Social Exclusion in the U.S. and Europe

A friend recently emailed me a link to this report by the Center for Economic and Policy Research (CEPR): "Is the U.S. a Good Model for Reducing Social Exclusion in Europe?" According to the British Government’s Social Exclusion Unit, "Social exclusion happens when people or places suffer from a series of problems such as unemployment, discrimination, poor skills, low incomes, poor housing, high crime, ill health and family breakdown. When such problems combine they can create a vicious cycle."

The concept is a frequent subject of newspaper reports in Europe (in German it’s called Ausgrenzung). It becomes a bigger problems in societies such as France or Germany, where umemployment has been in the double-digits for years. According to the CEPR, "[s]ustained, high levels of unemployment in the majority of Europe’s largest economies have led many Europeans to look to the United States as a possible alternative economic model."

Not so fast, says the CEPR. The report trundles out the usual suspects: Impriosonment_3 

  • The U.S. spends much more on healthcare than all other nations, while leaving a population the size of Spain uninsured and obtaining worse health outcomes
  • U.S. primary education is no more than average in world comparison.
  • The U.S. murder rate is about 5 times the world average, and the U.S. incarcerates a much larger proportion of its population than any comparable country (see chart on right).

Defenders of the U.S. admit that life may be hard for those at the bottom, but argue the U.S. is the "land of opportunity" where anyone can break out of poverty if they just work hard. See Clarence Thomas! Bill Clinton! It’s a comforting cliche, but the real issue isn’t whether exceptional poor children can rise from poverty to become millionaires or top officials. They’ll be able to do that in any reasonably free land. The policy issue is whether social and economic policy gives most poor children the chance to move a few rungs up the social ladder — say, to a decent job with benefits. In the U.S., intergenerational poverty — especially extreme poverty — is hard to break out of in the U.S.

European countries do a better job here: "[T]he United States has the lowest share of low-income workers that exit their low-income status from one year to the next (29.5 percent). The corresponding rates in several European countries are greater than 50 percent: Ireland (54.6), the Netherlands (55.7), the United Kingdom (58.8), and Denmark (60.4)." The same effect holds over the long-term: "Intergenerational economic mobility was lowest, by a substantial margin, in the United States…" That is, it is much more likely in the U.S. that children will end up in about the same income bracket as their parents were. Interestingly, Germany had the highest intergenerational income mobility — nearly four times as high as the U.S.!

There are a few bright spots for Uncle Sam. Even adjusting for factors that artificially lower the U.S. unemployment rate, the U.S. does a better job generating jobs than the large, "sick" European economies — but not the small, efficient cohesive welfare states in Northern Europe. Further, "absolute" poverty, that is, the number of people who make earn less than a certain income level, isn’t much higher in the U.S. than in most European countries, and is lower than it is in France, Ireland, Australia, and Italy.

The biggest surprise for me, though, was in college degrees. Among the population as a whole, the U.S. has more college graduates than almost all comparable countries. 38% of Americans between the ages of 25 and 64 have the equivalent of a bachelors’ degree, but "[m]ost Western European countries fall in the 20-30 percent range, with several in the teens." Looking at just 25-to-34 year olds, the U.S. has 39%, about the norm, and a few European countries "still lag far behin the United States: Italy (12), Austria (15), Portugal (16), Germany (22), and Greece (24)."

I was genuinely puzzled by the last statistic; I would have thought that countries such as Austria and Germany would do better here. Perhaps some of the result is due to longer time spent in college in these nations (although I know very few 34-year-olds who’ve still failed to get any sort of degree). Another factor is probably social attitudes. It’s been a truism in the U.S. for at least 30 years that you’re doomed to a marginal life if you don’t get at least one college degree, and all middle-class families send all of their children to college, or die trying. Until recently in Germany, there were plenty of "solid" blue-collar jobs which offered nice benefits, excellent security, and plenty of vacation. "Why waste 6 or 7 years going to college, when I can just get a job in the nearest Volkswagen factory at 22 and basically be set up until I retire?" These days are, of course, almost over in Germany, which is the subject of about every third news article printed…

6 thoughts on “Social Exclusion in the U.S. and Europe

  1. The college degree differential probably turns on the definition of a college degree in North America and Europe. I suspect that in Europe, this would be restricted to a degree from a university or Fachhochschule; a certificate from the “Institute of Applied Marketing” probably wouldn’t qualify. In contrast, in North America, it is apparently possible to obtain an “associate degree” in “office technology and information systems” or a community college degree in automotive mechanics or hairdressing. All of that would – in Germany, anyway – fall under the Ausbildung-system, which wouldn’t lead to a degree at all.

    Same statistic, just reversed: it would be interesting to compare the number of German “Meister” in various applied and technical fields to the number of US counterparts. Again, I expect it would turn on the definition…

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  2. When I read something like this I have to wonder whether it meets the sniff test. I don’t have a problem believing that only 29.5% of low-income workers in the US rise out of that status after a year. Indeed I’m surprised that it is that high a percentage. Typically the process takes longer than a year.

    But in several European countries numbers approaching 60% rise out of the low-wage category every year! Makes you wonder how the local kebab place and Macdonalds manage to staff their counters, doesn’t it? I find that completely improbable, which sort of throws that entire portion of the study into question. What were they measuring and how were they measuring it? Did they use an absolute or relative measurement of what low wages are? Both have their problems, BTW. If a country sets the minimum wage high enough they can in theory eliminate poverty – among those fortunate enough to have a job. Unfortunately a lot of people will not have enough skills to be worth the minimum wage – are they counted, and how?

