Social Mobility: The Making or Breaking of a Society and how it Reflects on Current Social Issues

By definition, I am what is called a Xennial, not quite old enough to be Gen X but not young enough to be a Millennial, raised in the midst of the analog to digital transition, with the best Saturday morning cartoons, before sugar was deemed “bad”, Halloween masks had you trick or treating effectively blind and hypoxic, and in High School cell phones could last a week on a single charge but would take a few minutes to type a single text message (9, 33, 0, 777, 666, 222, 55, 33, 3), and computers that screamed at you when trying to connect to the internet (dialing attempt 1 of 5). With all this greatness, however, times had already been a changing economically. No one had really noticed it at this point because our parents were still doing good from the lasting effects of the post-WWII economy, the previous manufacturing followed by electronics boom, the Dot Com bubble was busy cooking right along, everything appeared great. What was not on the radar, for the most part, was that in the late 60s’ companies began to consolidate and grow power, followed by the deregulation frenzy in the early 80s’, and organizational interests began migrating into the political arena.

So, people will say, “But Neal, don’t be so naïve, don’t ya know this is how it has always been? The rich and powerful have always been breaking the back of the little guy.” To an extent, I would have to agree with that sentiment, but, this time it is different. Now let us kill the lights, and I will grab a flashlight (for spooky effect), Cookie (my nickname) is gonna tell you a scary story.

I personally enjoyed the comedian George Carlin. He took what I am sure was depression and nihilism and molded it into wit and gallows humor to make a point and in many ways he was right. What is currently being experienced in the United States is the late stages of power and wealth transfer due to the control of the political environment by the organizational environment. Side note, I like to say organizational instead of business because monetary influence can fall outside of corporate/business offices but also include individuals, nation-states, religious organizations….you got a checkbook with enough 0’s in it? Great, because if you are buying, we are selling! Corporations are considered real people you know, that is unless you break the law, then it cannot be blamed, may be fined or relative slap on the wrist, but hey, corporate person thing, your money is good with me! “Okay, that is great and all but what does any of this have to do with the title?” Setting the stage for how social mobility was gutted in the United States, going to go into why there is a sense of hopelessness, dread, burnout, and why Surge was banned when I was in High School in 1997ish with its all its 85 mg of caffeine in a 20 oz (boooooo) but I can now get a Rockstar energy drink advertising 400 mg. You know, at a certain point, it would probably be healthier just to start throwing the cocaine back in Coke Cola. Coke, if you are listening, I know Buffet is holding a lot of your shares, get to calling folks in D.C., let's make this happen, chop-chop. I have a dissertation to write.

So on to the topic at hand. Social Mobility is effectively how easily a person can transition from one economic segment to a higher economic segment. I do not like saying the typical “class” because it is a lot more complex than that. Countries that have strong social safety nets such as public health care, free or cheap higher education, workforce protection, and so on typically have happier individuals. The two main reasons for this are a sense of security and the ability to better oneself if one so chooses. Using Norway as an example, higher education is free, even to immigrants. All you have to do is prove that you have enough money to cover living expenses. Having such a safety net allows people to be more productive, generally happier, and have the ability to develop themselves. This is not even close to being a new concept. Sun Tzu and Fredrick the Great, just naming two right off the top of my head, discussed this concept for the care and handling of military forces. “Ensure their needs are provided for and morale and spirit will do well.” So that tells us that concept is at least 2,500 years old.

While social mobility has improved in many developed countries, the United States has reversed course and has effectively gone backward. This is primarily due to the extraction of wealth and it has been intentional. Don’t believe me? Check out the Citi Group Plutonomy Report that got leaked in 2005 that can be found here. Other examples are comparing what happened to the individuals who were part of the 2008 housing collapse. In the United States, they got bailed out to the tune of $700 billion. As a counter-example, in Iceland, they got thrown into jail. The Panama Papers are another example. It was a huge information dump of individuals that were offshoring money to avoid taxes through a firm in Panama that included celebrities, politicians, executives, and so on. It barely made a blip in the United States. Good old Iceland again (I really like their style) found their prime minister on the list. He was forced to resign within three days. Many times, doing previous work as an analyst, the best way to determine if something is happening is to look at what is not happening. It will at least point you in the direction of what questions need asking. In this instance, accountability.

Okay, so how does this impact social mobility and why is it causing wealth transfer? There are a few reasons, the first is debt burden and capitalized interest. Another is inflation. Now do not get me wrong, inflation when properly used is an excellent tool at maintaining economic stability in an imperfect system. It enables governments to prevent market crashes by slowing market booms (granted in the United States it is a private organization but that is a topic for another time…Interesting fact, the Fed has its own police force, I trained with them before). However, when used maliciously, it can be used to reduce wages and pull funds from the general public by interest.

