Economic Mobility 

What is economic mobility?

Economic mobility measures how much a person’s income changes over time. It defines an individual’s or family’s ability to move up or down the economic ladder throughout generations. This incorporates economic success, power and autonomy, and being valued and engaged in the community. Economic mobility can be understood by defining three basic terms: absolute mobility; income inequality; and relative mobility.

How opportunity interacts with the economy and inequality

Absolute mobility occurs when general economic growth boosts everyone’s income, and the economic ladder gets taller. Income inequality occurs when the rungs on the ladder become less evenly distributed, reflecting income distribution. Relative mobility occurs when people are able to move from one rung of the ladder to another, depending on the opportunities presented.

Part of the American Dream is the idea that our children’s lives will be better than our own

There are two other terms we use when we talk about economic mobility. One way is to assess how one person’s income changes over their lifetime, comparing their income with previous points in their life. This is called intragenerational mobility. The second way is to assess how children’s income as adults compares to their parents’ income at a similar age. This is called intergenerational mobility.

Consider the economic mobility of Matthew. In his early 20s, Matthew was severely in debt and did not have a job that allowed him to pay down the debts. Fast forward to a Matthew in his 40s. His income has increased, debts paid off, and he opened a savings account where he’s started an emergency fund. Matthew’s intragenerational mobility increased.

Now compare Matthew’s journey to that of his parents. When his parents were in their 40s, they possessed debt and did not have the ability to save, much like Matthew could not in his 20s. However, Matthew experienced upward intergenerational mobility, because his economic situation was improved in his 40s compared to his parents when they were of the same age. 

What Does Poverty Look Like in Philadelphia?

A quarter of Philadelphians struggle with poverty

Philadelphia’s poverty rate is 24.5 percent, with 400,000 residents living below the federal poverty line. Less than half of Philadelphians experiencing poverty also experience deep poverty, meaning their income is  no more than 50 percent of the federal poverty line. The federal poverty line for a three person household is approximately $19,700 per year.

Philadelphia’s overwhelming rate of poverty indicates not many of the city’s residents have the ability to afford much beyond their means. This could be housing, food, transportation, childcare, clothing, medicine, etc. Macroeconomically, this also means that a quarter of Philadelphians are not able to contribute to the economy by purchasing from or investing in companies. 

Being paid a living wage is just one of the ways people can begin to move out of poverty, having the monetary means to both afford material goods needed to survive and thrive and also add to the economy’s financial growth.   

Minimum wage does not cover living costs for an individual, let alone a family

The minimum wage in Philadelphia is currently $7.25 per hour. Working full-time under minimum wage would yield only $15,000 per year. For one adult without dependents in Philadelphia, a living wage is $12.24 per hour, and poverty wage is $5.84 per hour. For one adult with two dependents, a living wage is $30.60 per hour, where poverty wage is $9.99 per hour. 

Consider what it would look like to live with a minimum wage job in Philadelphia through Michelle.

Michelle works as a cashier at Walmart 40 hours a week. Making minimum wage in Philadelphia, Michelle brings home approximately $22,564 a year, which calculates to roughly $1,466 a month, after taxes.  Now compare the average monthly expenses of one parent with two children to what Michelle can afford. 

The average monthly expenses for one parent and two dependents total to $4,234 a month. Housing costs $1,266 per month. Food is $642 a month. Transportation runs $695 per month. Childcare equals $1,103 per month. Medical expenses are $528 a month.

Michelle only brings home $1,466 a month. In order to be able to provide everything for her children, she would have to rely on government subsidies (e.g. living in a Philadelphia Housing Authority property, or receiving TANF, SNAP) and still cut costs. Michelle lacks $2,768 monthly to be able to provide for herself and her family compared to what is expected on average. 

There is no equal access to opportunity, which means social and economic standing are sticky

The belief that drives the American Dream is that hard work and determination will allow one to shift from humble beginnings to at least a middle-class lifestyle. This dream plays out generationally when children can acquire greater financial security than their parents and so on. However, a child’s ability to advance economically largely depends on their parent’s economic position. Children born into poverty and lower-income situations are five times less likely to experience relative mobility than their counterparts who were born into a higher rung of the economic ladder. This occurs because children tend to “stick” onto the rung of the ladder they are born into, making it difficult for them to move beyond where they began.

