Otherwise Occupied

A new study conducted by Stanford University used census data to examine family income at the neighborhood level in the 117 biggest metropolitan areas in the U.S.  The study — part of US2010, a research project financed by Russell Sage and Brown University — found that the portion of American families living in middle-income neighborhoods has declined significantly since 1970, as rising income inequality left a growing share of families in neighborhoods that are mostly low-income or mostly affluent. Today, there are thus larger patches of affluence and poverty and an ever-shrinking middle.

According to the most recent data, 44 percent of families live in neighborhoods the study defined as middle-income, down from 65 percent of families in 1970. At the same time, a third of American families live in areas of either affluence or poverty, up from just 15 percent of families in each of those categories in 1970. The study also found that upper income people are congregating in new exurbs and in gentrifying city areas that lower and middle-income families cannot afford.  The study identified these patterns in about 90 percent of large and medium-size metropolitan areas. 

Harvard economist Lawrence Katz says that the evidence for the presumed adverse effects of economic segregation is inconclusive. In a recent study of low-income families randomly assigned the opportunity to move out of concentrated poverty into mixed-income neighborhoods, Katz and his collaborators found large improvements in physical and mental health, but little change in the families’ economic and educational fortunes. However, an author of the Stanford study notes a growing gap in standardized test scores between rich and poor children, now 40 percent bigger than it was in 1970 and double the testing gap between black and white children.

The gap between rich and poor in college completion — one of the single most important predictors of economic success — has grown by more than 50 percent since the 1990s, says Martha J. Bailey, an economist at the University of Michigan. More than half of children from high-income families finish college, up from about a third 20 years ago while fewer than 10 percent of low-income children finish, although that is up from 5 percent. 

Harvard sociologist William Julius Wilson argues that “rising inequality is beginning to produce a two-tiered society in America in which the more affluent citizens live lives fundamentally different from the middle and lower-income groups. This divide decreases a sense of community.”

This data has obvious implications for the Occupy Wall Street and related protests.

Truly organic protests (as opposed to those that are carefully orchestrated) are, by their nature, typically messy, noisy and confused.  The fact that the Occupy Wall Street protestors still have no clear solutions to offer nor even a coherent vision of what exactly is wrong does not, in my view, damage their credibility nor mitigate the emotional clarity with which they have conveyed (and will likely continue to convey) that something really is wrong.  The general sense that we have serious problems and that things don’t seem fair or right has a striking ring of truth. 

Unfortunately, it is unlikely that we as a society will reach anything like consensus on issues like employment, taxation and equality.  That said, all of us — whatever our views of politics, business and economics — ought to agree on the centrality of opportunity.  The assumption that anyone can get ahead based on capability and effort is central to the idea of the American Dream.  Equality of opportunity is crucial to the success of our society.

As stated by Nobel laureate Joseph Stiglitz, “growing inequality is the flip side of something else: shrinking opportunity. Whenever we diminish equality of opportunity, it means that we are not using some of our most valuable assets—our people—in the most productive way possible.”

One crucial way — perhaps the most important one — to spur upward mobility (and protect against downward mobility) is education.  In today’s economy, a child’s educational attainment strongly influences his or her future earnings and is a strong determinant of economic mobility.Women with a high school diploma or less who are raised in middle-class homes are between 14 and 16 percentage points more likely to be downwardly mobile than women who get a college degree.  Men with no more than a high school diploma are 7 to 15 percentage points more likely to be downwardly mobile than men with just some postsecondary education but no bachelor’s degree.  College graduates have a much lower risk of experiencing a serious long-term income drop and are much more likely than others to recover therefrom.

As the father of a three California public school graduates, one of whom also graduated from the University of California (Berkeley) and another of whom is a Teach For America alum who worked in the Richmond, California school district, as well as the husband of a California public school teacher, I think I am pretty well positioned to offer some thoughts on ways we can improve the current system, at least in the Golden State.  Indeed, let me suggest that all of the focus on ideology related to the protests misses some important points. Are we allocating the public resources we have wisely? Are we looking for creative solutions to difficult problems? Are we rewarding the behavior we want to see? I suspect not, pretty much across the board.

We must begin by getting more kids — and especially disadvantaged kids — to aspire to college.  Obviously, that should start with parents and teachers.  My wife is reinforcing the benefits (as well as the demands and the requirements) of the “next levels” — middle school, high school and college — with her 5th grade students every single day.  We talked with our kids about college constantly.  Here in California, the Pathways to College Network is an alliance of national organizations that provides leadership to advance college opportunity for underserved students and research into how best to accomplish that task. Reality Changers, a non-profit here in San Diego designed to build first generation college students, and groups like it are imperative in a process that can be alienating for students and parents who don’t understand and are afraid of it.

