It's Wednesday and I have comments on a few items today. I haven't been able…
Dutch economist Jan Pen wrote in his 1971 book – Income Distribution – that “Parents are advanced secret agents of the class society”, which told us emphatically that it was crucial that public policy target disadvantaged children in low-income neighbourhoods at an early age if we were going to change the patterns of social and income mobility. The message from Pen was that the damage was done by the time the child reached their teenage years. While the later stages of Capitalism has found new ways to reinforce the elites which support the continuation of its exploitation and surplus labour appropriation (for example, deregulation, suppression of trade unions, real wage suppression, fiscal austerity), it remains that class differentials, which have always restricted upward mobility and ensured income inequality and access to political influence persist, are still well defined and functional. This was highlighted in a new report published by the the American Economic Policy Institute (EPI) – Early Education Gaps by Social Class and Race Start U.S. Children Out on Unequal Footing (June 17, 2015). Not much has changed it seems for decades.
The Report summarises the “main findings in Inequalities at the Starting Gate: Cognitive and Noncognitive Skills Gaps between 2010-2011 Kindergarten Classmates ” which:
… explores gaps by social class and race/ethnicity in both cognitive skills-math, reading, and executive function-and noncognitive skills such as self-control, approaches to learning, and interactions with teachers and peers.
A more detailed discussion including methodology etc is – HERE – and you might like to read that document if you are curious about the underlying literature that reinforces the hypothesis development and research design.
The study “refer to these skills gaps as gaps in school readiness”.
The dataset is the rich “National Center for Education Statistics’ Early Childhood Longitudinal Study, Kindergarten Class of 2010-2011 (ECLS-K 2010-2011)”, which tracks kids who began “kindergarten in 2010”, and “seeks to determine how much social class matters, both absolutely and relative to other factors, such as race and ethnicity.”
The sample is stratified by:
1. Individual characteristics – ethnicity, gender, disability incidence.
2. Family characteristics – living with two parents or not, language spoken, US born, living in poverty, SES status – in quintiles, low, low-middle, middle, high-middle, high.
3. Early education practices – pre-K care, centre-based or not, other parental enrichment activities.
The aim of the study is to:
… focus on the association between these characteristics and children’s readi- ness for school.
The broad results of the research are:
1. In America, “social class is the single factor with the most influ- ence on how ready to learn a child is when she first walks through the school’s kindergarten door.”
2. “Low social class puts children far behind from the start. Race and ethnicity compound that disadvantage, largely due to factors also related to social class.”
3. “A substantial minority are so far behind that school success will be very hard.”
In other words, the “large share of children entering … [US] … schools from disadvantaged context” are pretty much doomed from the start as a result of who their parents are and the resources the parents have at their disposal.
That is what Jan Pen meant when he said “Parents are advanced secret agents of the class society”.
It also means that as fiscal austerity has further pushed people towards to the bottom of the income distribution that increasing numbers of children will inherit the disadvantage of their parents and it becomes a vicious circle of poverty and alienation.
The results are presented in terms of the five quintiles based on ‘social class’, which is measured in terms of “socioeconomic status (SES)”, which is a composite index that of five factors – “parents’ (or guardians’) educational attainment, occupational prestige score, and household income”.
They measure skills such as reading, maths, memory, cognitive flexibility, self-control, approaches to learning, social interactions, closeness to teacher, eagerness to learn, persistence, focus (attentiveness), creativity, etc.
The Report produces a range of graphics which arrange the quintile groups or ethnic groups in terms of a athletics race starting line to provide a visual depiction of the relative status of each across the different measured skills.
I will leave it to you to investigate all the different presentations.
The following graph shows the “Differences in cognitive skills on the first day of kindergarten” that the study found between these quintile groups, arranged in terms of a athletics race starting line. The cognitive skills include reading, maths ability etc This graphic is in terms of reading.
The study concluded that:
Children in the highest socioeconomic group (the high SES fifth) have reading and math scores that are significantly higher – by a full standard deviation – than scores of their peers in the lowest socioeconomic group.
That is a huge statistical difference.
They also find that:
Black and Hispanic ELL children begin kindergarten with the greatest disadvantages in math and reading, due largely to links between minority status and social class
But the gaps between the ethnic groups (Asian, White, Hispanic, Black) “are much smaller than gaps based on social class.” The race gaps “shrink significantly” when social class is controlled for.
