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Is the U.S. Still a ‘Land of Opportunity’?

January 10, 2012

The New York Times posed this question to a group of experts, Richard Florida, Isabel Sawhill, Timothy Smeeding, and five others, including me.

More specifically, they asked:

There is a growing consensus that it is harder to move up the economic ladder in the United States than in many other places, like Canada. Should more Americans consider leaving the U.S. to get ahead? Or can the U.S. make changes to be more of a “land of opportunity”?

You can review all the contributions, and the resulting commentary from readers on the Room for Debate section of the Times website.

My response was based in part on a paper I co-wrote with Shelley Phipps and Lori Curtis, “Economic mobility, family background, and the well-being of children in the United States and Canada”, that was recently published by the Russell Sage Foundation.

I’d be interested in your comments, particularly from Americans in Canada and from Canadians in America, on my take:

Most American and Canadian children of middle class parents don’t have their life chances noticeably determined by their family background.

But averages conceal as much as they reveal.

If I were a young American born to top earning parents I would want them to stay put: these high-achievers are not only rich but also well-connected and informed. They can give me the education, health care, housing, and other investments that would set me on a path to attend some of best colleges in the world. I would enter a labour market that rewards my education to a much greater degree than in Canada, and a tax system that lets me keep more of my earnings.

My odds of staying in the top 10% as an adult if I were a child born in the top 10% are better than 1 in 4. I’d have a better than 50% chance of staying in the top third. In Canada only 1 in 7 kids born to top earning parents become top earning adults, and almost 10% fall to the very bottom, something that happens to only 3% of rich American children.

A rich kid does well in the US; but not a poor kid.

If I were born to parents in the bottom 10% I would rather they were raising me in Canada. Being in the bottom 10% would mean less hardship: my family income would be greater; I would be more likely to be living with both of my biological parents; I would be visiting a doctor regularly; and I would spend more time with my parents, particularly my mother during my infancy as she would have almost one year of paid parental leave.

My physical and mental well-being, general happiness, and cognitive development would be noticeably superior even at a very young age.

My early education would be of higher quality because it is funded through progressive income taxes, not local property taxes. I would have access to a good quality college or technical training at relatively affordable tuition fees of $5,000 to $10,000 a year.

In short, the Canadian playing field is more level than the American, and my chances of moving into the middle class would be higher. If my parents lived in the US I would have more than a 1 in 5 chance of being stuck in the bottom 10% of the earnings distribution and a 50% of staying in the bottom third. In Canada I’d be less likely to remain in the bottom, and would have a 50% chance of reaching the top half.

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5 Comments
  1. Miles,

    I usually quickly glance over my daily NY Times Opinion email and see what Paul Krugman is ranting about (as much as an economist can rant) before deleting it, but the Land of Opportunity piece caught my eye on Monday.

    As someone who was born in Canada and emigrated to the US over 15 years ago, achieved things professionally and academically I likely never could have in Canada, and was recently the Chief Marketing Officer for a US-based educational nonprofit that has a presence across Canada (including UOttawa), I must agree with what you wrote within the confines of the NY Times discussion.

    Canada does level the playing field somewhat, but other countries such as Norway, Denmark and Sweden do that even more so, with tax rates that would likely give a US Republican or Canadian Conservative Party member conniptions.

    The average American would take umbrage to a society/government levelling things out, as he/she would see it as an affront to the American concept of pulling up your own bootstraps, working hard, and then getting a bigger house than his neighour. It’s all about personal liberty to a point; as the New Hampshire motto reads: “Live Free or Die.” But, it may be more to do with a less-caring winner-take-all society too prevalent in the US now, especially in Washington and on Wall Street: “the guy with the most dollars wins, so keep your hands off mine.”

    In your article, you did not address the creeping Americanization of Canadian society that is very apparent to me after being away for almost 2 decades. This includes the most extreme right wing political party (the Reform Party with a more palatable Conservative name) to rule a federal government in modern times (perhaps ever) that is bent on busting unions, reducing gun control and privatizing health care, and diminishing or destroying other things Canadians have held near and dear for decades. So, these differences between Canadian and US societies and economics may get much smaller.

    Canada’s biggest economic problem is that it pales in comparison in regards to innovation and productivity to many countries (even Liechtenstein has more innovation!… See http://awesome.good.is/transparency/web/1112/most-innovative-countries/flat.html ).

