Should we worry about the top 1%, or praise them?

Every Statistics Canada data release on the share of the economic pie going to the top 1% elicits strong opinions, the most recent being no exception. Do top earners elicit rather dishonourable sentiments such as envy that should be given little weight? Or do they challenge our need for community and inclusion, influencing the way we live our lives in more fundamental ways? Should we praise the top 1% or worry about them?

It depends. We would be in a better position to answer this question if we put aside questions of merit and just deserts and focused more on the sources of social mobility and the capacity to conduct policy to support it in an era of higher inequality.

Earnings mobility for children from the very broad middle—parents whose income ranges from the bottom 10 percent all the way to the cusp of the top 10 percent—is not tied strongly to family income. These children tend to move up or down the income distribution without regard to their starting point in life. This may be one element of insecurity among the middle class: in spite of their best efforts, their children may be as likely to lose ground and fall in the income distribution as they are to rise.

the-intergenerational-transmission-of-priviledge
Children raised by parents in the top 1% are most likely to grow up to be the next generation of top earners

The situation is very different for children raised by top-earning parents, as the above figure illustrates. It shows the intergenerational cycle of privilege, the percentile rank in adulthood of children raised by top-1-percent parents. This playing field is clearly not level. If it were, all the points in the figure would be the same, all lining up along the dashed horizontal line drawn for reference at 1 percent.

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