Who’s Driving This Thing, Anyway? A Look at Colleges and Upward Economic Mobility in North Carolina

Completion of a college degree has long been associated with higher lifetime earnings, and many prospective students expect that their best chance for upward economic mobility lies in the classrooms of the most elite institutions of higher education. Much of our media and messaging reinforce the idea that the smartest, most successful people are those who attend or have graduated from such institutions. The message sent to prospective students is that, if you can gain access to these institutions (not easy for many), success is guaranteed.

The results of a new study by the Equality of Opportunity Project, however, suggest that while elite institutions provide increased chances of becoming rich as an adult, the largest share of students who move from the bottom to the top of the income bracket actually attended mid-tier, public institutions. The research explores links between college attendance and intergenerational mobility and finds that colleges rarely have both high rates of access to low-income students and high rates of postsecondary earnings success.

Using income (converted to 2015 dollars) from tax records of people born between 1980-82, Equality of Opportunity researchers calculated “access,” “success,” and “mobility” rates for each college in the U.S. that enrolled at least 100 students per incoming cohort. Here’s how they define each indicator:

  • Access rate: Percent of students who were born to parents in the bottom income quintile (household earnings of about $25,000 or less)
  • Success rate: Percent of students, among those born to parents in the bottom income quintile, who had earnings in the top quintile as adults (household earnings of about $88,600 or more at age 32-34).
  • Mobility rate: Percent of students, among all students at an institution, who were born to parents in the bottom income quintile and had earnings in the top quintile as adults.

Mobility Rate Calculations

The pattern in North Carolina is consistent with these broader findings across U.S. colleges:

  • Elizabeth City State University enrolled the largest percentage of low-income students (32.1 percent), but had only a small share of such students rise to the top of the income distribution as adults (12.5 percent)
  • Duke University enrolled the smallest percentage of low-income students (3.2 percent), but had the largest share of low-income students rise to the top as adults (50.4 percent).

If we look beyond mobility into the topmost quintile of income earners, we see that Elizabeth City State University students had a 34 percent chance and Duke University students had a 61 percent chance of rising to the top 40 percent (household income of approximately $52,000 or higher). If we look even broader at those who make it from the bottom into the top 60 percent (household income approximately $29,000 or more), the chances even out to 71 percent and 74 percent, respectively.

fig2fig3

 

 

 

 

 

Click on the images to enlarge

While it’s clear that the chances of becoming rich are higher at an elite university, if we look at odds of moving from the bottom into the top three quintiles, it is not necessarily the case that elite universities are the best vehicles for upward economic mobility or that they move the largest share of low-income students out of poverty. In fact, students who attended more elite institutions comprise a smaller share of those who made it out of the bottom than those who attended less selective colleges.

table2Duke University enrolled 48 low-income students with:

  • 24 moving to the top 20 percent
  • 29 to the top 40 percent
  • 34 to the top 60 percent

Elizabeth City State University enrolled 107 low-income students with:

  • 13 moving to the top 20 percent
  • 36 to the top 40 percent
  • 79 (more than double that of Duke!) to the top 60 percent

Despite the fact that Elizabeth City State University enrolled far fewer students, they enrolled more low-income students and more of these students rose to the upper 40 percent and 60 percent than Duke University. But, in looking at the extremes of access and success among low-income students, we are still missing an even larger point: low-income students who attended less selective, public institutions comprise a larger share of upwardly mobile adults. North Carolina Agricultural & Technical State University had more than double the number of low-income students rise to the top 60 percent as adults (188 students) than Elizabeth City State University, as did Fayetteville Technical Community College (160 students).

fig4fig5

 

 

 

 

 

 

fig6

fig7

 

 

 

 

 

 

 

Click on the images to enlarge

So, if you are able to get into an elite institution (and that’s a very big “if” for low-income students), they will likely offer you the best chance of reaching the very top. However, since postsecondary education is one of the primary vehicles for upward mobility, we need to be clear about which schools are facilitating these opportunities for more than just a select few. It’s tempting to see the success of low-income students at elite universities and look to them as models of mobility, but this outcome should come as no surprise given institutional and student-body access to relatively larger amounts of financial, social, and cultural capital. Instead, we should be taking a closer look at the mid-tier, public colleges that send the largest share of low-income students to the middle and upper income brackets, providing broader access to economic mobility–and with significantly fewer resources.

Considering the decline in public funding for higher education in recent years, we likely can’t rely on additional federal and state dollars to compensate for the resource divide between elite universities and mid-tier public colleges, but we can investigate what is unique to those institutions that are able to maintain both high levels of access and postsecondary success.