    If a young Canadian wishes to get ahead and compete with others globally, he or she will be forced to work outside the country. However, Canadians and Canadian companies don’t entirely trust these expats when they return, and treat them almost as interlopers, so many never return with their world knowledge of better ways of doing things. As a former expat told me today who returned to Canada from the UK 20 years ago, he got a job in Canada upon his return in spite of his foreign experience, not because of it. The best and brightest potential immigrants will not choose Canada in the future, and hence harm the country’s economy, due to its poor treatment of highly educated and experienced immigrants (doctors, nurses and engineers are prime examples of that). As an unemployed and educated Canadian recent immigrant from Spain wrote in an email: “It seems very strange to me that while the world is getting more and more globalized, experience in the ‘outside global world’ is seen as ‘irrelevant’ by Canadians.” I wrote a related August 2011 article about “Why are expat Canucks thought of as ‘less than Canadian’ when we return home, especially professionally?”: http://bit.ly/xXrkg0

    The consensus of my friends, family and acquaintances in Canadian business — and this has been confirmed by personal experience — is that hiring managers are intimidated by those with very competitive mindsets from outside Canada, whether they were born here or not. The “Canadian experience” and ”Canadian recency” excuses keep innovative immigrants and returning expatriates, respectively, from improving the way Canadian business does things.

    From my article linked above: “on average, Canadian companies are known to be risk adverse — many of them to a fault — which negatively affects the country’s productivity according to professional services firm Deloitte in a June 2011 report; it says Canada must expand beyond its resource base to ensure and enhance the level of prosperity enjoyed today, and the country has a very short window to take advantage before the US stabilizes — and it will. The majority of US companies, on the other hand, are known for the complete opposite, and have often come out on top due to that risk-taking mantra. Canadian companies — dismally behind in US risk-taking by 18% according to Deloitte — could arguably use at least a small injection of that ‘risk tolerance’ skill set that a successful expat brings in spades. Canada’s complacency and obsession with less productive work without innovation is self-defeating.”

    If Canada does not embrace a global mindset, it will forever be an economic afterthought (as it has been often, historically) when the world — and especially the US — recovers if it does not embrace global economics and trade, and keeps looking inward or only south of the border, as it largely does today.

    You may well be changing your mind in 20 years — or much sooner — and writing a very different column if Canada stays on this same track.

    • Thank you very much for your insights. This is a valuable perspective, and certainly there is a good deal to think about. I find the points you raise about productivity particularly pertinent, and are certainly relevant to a current (and longstanding) policy discussion. You might have an interest in a recent paper written by Don Drummond that expresses, in a different way, the same view: it seems that something in the structure of business, or attitudes, could be at the root of our slack growth in productivity, which is the ultimate determinant of overall economic well-being. The points about immigration are also well taken. I hope you feel free to drop back in on this blog and offer your views when appropriate. Again, thanks for taking the time to put these thoughts down and sharing them. best , m.

  2. Jonathan Blaine writes: ” The consensus of my friends, family and acquaintances in Canadian business — and this has been confirmed by personal experience — is that hiring managers are intimidated by those with very competitive mindsets from outside Canada, whether they were born here or not.”

    I agree Jonathan. While I don’t have statistical evidence to support my agreement I do have 35+ years of first-hand anecdotal evidence. Let me explain.

    Take an early morning business flight out of Heathrow to either Paris, Berlin, Madrid, Lisbon or any other big city in the world, and you’ll quickly find that your seat-mate can speak and read 5+ languages. Works equally the other way round. They’re likely to be reading a morning paper originating from their destination city. You can easily discover this if you can speak one or two languages other than English. (I’m good with German and OK with French.)

    Take a similar flight from Toronto to Montreal and the probability that your Torontonian seat-mate is bilingual is pretty low. Fly back the next morning to Toronto and your French Canadian seat-mate has a good command of both official languages.

    English speaking Canadians have this mindset that they already are superior and don’t need to know other languages to compete. They’ll tell you that the language of business is English….all over the world. They don’t need a second language. Our english speaking American neighbors have been living with Spanish for a long time… I don’t find many who speak spanish.

    You’ll also find, on your European flights, that highly successful companies on the continent have a very clear purpose. Purpose is a definitive statement about the difference you are trying to make in the world. They get it.

    American and Canadian companies are convinced that all you need is a “vision” and a “mission” statement. They don’t understand Purpose.but they will tell you that what you are sharing is a valuable perspective, and certainly a good deal to think about.

Trackbacks & Pingbacks

  1. In Canada, unlike the U.S., the American dream lives on | Barrie McKenna | The Globe and Mail « In brief. David Ing.
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