The US Senate wonders about tax policy for the American Dream: why are schools failing to promote social mobility?

The American education system is of relatively more advantage to the relatively advantaged. As a result it does less than it could to promote opportunity.

In response to my July 10th testimony to the Senate Committee on Finance hearing on “Helping Young People Achieve the American Dream” I received some homework, a series of questions asking me for a good deal more detail. You can review all of the questions on my November 11th post, but a couple of questions posed by the Committee Chairman, Senator Max Baucus of Montana, speak to probably the most important driver of social mobility, and raise particularly important issues for public policies.

Senator Baucus asks the following:

Education is one of the most important factors in providing every American with the opportunity to succeed. Our education system is one of the reasons that we have one of the most productive labor forces in the world, but not everyone seems to be benefiting. Why is our education system failing to achieve the same level of mobility that we see in other countries? How could the education system here in America do a better job of promoting mobility and opportunity?

At almost $15,000 per student, America spends more on the schooling of its children than almost all other rich countries. However, what matters for mobility is not just the amount of spending, but how the funds are allocated.

The one sentence answer to Senator Baucus’s first question is: the education system does not promote mobility to the extent that it could because it is of relatively more benefit to the relatively well-to-do.

Source: OECD (2011), “How much is spent per student?”, in Education at a Glance 2011: OECD Indicators, OECD Publishing.

The higher levels of spending in the United States are driven by much higher spending on tertiary education. For every dollar spent on primary education three dollars are spent on tertiary education, the highest of all other rich countries.

Further, tertiary spending is dominated by private sources of financing, which makes up over 60% of all spending on this level of education. America, in other words, is choosing to make higher education more of a priority, and in a way that is of relatively more benefit to the relatively well-to-do.

The demand for high quality college education among the well-off expresses itself in a demand for high quality primary and secondary schooling that offers a gateway to a good college education.

And while America also spends more on primary education per pupil than many other countries, significant inequalities in parental resources express themselves in the structure of the system, leading to variations in financing, quality, and access in a way that does little to level the playing field.

The Organization for Economic Cooperation and Development summarizes its research on this issue in this way:

Currently the United States is one of only three OECD countries that on average spend less on students from disadvantaged backgrounds than on other students. … Moreover, the most able teachers rarely work in disadvantaged schools in the United States, the opposite of what occurs in countries with high-performing education systems. (page 30)

On this basis the response to Senator Baucus’s second question—“How could the education system here in America do a better job of promoting mobility and opportunity?”—might proceed in two steps: reforms to the financing of education, and reforms to the structure of the system.

Reforms to make education of relatively more benefit to the relatively disadvantaged should begin by replacing or in some way supplementing financing by local property taxes. This narrow base for school financing leads income inequalities between families to be echoed in inequalities in the nature and quality of schooling.

Whether it is politically feasible to undertake such reforms at the State level is not a question I can address, but perhaps there are federal funding formulae that could be put into place so that more funds are directed to less advantaged neighbourhoods, and paid for through a progressive mechanism.

These financial reforms should go hand-in-hand with making teaching a valued, more highly paid profession that over time attracts the best and brightest. It should also involve the use of school testing and evaluations not as a punitive instrument, but rather as a managerial tool for obtaining feedback, improving quality, and redirecting resources at the school level.

These financial and structural reforms should be the preconditions to reform on the structure of schooling that includes:

  • a focus on the early years, involving high quality full-day kindergarten and pre-kindergarten;
  • raising school-leaving ages and requiring high-school graduation;
  • the continued development of post-secondary technical/community colleges that offer employer-based training as an alternative to college education;
  • and for those who pursue a college education a program of income-contingent student loans in which repayments are based on having a job, and the level of income earned.

While the Senator is certainly correct to suggest that the education system is the most important public policy determining social mobility, its role also illustrates the influence of labour market inequalities and both the monetary and non-monetary resources that families have to invest in their children. Public policy needs also to be concerned with supporting families, an issue the Senator raises in other questions.