Inequity by Design

There is an endless supply of game metaphors for daily life. If we aren’t happy with our circumstances, we may be told that we all have to “play with the cards we’re dealt.” When something unexpected happens, we’ve been “thrown a curve ball.” Senator Cory Booker once cautioned against acting “…like you hit a triple when you were born on third base” to remind us that factors beyond our individual effort often play a role in our success. Despite our tendency to frame games as a simulation of daily life, the metaphors don’t all hold up. While many focus on strategies to secure resources necessary for survival and eventually abundance, the parallel ends there. The extent to which strategies and resources are equally accessible to all “players” are, by design, drastically different in these two realms. Monopoly players start with $1,500 and video game characters come pre-programmed with relevant attributes and tools. In the U.S, people do not begin with the same resources at birth or upon entering adulthood (e.g., guaranteed basic income). Unlike the world of games and gaming, what we start with is quite variable, depending on where we’re born and to whom.

When the stakes are low and the consequences of “losing” don’t influence our long-term livelihoods, it is relatively easy to agree on “fairness.” The high stakes game of living life, on the other hand, is more complicated. If we want to ensure that people have the opportunity to thrive and contribute in our society and remain actively engaged in the “game,” it is imperative that we do the hard work required to make the game board—our systems and society—more equitable.

Game Equity by Design

Both video and board games are increasingly popular. A recent Pew Research poll shows that about 50 percent of both men and women report that they play video games and many believe they are useful beyond entertainment value. Sixty-four percent agree that video games help develop good problem solving skills and 47 percent agree that they promote teamwork and communication. Given their growing popularity it’s no surprise that game designers go to great lengths to ensure that games are fun, which includes creating the proper balance of difficulty, complexity, fair competition, and enjoyment. They recognize that we are more likely to play (and purchase) games when we have a fair shot at winning or if our wins can be attributed to one’s own skill and ingenuity rather than some other external advantage. This balancing process involves constantly reworking game mechanisms that are too weak, too powerful, or too complex. It can take months, or even years to get this right and comes at significant cost in time and money to game designers. These mechanisms are scrutinized in the online gaming world, often invoking loud critiques by players; you may see claims that some element of the game is “OP” (overpowered) or “imba” (imbalanced) if it far outweighs the benefits awarded by other elements. It is also common to see cries that some feature has been “nerfed” (weakened) or needs to be “buffed” (strengthened).

If you think of our social systems as the board game, the design flaws are glaring. The long history of slavery, segregation, and stalled mobility in the South make the stakes especially high for low-income families and people of color. Securing high quality, reliable sources of food, housing, family-sustaining work, and healthcare while navigating the complex system of rules that dictate the distribution of those resources is difficult. The rules are always changing and those with the fewest resources often have the least say in how the game is played. Black WWII veterans, for example, were awarded the GI Bill alongside their white counterparts and promised low-cost loans and funding for education and housing. However, opportunity-inhibiting policies and other government-sanctioned barriers to success at the time, including the lack of schools admitting black students and the redlining that constricted their ability to purchase homes with higher property values, prevented many black veterans from reaping the benefits of their effort.

Life is (not) all Fun and Games

Many American households devote a significant amount of time to games as a form of entertainment; it reveals both our intense desire for fairness (and competition) and the ways in which these feelings drive our motivations and behaviors. We’ve all played games with sore losers and, while it is unpleasant, most of us accept milder forms of this type of reaction as an unfortunate, but common, part of the game.

However, we expect better “sportsmanship” in daily life when the stakes are higher, the chances more uneven, and the rules more complicated. When communities with the fewest resources play by the rules and lose, many are surprised when they challenge the rules of the game. Even when it is done peacefully, the efforts of these groups are met with a narrative that largely calls them “poor sports” or sees this as evidence of their lack of patriotism or work ethic. This is where an understanding and empathetic approach is more productive. The ability to step back and give credence to an experience different from our own can go a long way in identifying cracks in our system. Implicit bias can influence who we see as “sore losers” in our system. If the dominant group has a different set of OP or imba advantages, it may seem that “nerfed” complaints from others are unjustified; if we return to the rule book, we might see something different.

Game designers have a vested interest in all of the players; given the degree to which daily life is more complex than gaming, we should expect that it would take at least as much time (and surely much more!), effort, money, and collaboration to ensure fairness and balance. Our institutions should be designed in a way that makes the rules of the game explicitly and publicly stated, starting places shouldn’t determine final scores, and systems should be regularly re-evaluated to ensure that we all have a fair shot at success. It’s difficult to play by the rules when there is not a level playing field. Without this presumption of balance in the game of life, people will walk away from the game and we all lose—because our systems are at their best when everyone has a seat at the table.

