How Presidents Can Help Boost American Economic Mobility
ARI SHAPIRO, HOST:
The presidential candidates talk a lot about how they would create economic opportunity for more Americans. As part of our series with member stations A Nation Engaged, we're looking today at economic mobility. That is the ability to rise from one economic class to the next. You're more likely to do that if you live in a place where lots of people have college degrees. UC Berkeley economist Enrico Moretti says that's true even if you yourself did not go to college.
ENRICO MORETTI: Workers with low-level schooling tend to have much higher chances of moving up the income ladder if they grew up in a place like San Jose, San Francisco or Boston or Salt Lake City than communities in the South, especially Mississippi, Louisiana and other Southern states.
SHAPIRO: So would it make sense for the government to just pay low-educated people to move to some of these cities that have higher economic mobility?
MORETTI: If anything, existing economic policy discourage geographical mobility. For example, if you are on unemployment insurance and you're receiving a check because you are recently unemployed, you have very little incentive to move from a low-performing city to a stronger labor market - say, to move from Flint to a place like Chicago because the unemployment insurance doesn't really adjust for cost of living. So you have all the incentives to stay in a high-unemployment, low-performing city rather than moving to a stronger labor market that might cost you more.
SHAPIRO: When Donald Trump and Hillary Clinton talk about economic mobility, both of them focus on infrastructure, investing hundreds of billions of dollars on improving the nation's roads, bridges, waterways. And it seems like a lot of economists like that idea, too, as a way of creating jobs and facilitating business. Based on your research, would infrastructure investment also increase economic mobility?
MORETTI: I think infrastructure investment might have positive effects on economic growth. But I think that by far the most efficient way to increase economic mobility is to invest not in physical infrastructure, but in the human capital of the American workers, meaning their education and their skill. I think most economic studies point to the fact that the dollar spent, the public dollar spent, in investing in education as some of the highest return both for workers and for society relative to pretty much any other public investment we can make. So I think investing in pavement, in bridges, in roads might help, but investing in education, training and skills will help much more.
SHAPIRO: In terms of policy, though, it seems much more straightforward to fix a road than to fix an entire education system.
MORETTI: Well, studies point to the fact that a dollar invested in early childhood education has enormous economic return later in life. These studies follow kids who received better early education when they were 3 to 5. They follow them when they enter the labor market, then they measured the return - the economy returns in terms of higher earnings. These are substantial returns and are some of the better investment that we as a country can make in our future.
SHAPIRO: Do you see either candidate offering proposals that you think have the potential to really improve economic mobility in the U.S.?
MORETTI: The Clinton program includes a pretty robust investment in education - investment in childhood education, investment in K-12 education and investment in college education. And all these three types of investments are likely to have good effects on long-term economic growth in the U.S. The Trump economic plan centers on cutting taxes. I personally think that probably lowering taxes would have a positive effect on economic growth. Unfortunately, the Trump plan is contradictory in the sense that it both proposes cutting taxes but also holding constant national debt and annual deficit. And honestly, you cannot do both things. So I would say that in general, the Trump plan offers much less in terms of future economic mobility of the U.S. workforce.
SHAPIRO: Professor Moretti, thank you very much.
MORETTI: My pleasure.
SHAPIRO: Enrico Moretti is an economist at the University of California, Berkeley and author of "The New Geography Of Jobs."
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