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"Ron Haskins is a senior fellow in Economic Studies at the Brookings Institution, codirector of the Center on Children and Families at Brookings, and a senior consultant at the Annie E.Casey Foundation. He was an adviser to President George W. Bush for welfare policy and a senior staff member of the House Ways and Means Committee, where he helped write legislation on social policy. He is the author of Work Over Welfare:The Inside Story of the 1996 Welfare Reform Law (Brookings, 2007) and coeditor with Rebecca Blank of The New World of Welfare (Brookings, 2001).Isabel Sawhill is a senior fellow in Economic Studies at the Brookings Institution, where she holds the Cabot Family Chair and serves as codirector of the Center on Children and Families. She previously served as an associate director at the Office of Management and Budget. From 2003 to 2006, she was vice president and director of Economic Studies at Brookings. She is the editor of One Percent for the Kids: New Policies, Brighter Futures for America's Children (Brookings, 2003), coeditor with Alice Rivlin of Restoring Fiscal Sanity 2005 (Brookings, 2005), and coauthor with Rudolph G. Penner and Timothy Taylor of Updating America's Social Contract (Norton, 2000)."

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CREATING AN OPPORTUNITY SOCIETY

BROOKINGS INSTITUTION PRESS

Contents

Foreword................................................................................viiPreface.................................................................................ix1 Our Vision............................................................................12 Public Values and Attitudes...........................................................193 The Changing Fortunes of the Rich, the Poor, and the Middle Class.....................324 Opportunity in the United States......................................................605 Why Family Background Matters.........................................................746 Perspectives on Poverty...............................................................857 Middle-Class Complaints...............................................................1068 Expanding Educational Opportunity.....................................................1259 Supporting and Encouraging Work.......................................................16710 Strengthening Families...............................................................20311 Paying the Bills.....................................................................232A Grants, Loans, and Tax Provisions for Postsecondary Students..........................249B The Bush Marriage Initiative..........................................................257Notes...................................................................................263Index...................................................................................337

Chapter One

The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little. Franklin D. Roosevelt

No ancient king could have imagined the comforts and conveniences provided by houses, cars, computers, clothes, packaged foods, and various other amenities enjoyed by most Americans. As this book went to press, the economy was in a deep recession and could remain there for several years, but such temporary troubles should not detract from the fact that America is a very wealthy nation. If personal after-tax income in 2008 were divided equally among the population, every adult and child would have about $35,000 in goods and services each year—that's $140,000 for a family of four. But the American economy is marked as much by the disparity between the top and the bottom as it is by its ability to generate income and wealth. Granted, some inequality in income and wealth is necessary to maintain the rewards for the planning, hard work, self-discipline, and risk taking that are the handmaidens of productivity. And productivity is the basis of America's wealth. But our society and political system seem to be more concerned with productivity and the generation of wealth than with inequality and those at the bottom of the heap.

That said, this book is not primarily about how to change the distribution of income per se. Nor is it only about the poor, although we do give them and their children special attention. Instead it is primarily about opportunity and how the nation can create more of it, especially for those at the bottom. We believe that everyone should have a shot at the American Dream and that too many people have been left behind. We focus more on opportunity than on inequality and poverty for two reasons. First, Americans believe in opportunity. They believe that anyone who works hard and has a certain amount of talent can get ahead. For this reason, they are more willing to support policies that reward personal responsibility and enhance mobility than policies that unconditionally redistribute income after the fact. They are far more interested in equal opportunity than in equal results. We argue that policies aligned with the value of helping people help themselves are likely to be politically acceptable as well as effective. Second, opportunity is a dynamic concept. It is about the process that lies behind where one ends up on the ladder of life. An individual or a family may be poor today and rich tomorrow, or vice versa. A middle-class family may fear that it is only one job away from being poor, and it may be right. A poor family may take great pride in the fact that, as a result of their own sacrifices, their children have entered the middle class. Like almost everyone else who has written about these topics, we rely heavily on data that measure the rich, the poor, and the middle class at one point in time. But too much focus on income at any one time may miss the more important fact that people's fortunes change over the course of their lives.

It is in this context that we examine the growing body of evidence on economic mobility. Mobility and the chance to move ahead in life depend in large part on the circumstances into which one is born. In a seminal address about poverty at Howard University in 1965, President Lyndon Johnson said that as a society we have a responsibility for bringing people to the "starting line" without significant disadvantages, because if we fail to do so they cannot fairly participate in the race. The point is that people are not born equal. The genetic endowment passed to offspring by parents, which is an important influence on human development, is far from equally distributed. The plain fact, hard to admit in the land of opportunity, is that many children are already far behind at birth. Worse, children disadvantaged at birth have a high probability of being born into circumstances that are not conducive to their development. These include single-parent families, parents with low income and poor parenting skills, dangerous and crime-ridden neighborhoods, and lousy schools. In short, we are worried about the extent of opportunity in America, especially for those at the bottom and their children.

