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Movin’ on up the Economic Ladder

Article by William McKenzie January 30, 2014 //   4 minute read

The most intriguing story of the last few days was the one about how it is as possible now for a child to move into the top 20 percent of income earners as it was three decades ago. The National Bureau of Economic Research released a report that shows Americans born in 1986 into the bottom 20 percent of household income had a nine percent chance of moving into the top fifth of income earners by their 20s or 30s. That rate is slightly better than a child born in 1971 into the bottom 20 percent of household income. They had an 8.4 percent chance of making it into the top 20 percent by their 20s or 30s.

To be sure, the report notes that the U.S. has low levels of economic mobility compared to other developed nations. Still, the fact that people can move up the economic ladder at the same rate of a few decades ago is welcome news. Very welcome news.

But the question is, what is the best way to help more people make that move?

That question has many answers, but developing the right skills is certainly a big one.

Another report I saw this week reveals that students who finish advanced math courses have much higher earnings a decade later. That is true even when researchers control for factors like family background. (This data comes from research done a decade ago for The Review of Economics and Statistics.)

So, something as basic as math skills can create economic mobility. And not just for white-collar workers. Welding programs at community colleges require serious math courses like algebra, geometry and calculus.

Oddly, the Texas Legislature took some steps back from the math front last year. For example, it de-emphasized Algebra II. (The State Board of Education held a hearing today to discuss renewing at least some of the Algebra II emphasis. I will report back later on its decision.)

The Legislature’s decision is risky because math skills help create more opportunities for Americans, which is what President Obama spoke about Tuesday night in his State of the Union address. In the policy world, this is about developing human capital, which sometimes gets overshadowed when critics argue that states are raising standards too high for kids.

Maybe the standards are increasing, but there is a payoff.  Researchers Heather Rose and Julian Betts put it this way in their study of math skills a decade ago:

“Students who take more advanced math classes learn skills that may apply directly to certain jobs. They may also learn logic and reasoning skills that indirectly make them more  productive. In addition, advanced math may also teach students how to learn. Finally, even if a job only requires basic math skills, a student who has taken advanced math has had an additional chance to master those skills.”

As we go forward on this blog, I am going to try to explain how elevating standards can pay off. If we believe all kids can learn, we should give them the chance to maximize their opportunities.

Image by K. Praslowicz