.S. economic growth, say studies by the Organisation for Economic Co-operation and Development and the Brookings Institution.
Mind the gaps
An analysis of U.S. Census Bureau data shows that income inequality has grown in most parts of the United States since the late 1970s. On average, incomes fell by close to 6 percent among the bottom fifth of households between the late 1990s and the mid-2000s, while rising by 8.6 percent among the top fifth. And, incomes grew even faster — by 14 percent — among the top 5 percent of households.
During the same period, the educational achievement gap between rich kids and poor kids widened, too. That gap was 30 to 40 percent larger among children born in 2001 than among those born in 1976, according to a Stanford University study. The achievement gap between rich and poor students is twice as wide as the more well-known achievement gap between black and white students, the Stanford study showed.
As the American Dream’s promise of upward mobility through personal effort drifts out of reach for growing throngs of young people, hope in a prosperous future dims for everyone. A new book by the Brookings Institution Press, “Inequality in America,” states that a growing number of economists “suspect that once inequality passes a certain point it may jeopardize economic stability and economic growth,” according to The New York Times.
The U.S. is one of the major countries in which rising income inequality creates economic conditions that stifle upward mobility and make it harder for hard-working people to get the rewards they deserve, said a report for the OECD, a Paris-based international study group.
While the U.S. spends more on education per pupil than many other countries, inequalities in school financing and disparities in parental resources create an uneven playing field for American students, according to an analysis of the OECD report by the Center for American Progress.
Better rich than smart
More than ever before, getting the kind of education that leads to a well-paying job and secure future in the United States is dependent on already having the advantages of wealth. It’s getting harder and harder for low- and middle-income kids — even those who test smarter than their wealthier peers — to tap into the learning opportunities they need to get ahead in life.
Low-income students with above-average scores on eighth-grade tests have a college graduation rate of just 26 percent. That’s 4 percentage points lower than the college graduation rate for wealthy students with below-average test scores, according to data from The New York Times. Thirty years ago, a 31 percentage point spread separated the share of rich and poor students earning college degrees. That gap has since widened to 45 points.
Poverty isn’t the only disadvantage faced by bright kids from poor backgrounds, The New York Times story said. At college, low-income students face competition from peers who grew up with perquisites many poor kids lack, such as preschools, tutors, summer camps, music lessons and stable, prosperous families. Low-income students often miss out on guidance from family members, can be easily swamped by mounting debts, and might feel pressure to contribute income toward their families.
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