Since its founding, America has been an immensely successful nation. It has long been the world's most affluent society; it continues to be a bastion of individual freedom; and it has shown the way in using democratic government to solve a variety of problems thrown up by history. But now the country is confronted by economic and social disparities that have proven all but impervious to public and private efforts for nearly four decades. As detailed in subsequent chapters, income inequality is as high as it was in the roaring twenties, we have had few successes in fighting poverty, and the United States now offers less economic opportunity than some other countries. We believe that the lack of more significant progress signals that the country's efforts need to be expanded and retooled. In early 2009 a new administration and a new Congress took steps to address at least some of these problems in a so-called stimulus bill, which represents an almost unprecedented expansion of the role of government. However, little thought was given to the need to rethink and reform the social agenda. One problem with this approach is that a nation already failing to pay its bills cannot afford to permanently expand the size of government. Thus much of the spending in the stimulus bill will have to be stopped in two or three years. Programs that were temporarily expanded will have to contract, and many participants in these programs will lose benefits. This book provides a broader and longer-term look at how to think about social policy and about what needs to be done to create an opportunity society. And because we suggest ways of paying for any expansion of benefits, our proposals are fiscally responsible.

The authors of this book have been studying issues of poverty, inequality, and opportunity for more decades than we care to admit. This book is our attempt to synthesize much of what we have learned about the state of opportunity in America and to offer our views on what the next generation of social policies should look like. The two of us do not always agree. However, we have each benefited from our many debates; and we hope that our effort can serve as an example of what can happen when people from different perspectives seek to find solutions that command wider support than those favored by advocates on either side of the debate about what the more fortunate owe to the less fortunate in our society—and what the less fortunate must do to help themselves get ahead.

At the outset of our study, we want to clarify our general view of how the political system is dealing with the problem of opportunity. We do not side with those who think that the current distribution of income and wealth is just fine and that opportunities to get a firmer foot on the economic ladder cannot be improved. Nor do we side with those who say that all government needs to do is spend far more resources than it does at present on existing social programs. The federal government conducts literally hundreds of programs and spends billions of dollars on domestic social programs. One of our complaints is that the money is not being well spent. Too many programs are either poorly targeted (by age or income), ineffective, or inconsistent with widely held public values. And too many are also inconsistent with research on how people behave and the role that a little more paternalism or higher expectations might play in moving people up the ladder.

We wrote this book because we believe it is possible to do better by paying more attention to six criteria that should guide the nation's social policy. Our first criterion, policies consistent with public values (and thus politically sustainable), should be obvious in a democracy. Of course, political feasibility is also shaped by external events and changes in electoral fortunes. This shift was strikingly evident when Ronald Reagan took over the presidency in 1981 and Democrats won the White House and Congress in 2009. While we acknowledge the importance of elections, giving too much attention to these short-term political developments implies, in our view, insufficient attention to new ideas and expert opinion along with the need for consistent and coherent policymaking over the longer term. In short, policymakers ignore more durable public values at the risk of becoming irrelevant.

Our second criterion, policies that reward those who play by the rules or exercise personal responsibility, is more controversial. Personal responsibility means that individuals must make decisions and take actions that promote their own growth and well-being as well as that of their children. We place special emphasis in this book on the responsibility to get a good education, to work, and to marry before having children. We show that playing by these three rules would ensure almost everyone a middle-class income. We believe that social policy should encourage playing by this set of rules.

A third criterion is cost-effectiveness. Ideally, one would like to know both the costs and the benefits of a policy, but such information is often lacking. We rely on whatever information is available but do not shrink from making recommendations based on partial evidence when necessary.

A fourth criterion is targeting resources on disadvantaged families and especially on helping their children move up the economic ladder. Too many programs in the federal arsenal are poorly targeted or even perversely tilted toward the more advantaged, a fact that is inconsistent with creating a more equitable society. Many of the nation's most expensive programs, especially those for seniors, fail this test.

A fifth criterion is consistency of programs with new research on human behavior. This research suggests that people often engage in behavior that is shortsighted or even self-destructive but that they respond well when nudged to move in the right direction.

A final criterion is the need for greater simplicity. In some areas, the proliferation of programs has created a nightmare both for those receiving benefits and for those paying the bills. This alphabet soup of programs is unlikely to end any time soon, but we try to strain at least a few letters out of the broth.