Bootstraps vs. Blockades: Closing the Growing Racial Wealth Gap When Doing the “Right Thing” Doesn’t Work for Everyone

Conceptions of the American Dream often frame upward mobility as an ideal best accomplished through individual effort and perseverance. However, persistent racial disparities despite similar inputs demand a reconsideration of the story we tell ourselves about the degree to which success is available to everyone. A recent report using data from the Survey of Consumer Finances shows that, in 1983, white households held, on average, 5.3 times greater wealth than black households and 6.1 times greater wealth than Latino households. By 2013, those rates had increased to 7.7 and 6.7 times greater, respectively. This is a growth of 85 percent for white households, but only 27 percent for black households, and 69 percent for Latino households.

Source: CFED and Institute for Policy Studies. The Ever Growing Gap. August 2016

Source: CFED and Institute for Policy Studies. The Ever Growing Gap. August 2016

What is more striking, however, is that even if the wealth of black and Latino households had grown at the same rate as white households or even as drastically as those on the Forbes 400 list (a 736 percent increase in wealth between 1983 and 2013), their wealth would still not match the wealth held by white households. Black households would fall short by $181,000 and Latino households would fall short by $270,000. The report concludes that:

“If average Black family wealth continues to grow at the same pace it has over the past three decades, it would take Black families 228 years to amass the same amount of wealth White families have today. That’s just 17 years shorter than the 245-year span of slavery in this country.”

Catching Up: The Racial Wealth Gap is Unlikely to Narrow

In order to catch up to white families, black and Latino families would need to find a way to increase their wealth by over 700 percent. But traditional drivers of wealth creation do not produce as much value for people of color relative to their white counterparts (with the exception of Asians). For example, education has long been described as the great equalizer and, while there are significant economic returns to a college degree, there are large earnings and wealth gaps by race even among those who have earned postsecondary degrees. Similarly, homeownership is the largest expenditure for many families and represents a large portion of their total wealth, but non-whites are less likely to own their own home and, when they do, their property values are significantly lower. Given the extent to which homeownership is constrained by income and student loan debt (which is accumulated in larger amounts by non-white students), these racial disparities are not surprising.

Source: Georgetown University Center on Education and the Workforce. The College Payoff. 2011

Source: Georgetown University Center on Education and the Workforce. The College Payoff. 2011

 

Source: St. Louis Federal Reserve Bank. The Regional Economist. Unequal Degrees of Affluence: Racial and Ethnic Wealth Differences across Education Levels. October 2016.

Source: St. Louis Federal Reserve Bank. The Regional Economist. Unequal Degrees of Affluence: Racial and Ethnic Wealth Differences across Education Levels. October 2016.

Intergenerational transfers of wealth are another major contributor to wealth creation, but for black families, this strategy is much less successful. Black children born into moderately wealthy families (the middle wealth quintile), are more than twice as likely as white children to fall from the middle to the bottom quintile as adults (33 percent vs. 14 percent).

This trend is especially concerning in the South, with deep racial divides in economic opportunities and a long history of excluding racial minorities from sources of wealth accumulation. For example, the high degree of residential segregation found in the South further exacerbates the gap in wealth created by home ownership; neighborhoods with higher concentrations of non-white residents often have significantly lower property values. Coupled with lower rates of intergenerational income mobility, this suggests that an even greater challenge exists for black and Latino families hoping to build wealth and economic security.

New Outcomes Require New Systems

If black and Latino families are pursuing the same strategies for upward economic mobility as white families, why aren’t they reaping similar rewards? As we’ve written before, our history, particularly in the South, of economic dependence on forced and exploitative labor limited opportunities for wealth creation for those outside the economic elite, and particularly for people of color. Unequal investment in community resources that are beneficial to the entire population, like schools, transportation, and healthcare compounded these issues. This history and it’s continued legacy, apparent in current disparities, undermines a pillar of our proclaimed American ideal that upward economic mobility is available to all who are motivated, persistent, and hard-working. If we believe that closing the racial wealth gap is an issue best solved with strategies implemented at the individual level, what then, is a viable pathway for black and Latino families to catch up, if not through education, income, or homeownership? If we do not have a good answer to this question, we cannot continue to tell ourselves that the only thing standing between poverty and prosperity is a strong work ethic. Instead, we must commit to systemic changes at the institutional level, which focus on the racial disparities among major drivers of wealth creation and create an infrastructure of opportunity that is prosperous for everyone.