[ I have to admit that I do not know as much as I should about the design and financing of American education, so I would invite feedback on my response to Senator Baucus’s questions–particularly with regard to the Federal government’s role in financing the system. Here are the sources I am drawing upon:

Diana Furchtgott-Roth, Louis Jacobson, and Christine Mokher (2009). Strengthening Community Colleges’ Impact on Economic Mobility. Economic Mobility Project. Pew Charitable Trusts.

OECD (2012). OECD Economic Surveys, United States 2012. OECD publishing.

OECD (2011). OECD Education at a Glance 2011. OECD publishing.

OECD (2011). Lessons from PISA for the United States, Strong Performers Successful Reformers in Education. OECD Publishing. ]


28 thoughts on “The US Senate wonders about tax policy for the American Dream: why are schools failing to promote social mobility?

  1. If I can, as Dr. Foth might have said, try to unmuddify some of the fuzzification about US public education:

    Affluent areas in the US benefit from higher and more tax revenues being allocated to schools than others. Less affluent areas suffer due to the reverse. Local laws often need to be passed to increase tax support of education, and those are often not passed by the electorate. This is very different than current realities in Canada.

    Unlike Canadian education funds, which are doled out at the provincial level, US states have a much less hands-off approach, while the US federal Dept. of Education eats up a lot of the funds that, in Canada, would be spent by the provinces. Imagine Ottawa attempting to control what happens at the local high school in Riverview, New Brunswick, but that is the reality in the US. American school boards are often party politicized just as city councils are (Democrat, Republican), which is a foreign idea in Canada and many other countries. During this post-recession period, teachers have been laid off at the local level due to declining local tax funds. That would not occur in any Canadian city or town, but could, perhaps, provincially.

    US teachers’ pay is often tied to federally-mandated student test scores, and are perceived as a sledgehammer. In Canada, teacher evaluations are essentially meant to help the teacher; not to provoke fear.

    Canada at 5.2% spends 0.5% less of GDP than the US does (5.7%) for arguably much better results. Source:; United Nations Human Development Programme.

    Finally, while Canada and Canadians now largely agree on how important public education is, US communities, teachers, teacher unions, school boards and state legislatures are often at loggerheads about the money and direction, which often puts what should be society’s prime concern, the students, at the back of the school bus.

  2. Another contributor to resource inequalities in education are growing residential segregation (which accentuates resources disparities) and increasing SES and racial stratification between schools even within districts (the latter may be in part due to school choice and charter school schemes).

    It’s important to look at curriculum too, especially with the continued prevalence of within-school tracking. Nationally representative surveys of teachers as part of the National Assessment of Educational Progress suggests that as many as three-quarters of eighth grade students are assigned to classrooms based on their perceived level of ability, and about a third of fourth graders (!). Research at the education policy center I work at under Bill Schmidt at Michigan State University shows pretty dramatic variation in the rigor of instructional content offered to students. Cogan et al. (2001) found big differences in course content within the same school and grade level between classes with the same course title. These curricular inequalities are often associated with SES and racial inequalities.

    You might want to take a look at Duncan and Murnane’s “Whither Opportunity,” an edited volume that examines SES inequalities in education pretty exhaustively.

    (This is my principal area of study in ed policy, so I can go on all day – let me know if you need more!)

    1. Thanks for this, and for the references. I found the comments about tracking interesting, and something I had not thought of in the American context. I assume this is implicit, done within the school by teachers and principals? Or are there explicit administrative rules and policies in place at district or broader levels?

      1. Whether there is explicit tracking or not, the battleground for social mobility is middle school, as I understand. By the time students reach high school, their course is pretty well set: college, high school graduation, or dropout.

      2. I’d be curious to know what makes you say that, whether it is personal impression and some experiences you’ve witnessed or other evidence. I also wonder how much of this is related to experiences during the early years, a developmental phase that many academics have emphasized. thanks, m.

      3. @MilesCorak

        About middle school being the battleground, my view is mainly based upon reading. True, the research I read goes some years back, but I doubt if things have changed much, given No Child Left Behind, teaching to the test, the focus upon college, etc. Also, it fits with my experience. Certainly by sophomore year the kids could tell who was college bound, and who was likely to drop out. Also, the role of teacher expectations is well known.

