What Do We Know and What Should We Do About Social Mobility?. Lee Elliot Major
benefitted from the manufacturing industry never recovered, and still suffer high rates of joblessness to this day (Amior and Manning, 2018). As we have seen, the 1980s saw a big rise in the earnings gap between the richest and poorest as technological changes and weakening of collective bargaining yielded labour market gains to more educated workers. Those with less education increasingly lost out (Machin, 1996). The government's victory in the bitter miners’ strike of 1984–5 signalled profound changes in society: the diminishing power of the unions, and the loss of local jobs in large swathes of the country.
Behind these neoliberal reforms was the paradigm of trickle-down economics: free markets might lead to higher inequality, but the wealth at the top of society percolates down to make everyone better off. George W Bush, who became US President in 2001, later summed up the belief on both sides of the Atlantic. Free market capitalism, he proclaimed, was ‘the engine of social mobility – the highway to the American dream'.
The 1980s saw wage inequality rise rapidly as the whole distribution fanned out as each percentile above that below experienced faster wage growth, as shown in Figure 2.2. In the next two decades the anatomy of rising wage inequality altered. Wage inequality rose rapidly in the top half of the distribution, but narrowed in the bottom half. Salaries for lower earners benefitted from the National Minimum Wage introduced in 1999, as they experienced faster wage growth than those in the middle of the distribution. Middle earners also saw some gains through ‘spillover’ or ‘knock-on’ effects: they benefitted even though they were not targeted by the policy.
The occupational structure of work continued to shift. By 1991, the managerial and professional classes made up 35 per cent of the working male population and 27 per cent of the working female population. Where once there had been room for the working classes to climb up to, there were now increasing numbers of people concerned only with sustaining their lofty positions at the top of the social hierarchy. The 1980s also witnessed the wholesale cull of middle-management jobs as corporates downsized as part of managerial reforms (Heckscher, 1995).
Educational inequality also rose during this period. Elected in 1997, the New Labour government left intact the market-based policies for schools ushered in by the 1988 Education Reform Act, including published school league tables and school inspections alongside a national curriculum. A series of education initiatives followed, from Sure Start centres to new autonomous state schools (academies).7 There was more funding for schools and early years support. The aim was to close the gap between poorer children and their more privileged peers. However, by most measures there was only a tiny reduction in the attainment gap during 1997–2010. And the proportion of young people aged 16–18 who were not in education, employment and training (so called NEETs) remained stubbornly high.
This was also the era of higher education expansion. In 1992, former polytechnics became fully fledged universities. Continued expansion was made possible by tuition fees in England, introduced in 1998 and raised to £9,000 a year in 2012. In 1980, 9 per cent of 26–30 year olds were university graduates; by 2019, 45 per cent of 26–30 year olds had a degree.8
For all this expansion, the graduation gap between rich and poor widened. Figure 2.3 records the percentage of all young people who graduate from university by age 23 and compares those from the poorest fifth of families with those from the richest fifth (denoted as poorest and richest quintiles on the figure's legend). It also shows educational inequality in 1981, 1993, 2005 and 2017 defined as the graduation gap between richest and poorest quintiles. This metric of education inequality nearly trebled between 1981 and 2017, with the most rapid increases occurring in the 1980s and 1990s, but continually rising at a slower rate of increase up to 2017. After three and a half decades, the graduation rate for those from the poorest families (16 per cent in 2017) was still lower than the rate for those from the richest families in 1981 (20 per cent).
Figure 2.3 Degree acquisition and education inequality, 1981 to 2017
Notes: Degree completion by age 23 for all people, for the bottom and top 20 per cent of the family income distribution (respectively the poorest and richest quintile) when aged 16 and the gap between the top and bottom quintile in 1981, 1993, 2005 and 2017. 1981 and 1993 numbers based on the 1958 National Child Development Study and the 1970 British Cohort Study, taken from Blanden and Machin (2004). The 2005 and 2017 numbers are own calculations, respectively from the British Household Panel Survey and from Understanding Society data.
Increased numbers of disadvantaged students enrolling at universities were observed across the UK, despite the introduction of university fees in England in 1997. But the extra charges for degrees, required to fund the continuing expansion of universities, coincided with falling numbers of part-time and mature students. At the same time, the gap in entry rates between advantaged and disadvantaged students at the country's most selective universities, including Oxford and Cambridge, widened between the mid 1990s and 2011–12.
In 2004, Prime Minister Tony Blair spoke of creating a new meritocratic Britain ‘where people should rise according to merit not birth'. But a report for the Sutton Trust found that relative income mobility was lower for the generation born in 1970 compared with that born in 1958 (Blanden et al., 2004). Children who grew up in poorer homes in the 1970s and 1980s, and who were now adults, were more likely than the previous generation to end up relatively poor. The UK, at least according to the barometer of earnings, had become less mobile. Low social mobility was a product of educational and income inequalities. Like all politicians, Blair did not want to entertain the unpopular prospect of downward mobility: ‘This could create economic instability and social tensions', cautioned an internal memo to his Cabinet (Aldridge, 2001).
The Era of Falling Absolute Mobility (2008–20)
When he became Prime Minister in 2007, Gordon Brown set his sights on improving absolute mobility, likening it to a national crusade. However, the plan rested on improving people's wages. The global financial crisis of 2007–8 saw the UK's economic growth stalling. Workers went through the worst sustained period of real wage decline since Victorian times. The golden age of the 1950s and 1960s has turned into the bleak age of the early twenty-first century.
Falling absolute mobility at age 30 is shown in Figure 2.4. It charts the proportion of children who go on to earn more than (or as much as) their fathers did for successive generations. In the middle of the first decade of the 2000s, over half of 30 and 40 year olds exceeded or equalled their fathers’ earnings in real terms at the same ages (the peak was in 2006–7 at 64 per cent). But by 2019, this fell dramatically to 44 per cent. The majority now earned less. The dream of just doing better, let alone climbing the social ladder, had fallen. The reason for this is the slowdown in economic growth and extremely low real wage growth in the UK since the onset of the global financial crisis (Blanden, Machin and Rahman, 2020). The real wages of workers in sectors affected more by the huge exchange rate depreciation that accompanied the unexpected Brexit referendum result acted to further slow real wage growth, through the twin effects of slower wage growth in worse-hit sectors and higher price inflation (Costa, Dhingra and Machin, 2019).
Figure 2.4 Absolute intergenerational mobility, 1995 to 2019
Notes: Percentage of children whose real weekly earnings matches or exceeds that of the generation of their fathers when both are aged 25–44 (consumer price index used to deflate earnings), from the 1995 to 2019 Labour Force Surveys.
Source: Taken from Blanden, Machin and Rahman (2020)
In 2011, improving social mobility was announced as the ‘principal goal’ of the Coalition government's social policy (Cabinet Office, 2011). It oversaw real-terms cuts to school funding, but introduced a pupil premium grant to support disadvantaged pupils. At the same time it introduced a new levy to support apprenticeships to give a much needed boost to training in the workplace. David Cameron's advisers came up with a phrase for the Etonian Prime Minister to demonstrate his aspirations for a classless society: ‘It's where