Lesley Perez, 24, is a New York City kindergarten teacher and earns just $23,000 a year. To save money, she lives with her parents. She is $35,000 in debt from college loans.
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The most recent blows to economic equality, of course, have been the real estate and credit crises, which wiped out housing prices and thus erased the largest chunk of middle-class wealth, while stocks, where the rich hold much of their money, have largely recovered. It is telling that in the state-by-state Opportunity Index recently released by Opportunity Nation, a coalition of private and public institutions dedicated to increasing social mobility, many of the lowest-scoring states--including Nevada, Arizona and Florida--were those hardest hit by the housing crash and are places where credit continues to be most constrained.
But the causes of inequality and any resulting decrease in social mobility are also very much about two megatrends that have been reshaping the global economy since the 1970s: the effects of technology and the rise of the emerging markets. Some 2 billion people have joined the global workforce since the 1970s. According to Goldman Sachs, the majority of them are middle class by global standards and can do many of the jobs that were once done by American workers, at lower labor costs. Goldman estimates that 70 million join that group every year.
While there's no clear formula for ascribing the rise in inequality (via wage compression) and subsequent loss of mobility to the rise of China and India, one key study stands out. Nobel laureate Michael Spence's recent examination of major U.S. multinationals for the Council on Foreign Relations found that since the 1980s, companies that operated in the tradable sector--meaning they made things or provided services that could be traded between nations--have created virtually no net new jobs. The study is especially illustrative of the hollowing out of the American manufacturing sector in that period as middle-wage jobs moved abroad. The only major job creation was in more geographically protected categories like retail and health care (another reason wages are shrinking, since many of the fastest-growing jobs in the U.S., like home health care aide and sales clerk, are low-paying).
That so many of the jobs we now create are low end underscores a growing debate over technology and its role in increasing or decreasing opportunity. Many of the jobs that have disappeared from the U.S. economy have done so not only because they were outsourced but also because they are now done by computers or robots. Advocates of technology-driven economic growth, like the McKinsey Global Institute, would argue that the creative destruction wrought by such innovations creates more and better jobs in the future; microchip making employs just 0.6% of the U.S. workforce, but chips make all sorts of businesses more efficient so they can develop new products and services. The problem is that those jobs tend to be skewed toward the very top (software engineer) or the bottom (sales clerk). The jobs in the middle have disappeared. According to the New America Foundation, a public-policy think tank, the share of middle-income jobs in the U.S. fell from 52% in 1980 to 42% in 2010.