Once students aspire to college, that aspiration has be particularized so that the students prepare and then apply to college and apply wisely. A prominent University of Chicago study reported that “[a]cceptance is less of a barrier than might be expected,” noting that only 8% of lower-income students with four-year college aspirations applied and were not accepted. But many more students missed benchmarks in the application and enrollment process.  Only 41% of these students who said they wanted four-year degrees even completed the senior year steps needed to apply and enroll.

Students often need help learning and managing the process, especially if their parents did not attend college. Economically disadvantaged students are also the most likely to “mismatch” their college choice, enrolling in colleges with selectivity levels well below those of colleges they probably could get into based on their academic qualifications. The College Board (among others) has some great free resources to help all students manage the college application and selection process. These students also tend to lack support during the planning process and even while in school.

We must do better.

Once students have aspired and applied to college and been admitted, we need to be sure that they can pay for college.  A major piece of that puzzle is simply letting them know how much aid is available.  Many students limit their college searches to schools they assume they can afford and thus neglect great (usually private) colleges that might be less expensive for them to attend on account of financial aid.

Private schools typically have more financial aid to offer and some even guaranty to meet all or more of a student’s determined need pursuant to the applicable formulae.  Other schools are particularly generous with non-need based aid.  These issues often have a very significant impact on a college’s actual cost and should be considered carefully by every aspiring freshman. Underserved students and communities will often need help in this regard.

Berkeley now costs $32,635 per year for in-state students, still well less than its rival Stanford’s $56,906.  However, while Stanford meets 100% of each student’s financial need (as determined by FAFSA) and provides average financial aid packages of $40,298, Berkeley (on average) only meets 76% and provides average financial aid packages of $20,619.

According to the U.S. Department of Education, between 1.5 and 2 million low and moderate income students fail to apply for federal financial aid each year.  Moreover, a majority of those who file a FAFSA only do so after important deadlines have passed, decreasing their likelihood of receiving state and institutional aid.

Yet financial aid isn’t the only necessary response to the need to make it possible for students to pay for college.  I am absolutely in favor of providing “first chances” for those who have been disadvantaged and “second chances” for those who need them. I absolutely support the ideal of providing a place where high school graduates who may not be ready for a place like UC-Berkeley can get prepared to enroll there. Therefore, in my judgment, the mission of the California community college system is a noble one and one that ought to be continued.  But any fair assessment of that system must also conclude that it’s a mess.

According to research performed under the auspices of the Institute for Higher Education Leadership and Policy at CSU Sacramento (link), only 24% of students entering a JC to seek a certificate, get a degree or transfer to a four-year school accomplish their goal within a six-year period (and it’s only 14.5% of total students). Thus California ranks near the top in terms of getting students in the door of higher education, but in terms of actual achievement -– either via a degree or by transferring to a four-year school -– California ranks near the bottom. That said, a community college education remains remarkably inexpensive — costs are the lowest in the nation and a small fraction of the average cost nationally. Thus we’re paying a very high price for surprisingly little return.

Moreover, and more importantly, many community colleges are replete with students of means who have always had tremendous opportunities available to them who are wasting their time (and taxpayer dollars) there. Roughly 50% of California community college students have annual family incomes in excess of $50,000 and roughly 25% have annual family incomes in excess of $80,000 (link). Why should taxpayers provide — essentially for free — second, third and more chances to students with means and opportunity galore who have consistently refused to make good academic and educational choices while, at the same time, charging students who have made the best choices higher and higher prices and prices that are, by far, the highest in the system? Is it too radical to suggest the our UCs (Berkeley, UCLA, UCSD, etc.) charge prices more like what community colleges charge (to reward student achievement, to keep more of our best students “home” and to ease the financial burden on these students and their families) and that community colleges charge prices more like what the UCs charge for those that can afford them? It seems to me that the same amount of money could be put to much better use.

We also need to encourage more foreign students who come to the U.S. to school to stay here when they graduate.  What is intriguing is not just that the U.S. has won so many prizes, but that the a third of American Nobels have gone to immigrants to the U.S.:

“The United States has won more Nobel prizes for physics, chemistry, physiology or medicine, and economics since World War II than any other country, by a wide margin (it has been less dominant in literature and peace, two awards that are much more broadly distributed among nations). At least one American has won a prize each year since 1935 (excluding the years 1940 through 1942, when no prizes were given out). And the United States became dominant after a very slow start: no American won a science prize in the first six years of the prize’s existence.”

Sadly, it is now very difficult for foreign graduates to stay in this country when their educations are complete.  It doesn’t make sense to me for the U.S. to train them and then send them back overseas to compete with us when they want to stay.  Their skills and training could help the U.S. compete internationally and keep more high-tech jobs here. 

The Occupy Wall Street movement has struck a nerve.  I realize I am probably delusional in this regard, but we ought to at least be able to come together and provide better educational opportunities for everyone even though we are unlikely to find much in the way of consensus elsewhere with respect to the OWS agenda (such as it is).

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