One of my old professors had a great adage “Statistics lie and liars use statics.” Numbers can be massaged to give the impression desired by the one(s) presenting the data. The same can go with names and phrases. Take for example states that have “Right to work” laws. The more accurate name would be the “Right to Fire” because who cares about your employment protections. I have seen that happen first hand with facilities. Random sitewide meeting “We know things are tight but we will make it through, don’t worry about being laid off, that won’t happen.” What they really mean is “We are about to lay off a good third of you, but please do continue to come in and work hard until you are no longer needed and then you will be escorted out.” True story, seen it happen more than once.

So that being said, I like using percentage change when dealing with change over time. When the methods are done correctly, changes that would otherwise be overlooked can stand out. Especially when it comes to things like you know, inflation, tuition, healthcare, and so on. “But inflation, everything gets more expensive with time and regular inflation is expected and that is what cost of living increases are for!” Uh, yeah. It took a significant amount of digging but I was able to dig up data on the cost of homeownership, rent, tuition, and healthcare. I also got the minimum wage rates for every year starting from 1970 forward. From there, I adjusted the dollar amount for the inflation rate using 1970 as the base year (starting point for the data). After adjusting for inflation I calculated the difference between these data sets each year against 1970. Below is the graph I assembled. See that sad little orange line there at the bottom? That is not a Bob Ross happy tree, that is showing the minimum wage trend is actually NEGATIVE, a little over 26% less than it was in 1970. College tuition, annual medical costs, yeahhh. Even with homeownership and rent, the gaps are noticeable.

So the question is, why did I pick these things. Are they not included in the consumer price index? Technically, yes, but again, liars use statistics. These items are the gateways to bettering oneself. The higher the cost, the more difficult to achieve. I argue that there should be not just an inflation index but a social mobility inflation index. That in my opinion is a true sign of how healthy a society is. As is made clear in the chart above, in the United States, social mobility is virtually non-existent.

It may be argued, “I do not go to the doctor and my employer pays for my healthcare.” It still costs you, all the employer is doing, is moving one line item of operational cost, to another line item of operational cost so you think you are getting a better deal. When a compensation package is assembled for an employee, healthcare is part of that cost, so if your employer is paying $1,400 a month for your health plan, that is actually $1,400 that you should be getting paid if healthcare was a government service just like the other 32 of the 33 developed nations on the planet. Guess who is that one out of the 33? Its name starts with U and ends with Murica.

A similar argument can be made with minimum wage. Minimum wage sets the pace for higher levels of compensation. If minimum wage was set at $15.00 an hour, do you think I would work for an abusive boss in a high-stress environment where I may or may not always be on call (flashback to my days as an hourly) when I could go sweep floors for just $2.00 an hour less? Give me a broom. I will come out ahead between not spending as much on whisky to kill the pain and my liver will thank me. Additionally, the minimum wage should be at least on pace with inflation and preferably high enough to allow for social mobility. Currently, it is effectively impossible for most individuals to go to college without going into debt. Likewise, with healthcare gutting paychecks and pretty much everyone being one major health event away from bankruptcy, there is no safety net. The constant shadow individuals are under due to debt burden, the push to get higher education even where functions do not need it (I say function and not jobs because more and more positions are wanting a four-year degree unless the hiring manager wants to lowball pay), and knowing that a major life event is enough to derail all the person’s work and savings to date. “Sorry Bob, that cancer stinks but yeaaaaahhh, we are going to fire you because of that bad performance review three years ago since we cannot fire you for having cancer. Right to work for the WIN!” Then you lose your insurance because you cannot afford the COBRA benefits and now we effectively have the plot for Breaking Bad.

It is a lot to handle and due to this predation on the things people need to survive and be able to improve themselves has led to a creeping sense of hopelessness. Are you tired? You have a right to be tired. Burned out, oh yeah. That is a person’s body and soul telling them this is not a healthy environment and that they do not belong in this position. Depression? I would almost be worried if you are not depressed on a semi-regular basis.

I like to get solutions and at least some helpful insights that individuals can use to at least get a better perspective. Unfortunately for this article, there is none at this point in time. My goal this time is to build awareness of the problems and articulate them in such a way that shines a light on the situation in a clear way. To address a problem, we first have to know what the problem is, and to what extent it is affecting us. Use minimum wage as an example. To say that the minimum wage is stagnating makes light of the reality that the minimum wage has actually gone down by 26% since 1970, and that is even using the watered-down consumer price index inflation rates and not the social mobility index. To put this in perspective, let's assume minimum wage matched the lower rate increase of housing cost, then minimum wage should be around $14.20. Is it just me or is that kind of weird that is pretty close to the $15.00 rate being kicked around right now? I digress; let's not dally on that question, onward to a magical land where the minimum wage grew on par with the cost of college. Doing some quick math, we are at $32.56 an hour. So, where can I sign up? Since I am there maybe I can find a giant dragon somewhere that I can get to be best buds with and share a horde of shiny things. While $32.56 is not practical, it should crystalize exactly how much costs for services that aid in social mobility has divorced themselves from the people who need it most.

As always, thank you for your time and your attention my friends.

Neal