        If things have changed for the better, great! But even so, I expect that middle school is worth much more attention than it gets. Acorns and oaks. After all, most adult have trouble with 7th grade math.

  3. Yes, most of the tracking is implicit. Its explicit use is pretty unfashionable now, but whether you look at the national data or even just ask teachers, they take it for granted that you assign kids to classes by ability.

    One thing that’s odd is that in international studies the U.S. is usually defined as a no-track country, which in reality it very much is. The U.S. also has a stronger relationship between SES and school outcomes than other OECD nations, but because it’s defined as no-track the research may be underestimating the effects of tracking on inequality of outcomes.

    One of the big problems with international assessments (and the NAEP for that matter) is that they aren’t really designed to look at variation between classrooms, which makes it very difficult to get a handle on within-school variation. The sampling is either done school wide with no teacher id’s (like PISA) or (like TIMSS) they only sample 1 or 2 classrooms.

  4. As mentioned already, the U.S. system of education is strong linked to property tax base. Here is a good link that provides avenues for additional references.

    But the problem is further compounded by extreme levels of geographic segregation in the U.S., as well as their municipal structures. Think of how Los Angeles is structured with its many many many municipalities (typically shaped around a homogeneous income class) compared to Toronto (or even old Metro Toronto).

    Interestingly, health geographers Nancy Ross (McGill) and Jim Dunn (McMaster) examined the relationship between U.S. income inequality, geographic segregation/municipal funding and health/mortality. Their thesis was the inequitable structure of U.S. municipalities and funding leads to inequalities in public goods and services (of which education is one factor) which influences health inequalities. The notion is that universality in public goods and services (quality and availability) helps moderates income inequality (earnings). Logic and the evidence supports the notion.

    Income distribution, public services expenditures,and all cause mortality in US states

    Click to access Burgess_Dunn2835.pdf

    Why digress into health and income? Because it sets a bigger message. Education is clearly a critical resource, but it just one element within a wider social context. So even the use of education grants to try to equalize funding disparities in primary education leaves unaddressed the larger social context (e.g., quality libraries, public parks and other public goods). The inequalities in how US municipalities are politically shaped and organized influences far more than just education, it shapes the local social environment.

  5. One person who has written a lot about funding disparities and their effects is Bruce Baker who blogs at (School Finance 101).

    My problem is the belief that education will reduce social mobility. While an educated populace is a good thing, as long as there are poorly-paying jobs, we will have impoverished workers. It seems that the issue has far more to do with labor power, minimum wages, competition among and for workers, and so on.

    1. Fair enough. I certainly don’t want to be interpreted as suggesting that there is a single driver. The labour market, and the structure of labour market institutions like those you are underscore, as play a role. I’ll to clarify this point in future posts.

  6. If I may add one thing. Public K-12 education is just one piece of this puzzle. American social and generational mobility issues extend to higher education and its quickly accelerating costs and debts that are, by far, the highest per student in OECD countries. Outstanding student loans have now exceeded $1 Trillion. Defaults are increasing.

    A Bachelor degree is now, essentially, the bare minimum to get a good job — what a high school diploma was 20 years ago — but the attached price tag in the US places huge walls in the way of mobility for many. Even so, as James Bradshaw reported in the 9/25/2011 Globe and Mail: there is “no firm guarantee of a return on investment in that expensive piece of paper,” the university degree. This is a universal reality in both the US and Canada, but the financial risk for Canadians is much less. There are Pell grants for some people who are essentially poor, but the maximum grant ($5550 annually) does not pay for all expenses, nor even all of the tuition tied to attending most universities, even public state schools.

    I attempted to flesh out this issue in an article a year ago:
    Defaults on college & university student loans: The next US economic bubble to burst?

  7. Interesting post. I think the tertiary spending should be looked at in more detail. Research by the Delta project suggests that increases in higher Ed spending are being driven by increased research spending and non-instructional services. Both of those raise serious issues about the efficacy of the current higher Ed model and the sources of accountability in the system.

    Click to access Delta-Spending-Trends-Production.pdf

    I’d argue spending pattern should significantly reversed. James Heckman’s work on the ‘Technology of Skills Formation’ makes a persuasive case that we would better served more heavily investing in early childhood education.