So it is socioeconomic status rather than race which “largely explains gaps that appear to be due to race”.
This raises the importance of choosing controls in statistical studies. Many studies in economics, for example, only consider individual outcomes in terms of so-called ‘supply side’ factors (education, age, gender etc) and ignore ‘demand side’ influences. They then conclude that individuals are to blame for their own outcomes (usually low education) when if the state of the economy (demand side) is taken into account, the supply side influences, often become insignificant.
For example, in this study, once race is controlled for by SES and “a set of parenting characteristics and practices”, the “gap in reading between black and white children disappear almost entirely”.
The study also finds that:
Low social class also affects children’s social, behavioral, and other noncognitive skills
Thus students from poorer, disadvantaged backgrounds are behind in terms of “self-control and approaches to learning” and “social skills”.
Why do these gaps occur at such an early age?
The single most influential determinant is the “child’s social class or socioeconomic status” which operates in two ways. It influences the “environment in which a child grows up”, the “participation in early childhood programs, the quality of those programs, and even the type and quantity of instructional and motivational activities that parents engage in with their children and that affect child development and school readiness.”
It also leads to spurious correlations between ethnicity and education gaps. The authors emphatically conclude that:
… this attention to conditions in which children live has, for the most part, disproved the misleading theory that innate or genetic factors partly explain the gaps
In other words, if you are black and grow up in a high SES household you will tend to be at the start of the queue.
Children who “live in concentrated poverty” have limited “role models”, a more polluted natural environment (which impacts on neurobiology), higher levels of stress, and lower quality pre-school opportunities.
The learning problems inherited in childhood then are carried into less teenage and early adult development – “skills beget skills – so that if the “basic, foundational knowledge” is impaired it is very hard to “to acquire skills in the future”.
The adult then experiences a life of job instability, low pay, long unemployment spells if there is a entrenched unemployment due to macroeconomic policy failure, and other characteristics of disadvantage including poor health, higher incidence of mental illness, etc.
Which leads me to discuss the latest bias towards fiscal austerity.
Fiscal austerity increases inequality and suppresses dynamic forces in labour markets that promote upward mobility.
Recessions impact on a number of economic aggregates in addition to the most visible impact – the rise in unemployment. The great American economist Arthur Okun coined the term The Tip of the Iceberg and I borrowed that for the title of a book I co-authored in 2001.
The point is that the costs of recession and the resulting persistent unemployment extend well beyond the loss of jobs. Productivity is lower, participation rates are lower, the quality of work suffers and real wages typically fall.
The facts associated with the current downturn are consistent with this general model.
However, within this context, Okun outlined his upgrading hypothesis (in the 1960s and 1970s) and the related high-pressure economy model, which provided a coherent rationale for Keynesian demand-stimulus policy positions.
Two references are Okun, A.M. (1973) ‘Upward Mobility in a High-Pressure Economy’, Brookings Papers on Economic Activity, 1: 207-252 and Okun, A.M. (1983) Economics for Policymaking, Cambridge, MIT Press.
Okun (1983: 171) believed that:
… unemployment was merely the tip of the iceberg that forms in a cold economy. The difference between unemployment rates of 5 percent and 4 percent extends far beyond the creation of jobs for 1 percent of the labor force. The submerged part of the iceberg includes (a) additional jobs for people who do not actively seek work in a slack labor market but nonetheless take jobs when they become available; (b) a longer workweek reflecting less part-time and more overtime employment; and (c) extra productivity – more output per man-hour – from fuller and more efficient use of labor and capital.
The positive side of this thinking is that disadvantaged groups in the economy were considered to achieve upward mobility as a result of higher economic activity. The saying that was attached to this line of reasoning was “all boats (large or small) rise on the high tide”.
Okun’s (1973) results are summarised as follows:
The most cyclically sensitive industries have large employment gaps, and were dominated by prime-age males, offered high-paying jobs, offered other remuneration characteristics (fringes) which encouraged long-term attachments between employers and employees, and displayed above-average output per person hour.
In demographic terms, when the employment gap is closed in aggregate, prime-age males exit low-paying industries and take jobs in other higher paying sectors and their jobs are taken mainly by young people.
In the advantaged industries, adult males gain large numbers of jobs but less than would occur if the demographic composition of industry employment remained unchanged following the gap closure. As a consequence, other demographic groups enter these ‘good’ jobs.
