Increasing economic participation with education and new business creation: The best path to upward mobility

Income inequality, declining middle-income jobs, and upward mobility have all featured prominently in U.S. politics this year. Earlier this year, we cited research from the Brookings Institution that showed 

Americans are against people being stuck in poverty, but are much less worried about the persistence of relative affluence. In fact, the ideal rate of stickiness at the top closely mirrors the real data.

To which we added, 

In other words, the preferred strategy to combat poverty and reduce inequality involves improving the life and career prospects of those currently “stuck in poverty.” It’s an opportunity agenda, not a redistributionist agenda.

And opportunities abound for those prepared to capitalize on them. The recent Washington Roundtable-Boston Consulting Group report identifies 740,000 new job openings in our state in the next five years. We wrote about it here. The key: Most of those jobs will be filled by workers with postsecondary training and education.

At New Geography, Ryan Streeter today writes of the importance of increasing economic participation.

The problem in America today is that some people are participating in the growing, opportunity-rich parts of the economy and others are not. It is the inequality among the 99 percent, not the 1 percent, that matters most in America. MIT’s David Autor has calculated that growth in income between the top and bottom of the 99 percent between 1979 and 2012 was four times greater than the redistribution of income from the entire 99 percent to the top 1 percent.

The so-called “hollowing out” of the middle class can be understood in these terms. As Pew has reported, of the 11 percent decrease in middle-class households between 1971 and 2015, 7 percentage points are the result of families moving up and out of the middle class. Of the remaining 4 percent that moved down, a large share can be explained by the growth in immigrants working in low-wage jobs. 

The best way up for people is — and always has been — the capacity to participate in the economy as an employee, entrepreneur, or owner.

The policy objective, then, must be to increase individuals’ capacity to participate. Streeter identifies three ways: high school certification paths in high-demand skills, apprenticeships, and increasing the rate of new business creation. His short article captures much of the larger Opportunity Washington, particularly our Achieve (education) and Employ (economic vitality) priorities. 

Expanding opportunity also means getting the most out of the state’s K-12 education system, a theme explored in The Lens by TJ Martinell. He reviews the challenge before the 2017 Legislature with respect to education funding.

The state’s biennial K-12 operating funding has grown from $13.4 billion to $18.2  billion, according to a brief to the high court from Washington State Attorney General Bob Ferguson. However, outcomes have remained middling, and accountability measures will be key as the legislature finalizes a McCleary compliance plan in 2017 to assign an even greater share of K-12 support to the state…

National Assessment of Educational Progress (NAEP) data found that less than half, and typically closer to just 40 percent, of Washington fourth and eighth-graders score “proficient” or better in math, reading, and science. Washington public high schools in 2015 had a 78 percent graduation rate, while the national average was 81 percent.  A recent Washington Roundtable report found that less than a third of Washington high school students go on to earn a postsecondary credential by age 26.

Martinell interviews several key players in education policy. The short article is worth your time.

Finally, in news of postsecondary education, the Seattle Times reports on an encouraging financial aid experiment undertaken by Seattle University.

The program, which was cited in a recent study by the education consulting firm EAB, offers $1,000 in incentive pay to low-income students who earn a strong GPA in their first quarter at the school. And students who keep those grades high continue to receive the extra money in subsequent years.

…Krawczyk said about 90 students last year were eligible for challenge grants, and 60 earned it. “It’s a big win for us,” he said.


Many of these students are the first in their family to go to college, and the cost of attending a four-year school — including the cost of living in Seattle — can come as a shock to their families, Krawczyk said.

The SU program directly addresses the critical issue of increasing upward mobility by providing students the means to realize their potential. Well done.