  8. One might add, is it a coincidence that the countries with the most class differentiated and class biased university systems – U.S. and Ivy League, U.K. and ‘Oxbridge’, France grandes écoles – also happen to be three countries with least income mobility?

    The Effects of Elite Recruitment on Social Cohesion and Economic Development

    Click to access 46837524.pdf

  9. Looks like educational inequality mirrors income inequality.
    When we as a people decide we truly want to solve the latter we will also solve the former, but not until then.

    1. Thanks for the feedback. Education is certainly important, but I don’t think social mobility can be changed by focusing on just one thing. In the coming posts—and also some of the previous ones on this topic—I will suggest that it is the interaction of public policy, labour markets, and families that all play a role. Education is particularly important in the US (and also the UK), but I don’t think it can be the whole story. best, Miles

  10. I agree that education is only one of the related issues, albeit a very important one. There are many other societal forces at play; many of them interconnecting. As someone who’s lived in both countries (and voted in both), I’ll be following with great interest the rest of your “homework.”

  11. Hi Miles,

    I’ve been lurking on your site for some time, and I really appreciate your calm and even-handed approach to what have become highly politicized issues. It’s really refreshing to read your blog entries.

    Jonathan makes a point that I don’t think can be overemphasized: the post-secondary education system in the US is a key piece of the puzzle underlying the lack of mobility. I’ve lived in both countries as well, and it can be quite frustrating discussing education policy with Canadians. Like many policy issues, Canadians REALLY don’t know how different the system is in the US, and they often don’t want to. Here are links to tuition rates for a few universities in Boston, where I lived. These rates are pretty standard. Note where it says “per semester” (4 months) vs. “per year”, as $20 000 per semester would equal $40 000 per year or $60 000 per extended year (summer study included):

    Add to this the health insurance fee, laptop/equipment fees, lab/facility fees, and all the other fees. Then add in residence. If you don’t want to live in residence, add in an apartment (If you’re very lucky, you might find a room, not a full apartment, for $1000 a month in Boston. A private apartment would run approx $2000 in the lower ranges to $4000 + for a nice place.) Then add in toiletries, groceries, school textbooks, unforeseen life expenses, etc.

    When I was there 10 years ago, people were prepared to graduate with $100 000 – $120 000 in debt. It’s now up to $200 000 – $300 000 if you don’t have scholarships. Scholarships are rarely full tuition. A high-achieving student may be able to piece together a combination of scholarships and grants, and only graduate with a $40 000 – $60 000 debt load….this would be an enormous achievement.

    Those universities I referenced don’t have separate “resident” and “international” tuition the way we do in Canada. Everyone pays those rates. The only schools with “resident” tuition are state schools, which still normally cost far more than Canadian schools.

    Student loans in the US are dispensed by for-profit banks, but guaranteed by the government. Student loans do not have bankruptcy protection in the US. Yep, read that last sentence again 🙂

    Here’s how this plays out in real life:

    – student is told by family that university is not an option: they must go

    – student is counseled by financial aid office to take out as many student loans as possible

    – student graduates with a 5 or 6 figure debt load, 3 – 6 month grace period before loan payments start

    – loan payments start: $1000 + a month

    – student takes first available job (if they’re lucky) to meet crippling loan payments

    – in this case, student is not counted in unemployment statistics, since they are, technically, employed

    – if no jobs available, student applies for “loan deferment” – interest doubles, triples, quadruples the balance of the loan while student searches for job in current job market

    – in either situation (job or no job), the student puts off traditional life milestones: marriage, family, home purchase, travel – because of the massive loan payments

    – in either situation, the loan payments effectively render the student unable to usefully contribute to the economy

    This is certainly just one piece of the puzzle in the US right now, but it’s a big piece. I think if Canadians could wrap their heads around paying $50 000 a year in undergrad tuition, there would be less political bickering here about which provinces pay their “fair share” for university….since no one does. Education in all Canadian provinces is heavily subsidized, and we see the benefits in at least some greater degree of mobility.

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