In the end, we offer detailed recommendations about public policies that have a reasonable chance of helping those at the bottom move up. We argue for a three-front war: one front focused on improving educational outcomes for children and young adults, one focused on encouraging and supporting work among adults, and one focused on reducing the number of children being raised in single-parent families.

Like many others, we often focus on poor families or their children, but our attention is not confined solely to the bottom of the income distribution, for a number of reasons. First, we believe a case for action can best be constructed on knowledge of the entire income distribution. Poverty cannot be understood except in relation to how others in society live. The poor in the United States are quite well off by global standards but not in comparison to other Americans. Something is amiss with a society that pays its CEOs as much in a day as a low-wage worker makes in a year. Not only are these two people not in the same boat; they aren't even in the same sea. Second, large and growing differences in resources between the top and bottom may eventually lead to other kinds of stratification, including concentrations of political power, especially if they are combined with little opportunity for those at the bottom to move to the top. Third, the official poverty line of about $21,000 for a family of four is an arbitrary threshold and does not address the large number of Americans who, though not officially poor, are nonetheless far from financially comfortable. Finally, societies with large gaps between the haves and the have-nots produce less contentment among their populations than similar societies with less inequality.

We devote considerable attention to issues of public philosophy and to attitudes about poverty, inequality, and economic mobility. It turns out that Americans have a more optimistic vision of people's chances of success than the populations of other advanced countries. Moreover, although most Americans want to assist the less fortunate, their compassion is not unlimited and their confidence in government programs is not high. Complaints about "a lack of political will" to fight poverty and inequality need to be assessed against this more sober understanding of public attitudes and the extent to which they can be changed.

The political challenges of creating an opportunity society will intensify in the coming decades for reasons that have little to do with the design of antipoverty and opportunity policies themselves and a lot to do with other developments: the possibility of a prolonged and deep national or global recession, rapid changes in technology and international competition, a greater influx of poorly educated immigrants, the aging of the population along with rising health care costs, and enormous federal budget deficits. One of the most important changes produced by the technological revolution is the sharp decline in jobs that require little education yet pay well—jobs like those that used to be abundant in the manufacturing sector. We believe that, putting periods of recession aside, plenty of jobs will be available in the future. Anyone who needs evidence of the power of the American economy to create jobs need only consider the nation's ability to absorb 1.5 million immigrants every year for two decades (that's over 30 million people), while for most of this period unemployment rates remained low.

But we are greatly concerned about wages at the bottom of the distribution and the need to better prepare people for the kind of competition that will exist in the future. It is not just the unskilled high school dropout that will be affected; a broad swath of the population will be in competition with workers in newly developing countries such as India and China. In this context, how to balance assistance to the poor with assistance to middle-class workers, given the greater political clout of the latter, will be especially troublesome. And as if this political dilemma were not vexing enough, both groups will be competing with the growing number of elderly Americans, who have high and rapidly rising health care costs, for limited public resources. Either taxes are going to have to be raised to unprecedented levels for the United States, or promises to the elderly are going to have to be scaled back substantially.

Plan and Summary of the Book

The following chapters contain a wealth of research findings, some of them new, some of them old, and many of them based on the work of others, including our own colleagues at Brookings. Chapters 2 through 7 explore the lack of opportunity and the debates about its causes.

Public Values and Attitudes

Chapter 2 is about public values. It argues that a sense of compassion or fairness is deeply embedded in human nature, although compassion is stronger for those with whom the public shares common geography, race, or other ties and for those whom they perceive to be deserving of help. We re view public attitudes toward poverty and inequality, concluding that they are almost entirely consistent with arguments that people are naturally sympathetic and value fairness but that their willingness to share with the less fortunate is highly dependent on their assumptions about why people are poor and about how much opportunity they believe exists for people to get ahead. The majority of the public is in favor of helping the disadvantaged, and this proportion has grown in recent years. The public believes that people are poor in part because of a lack of opportunity but in part because of their own failings or lack of personal responsibility. It follows that the public is less willing to provide unconditional assistance to the poor than they are to provide specific forms of assistance (such as food or housing) or to support programs that enable people to become more self-sufficient (such as education and training).

The chapter concludes that equal opportunity is a more widely held value than equal results but that the lottery of genes and early family environments complicates what is meant by opportunity. It further concludes that income is an imperfect if readily available measure of success. Finally, it concludes that the current way of measuring poverty in the United States does not capture the fact that a sense of well-being depends more on one's relative, than on one's absolute, position in society.

(Continues...)

Excerpted from CREATING AN OPPORTUNITY SOCIETYby RON HASKINS ISABEL SAWHILL Copyright © 2009 by THE BROOKINGS INSTITUTION. Excerpted by permission of BROOKINGS INSTITUTION PRESS. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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