Published: April 12, 2007 02:53 pm      

The new U.S. economy: Rags to...rags

When she learns that Romeo’s last name is the dreaded Montague, Juliet Capulet asks plaintively, “What’s in a name? That which we call a rose/ By any other name would smell as sweet.” But Shakespeare’s star-crossed lovers would soon tragically discover that in Renaissance Europe, one’s name is one’s destiny.

It still is.

American social and economic mobility had a bright, shining moment in the middle of the 20th century, but it is retreating with accelerating speed.

Where once America was about working one’s way from the mailroom to the corner office; where once it was a place where Thomas Jefferson’s “natural aristocracy” of virtue and talent could flourish; where once existed a Horatio Alger mecca; now lives another parable: about a wastrel who indulges in frat-boy hijinks at Yale, uses family connections to escape Vietnam, fails at business opportunities that come along thanks to friends of Dad, drinks to excess until 40, then becomes president.

If you have the right family name, you’ve got chances galore in life. For everyone else, well, let’s just say that I doubt HarperCollins is offering your 25-year-old daughter a reported $300,000 for her first book, like it has for Jenna Bush’s UNICEF experiences.

America is still living off its reputation as a meritocracy where working hard can earn you a piece of the American Dream, but the economic realities are telling a different story.

Income inequality is now the worst it has been since the Depression. In 2005, the last year that figures are available, the top 1 percent of Americans saw their average incomes rise to an average of $1.1 million, up 14 percent in one year, while those in the bottom 90 percent had their income fall. Today, America’s wealthiest 300,000 people receive as much annual income as the bottom 150 million.

There is an emerging “apartheid economy,” as described by Harvard economist Richard Freeman, in which the upper and upper-middle classes live lives that are completely different from those struggling at the other end of the market economy.

The danger is not just the despair that can descend on those who are left behind, but the anomie that can infest society. Why play by the rules when the rules are stacked against advancement? Today, more than 3 percent of our workforce-age men are incarcerated. Maybe they made the calculation that selling drugs or stealing was a better bet than the low-wage, no-mobility jobs they could get.

This is not to excuse the choice, but to identify one factor in an incarceration rate that is five to eight times higher than other industrialized nations. In much of Western Europe, income inequality is tamped down by a tax system that is used to invest in widely beneficial social programs, such as universal health care. Average people don’t feel quite as on their own.

The experts who study the income gap say it is really a skills gap. They point out that more educated and highly skilled workers have not suffered the way low-skilled workers have. This is true to some degree, but the statistics also show that 65 percent of college graduates have enjoyed lower wage gains in today’s economy than they would have under their parents’ economy.

The kinds of workers who used to boast that they graduated from “the school of hard knocks” and did well, now have little to show for their years of toiling for the same employer.

Today’s workers are viewed as expendable cogs to be outsourced and pared. Circuit City just announced that it will fire 3,400 of its highest-paid clerks, not because of poor performance but because they are earning too much. (The wages were reportedly between $8 and $15 per hour.)

Where is the outrage over this outrage?

According to “Divergent Paths: Economic Mobility in the New American Labor Market,” a book authored by a group of researchers and statisticians, “90 percent of white male workers are doing worse now than they would have done 20 years ago.”

Like Latin America, family background and connections are becoming the overriding key to success in this country, while rigidly class-conscious Europe is starting to look more like we used to look. According to Canadian economist Miles Corak, who edited a book on economic mobility in Europe and North America, many of the rich countries of Europe have overtaken the U.S. in terms of rising prosperity relative to one’s parents.

In the United States, it is now estimated that somewhere between 45 and 60 percent of parental affluence is reflected in their children’s life outcomes. For a big chunk of our citizens, we seem to be on the verge of permanently stamping one’s class on one’s birth certificate.

Just ask the Bushes.

Robyn Blumner is a columnist for the St. Petersburg Times. She can be reached at blumner@sptimes.com