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Monday, January 27, 2020

Achieving ‘American Dream’ more likely in Canada than US, report finds

Most economies don't let citizens thrive, entrenching historic inequality, says World Economic Forum

Rory Sullivan

The “American Dream” is much easier to achieve in Canada than the US, data from a new report into social mobility suggest.

The report, by the World Economic Forum, found it would take someone born into a low-income family in the US four generations to approach mean income — one generation more than it would in Canada.

Figures also showed the top 1 per cent of earners in the US in 2018 earned almost 160 per cent more than they did in 1979. Over the same period, the bottom 90 per cent of earners only saw a 24 per cent rise in income.

Research came from the Global Social Mobility Index, which ranks 83 countries in terms of social mobility.

The report suggests that huge wage disparities, which have grown “exponentially” since the 1970s, are part of the problem.

Klaus Scwhab, the founder and executive chairman of the World Economic Forum, said in a statement that an individual’s chances in life were still “disproportionately influenced” by their socio-economic background.

This year’s index, published to coincide with the start of the World Economic Forum in Davos, revealed that Nordic countries were the best for social mobility, with Denmark topping the list.

Canada and the US came lower down the rankings, in 14th and 27th place respectively. The UK came in between them in 21st place.

Among the world’s large emerging economies, Russia ranked 39th, followed by China in 45th, Brazil in 60th and India in 76th.

The World Economic Forum said in a statement on Monday that most economies currently fail to give their citizens the opportunity to thrive, with only a “handful” having the necessary conditions to foster social mobility.

It added: “As a result, an individual’s opportunities in life remain tethered to their socio-economic status at birth, entrenching historical inequalities.”

Technology is also another issue the report highlights, since it reduces the need for low-skilled jobs and rewards high-skilled jobs disproportionately.

The World Economic Forum recommends a range of measures countries could adopt to improve their social mobility rankings, including the introduction of more progressive tax systems and better quality education.

The World Economic Forum’s Global Social Mobility Index 2020 measured economies across five criteria: health, education, technology access, work, and protection and institutions.