Living in crisis hinders people’s ability to plan for their future

New developments in neuroscience explain that the traumas of poverty can negatively affect a person’s continued ability to think strategically or long-term.  There are two ways poverty does this. The first is when situational factors impact decision making in real time. An example of this is the inability to think clearly or make important decisions when under significant stress, exhaustion, or worry. The second is when struggling to make ends meet, protecting against violence, and dealing with oppression disrupts one’s brain capacity for impulse control, memory, and judgment—more generally referred to as self-regulation. 

Living in poverty is living in constant stress, negatively affecting the brain function that governs long-term decision making

The area of the brain that is responsible for the analytical process necessary to problem solve, set goals, and execute chosen strategies is called the prefrontal cortex. The prefrontal cortex works hand-in-hand with the limbic system, which is responsible for processing and triggering emotional reactions and environmental stimuli. 

This relationship works best when the limbic system can send desires or fears to the prefrontal cortex which can then properly use those emotions to encourage problem solving or goal attainment. It is poorer when the limbic system is too active—sending too many signals to the prefrontal cortex—causing it to become overwhelmed and be unable to operate with clear focus and judgement.

In situations where the brain has to be exercised optimally to figure out a next meal or the ability to obtain a job while posed with obstacles, it is difficult for people to fully tap into the prefrontal cortex due to an overactive limbic system. The judgement and decisions made are for short-term crisis situations, leaving little room to think and plan long-term. Mixed with situational stress, this further robs people of the ability to fully execute decision making skills.

Repetitive and unrelenting stress disrupts the development of these skills

The decision-making skills that have the potential to be disrupted by environmental factors in conjunction with limbic brain overactivity are called executive functioning skills. Examples of executive functioning skills include impulse control, working memory, and mental flexibility.

The intergenerational nature of poverty and its impact on people’s brains make it difficult to escape from the cyclical effect of poverty on their own. To break those cycles, people tend to need help and support from others like a mentor or coach, accessible services, and anti-poverty policies and legislation.

A tool that Episcopal Community Services uses to process decision-making and aid in the escape of cyclical, intergenerational poverty is the Bridge to Prosperity®.

How can coaching help?

A professional, intentional partnership and guide

When people are working towards goals they have selected, they are more likely to be successful. Coaching is an intentional partnership between a coach and the person being coached—called a participant—where coaches place the participant at the center of their work.  Together they map out a plan of action steps to achieve the goal. 

Coaches take a holistic approach in supporting participants by considering factors that can impact multiple aspects of their lives. If a participant has an education-related goal the coach does not ignore the other factors that could benefit or inhibit the participant’s ability to meet that goal. The Bridge to Prosperity® is crucial in this as coaches can account for all aspects of a participant’s life from: Family Stability; Health and Wellbeing; Financial Management; Education and Training; and Employment and Career Management.

This lends itself to the idea that each facet of the whole person are met as they relate to one another. 

Coaching is unique because it does not prescribe solutions. It gives participants help and autonomy in seeing beyond their current positions. Each coach/participant relationship is individualized and specific. The coach never tells the participant what to do or gives them a one-size-fits-all rulebook to follow.  Not only do participants have the ability to present their desired goals to coaches, they also have the agency in establishing the steps needed to take. 

Questioning through the lens of a coach is important because it supports the development of the participant’s self-awareness. The power is put in the hands of the participant, rather than the coach. This allows the participant to realize they have the capacity to meet their goals. Having ownership of the goals and the steps to get there, typically yields more successful results. This is where coaching differs from case management. 

Long-term goals are not met in a day or even one year. Goal completion can last three years, five years, and sometimes more. In turn, coaching requires time to be both impactful and successful. The goal is to have this process be repeated enough that it becomes internalized where participants are enabled to tackle future goals independently.

How does ECS fit in?

Episcopal Community Services seeks to help Philadelphians be uprooted from poverty. One way we are doing this is through our newest workforce development initiative, MindSet

Learn more about MindSet