The demographic composition of industry employment is cyclically sensitive. The shift effects are in total estimated (in 1970) to be of the same magnitude as the scale effects (the proportional increases in employment across demographic groups assuming constant shares).
This indicates that a large number of labour market changes (the shifts) are generally of the ladder climbing type within demographic groups from low-pay to higher-pay industries.
So prior to the neo-liberal onslaught and during the period that governments were cogniscant of their responsibilities to maintain full employment (and actively used fiscal and monetary policy to attack high unemployment relatively quickly), a recovery reversed the damage caused by the recession.
The evidence supported the proposition that when the economy is maintained at high levels of employment, workers in low paying sectors (or occupations) also receive income boosts because employers seeking to meet their strong labour demand offer employment and training opportunities to the most disadvantaged in the population. If the economy falters, these groups are the most severely hit in terms of lost income opportunities.
The upgrading thesis also focused on the mapping of different demographic groups into good and bad jobs. The groups who experience the greatest relative employment gains when economic activity is high are those who are stuck in the secondary labour market, typically, teenagers and women.
While these groups were proportionately favoured by the employment growth, the industries with the largest relative employment growth are typically high-wage and high-productivity and employ mostly prime-age males. Expansion is therefore equated with ladder climbing whereby males in low-pay jobs (as a result of downgrading in the recession) climb into better jobs and make space for disadvantaged workers to resume employment in their usual sectors. In addition, favourable share effects in predominantly male industries provide better jobs for teenagers and women.
So there were many benefits from growth which spread out across rising participation, rising wages, rising hours of work, rising employment and falling unemployment.
But the downside is that the iceberg takes a long time to melt if (a) it is large; (b) if the recovery is not robust enough; and (c) if the policy stimulus is poorly designed and targetted. Recovery alone is not sufficient. Real GDP growth has to be consistently strong for some years before the iceberg melts and the upgrading bonuses accrue.
Please read my blog – The aftermath of recessions – for more discussion on this point.
The full employment era (roughly 1945 to the late 1970s) to some extent, therefore, eroded the worst effects of the class differences that we discussed earlier.
However, once full employment was abandoned and governments adopted the austerity bias that is now chronic, The upgrading benefits that used to accompany growth have been hijacked by the rich and the vast majority of the population now miss out.
In part, this is due to the increased casualisation of the labour market, the suppression of real wages growth, the attack on trade unions, and the shift away from high productivity job creation towards the FIRE sector, which is a largely unproductive sector.
The neo-liberal attack on the role of government in ensuring policy advances the well-being of all has changed the way the distributional system operates – with workers now finding it harder to gain access to real income growth despite contributing more per hour (productivity growth stronger).
Under these circumstances, the old class screening and channelling that the schooling system has provided for the Capitalist system is intensified and inequality accelerates.
The Report argues that early intervention is crucial if societies are to reduce the “poverty-related early skills gap”.
They suggest a range of interventions (homevisits by nurses, quality child care, prekindergarten participation) etc. These are seen as “mitigating” the effects of poverty rather than solving (reducing) it.
They realise that “Poverty poses such huge challenges to life success that mitigating its effects is insufficient.” In this context, we are back to the usual themes of this blog.
There is a need to ensure that the statement “all boats rise on a high tide” is an accurate reflection of the dynamics of the system. That means we have to allow those dynamic upgrading effects to work again and we have to prevent the elites monopolising the gains of growth.
That means we have to (the Report makes the same recommendations):
1. “Raise wages” – “starting with the federal minimum wage” to ensure workers fully participate in the productivity gains of the economy and that the concept of the working poor is eliminated. No one who works should be below the poverty line.
2. “Boost employment” – there has to be a return to the commitment to full employment. People from “Low-SES families are particularly vulnerable in times of high unemployment” and a true full employment state ensures these families always have adequate income. The introduction of a Job Guarantee should be an essential aspect of that commitment.
3. “Sustain the social safety net” – there will be times that people need further income support – sickness, disability, age, etc. There is never a reason to deny families (and the children within them) access to an adequate income that allows the family to avoid social alienation.
There are a range of other suggested strategies relating to immigration, prison reform and ethnic segregation, which maybe US-centric.
But the three I have listed apply to all economies and once those structures are restored to their proper levels, then the poverty problem will be very small and easily dealt with.
That is enough for today!
(c) Copyright 2015 William Mitchell. All Rights Reserved.