    What mechanism pulls these people out of poverty so quickly in the UK, and if this is happening how is it that the public Housing Estates stay so full with the same people for very long periods?

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  3. Koch, the kind of thing you indicate would be regarded as a diploma, not a proper college degree. And it would not be counted as such. Four full years at a college or University is how it is commonly defined.

    I’m not sure what the German system is like, but the definition of a college degree is very similar to that is the US, I think.

    What is a ‘Fachhochschule’? A technical university, what we in the UK used to call a ‘red brick’?

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  4. Hi Don,

    I believe that the typical university bachelor degree in the US or Canada requires 3 years. A four year degree is an honors bachelor, or a combined major.

    A “Fachhochschule” is, to use the Cologne Fachhochschule’s own designation (www.fh-koeln.de), a university of applied science. The program offerings range from machine engineering to architecture to electronics engineering. There is some ‘fluff’ in there, with programs on international business or design or “conference translating”. For the most part, the programs are pretty technical and advanced, i.e., to a level likely a little bit higher than a North American community college. Typically, one requires the same high-school qualification to attend a FH as one needs for a university, although some exceptions are made. Germany also has technical universities (TU Munich, Berlin, Aachen, etc.) that generally offer high-level engineering programs.

    My point is simply that in North America, the ability to “grant a degree” is less restrictive, and that which is considered to be a post-secondary “degree” is a broader concept. It is possible to obtain “degrees” from numerous low-level community colleges in numerous fields that would not be comparable to the university-level offerings in other countries. Even the designation “university” can be suspect in North America. For example, here’s a link to the restaurant management bachelor’s degree program at the (notorious) Bob Jones University in Greenville SC: http://www.bju.edu/academics/sba/undergrad/divm/restmgmt.html. I note that one of the career paths post-completion is a “School Lunch Program Director”. I’m also fascinated by the missionary aviation programs, combining old testament messages with advanced cross-country flight.

    I don’t think it would be possible to obtain a degree-comparable “Abschluss” in Germany in fields like these. But I’m happy to be proven wrong!

    Regards,

    Koch

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  5. Hi Koch,

    I think you are laboring under a misapprehension here. A ‘college degree’ in the US indeed means just that – a four year (or longer) degree from an accredited university or college. We don’t have the term Fachhochschule (which I might term a ‘technical college’) exactly. There are a number of institutions specifically oriented toward engineering and both the theoretical and applied sciences but they tend to be elite or semi-elite institutions like MIT, Cal-Tech, Pomona, and quite a few others. Most of the state universities have strong to very strong engineering and science programs – it was part of their charters. But most of the stste U’s also have strong liberal arts, social sciences, and professional schools.

    The reason why the US has far more college graduates than most European universities is that advanced educations is far more accessable. Almost any city of more than 20,000 people will have a university or college of some kind which can be reached with some ease. In more rural areas there is often what they call a ‘junior college’ which provides technical ‘degrees’ (2 years) and (more crucially) the first two years of the undergraduate curriculum transferable to most of the state universities in that state and frequently elsewhere. So a youngster can get a start close to home and move on to an institution granting the four year degree later. But the two year diploma will never be called a college degree.

    When I was in Germany I understood that small cities do not usually have colleges or universities. That is certainly the case in Italy, where the system seems to have perhaps 20 or 30 very large universities. The US (with a population of perhaps 5 times Italy) has literally hundreds of colleges and universities – perhaps as many as 1000 significant colleges/universities granting the four year degree.

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  6. “My point is simply that in North America, the ability to “grant a degree” is less restrictive, and that which is considered to be a post-secondary “degree” is a broader concept. It is possible to obtain “degrees” from numerous low-level community colleges in numerous fields that would not be comparable to the university-level offerings in other countries.”

    The two year degrees which you refer to are the US equivalent of the German apprenticeship program, I think. One will usually need one of these degrees to get a good job as an auto mechanic at one of the national car maintenance companies for example, though a lot of experience obtained while in the armed forces (typically the Army or Marines) can serve as a substitute. Usually the Army will put their mechanics through a similar though accelerated course however, then have them work as junior mechanics for a few years, learning from senior people.

    There is one other respect in which the US is ‘less restrictive’ – there are many private universities. I understand that colleges are a state monopoly in Germany & France, and virtually a state monopoly in Italy. Italy has one provate college (Bocconi in Milan), which is generally considered by far the best college in Italy.

    The US has a range of non-governmental colleges and universities ranging from the very best (Harvard, MIT, Stanford,etc) to much humbler institutions. Most of these non-governmental colleges are also not for profit.

    Schools on the very bottom of the US ladder such as those awarding two-year degrees are often for-profit though this is not a very lucrative activity. Competition from public ‘community colleges’ keep their margins down unless they have a superlative reputation in one area.

    But note that degree-granting standards remain fairly high over most of the 4-year institutions granting an actual college degree. Some may not meet the bottom standard in the much smaller German system but they are close enough. From what I read about the Frenach university system and my Italian friends tell me about the Italian system, even the colleges and universities in the bottom 10 pecent of the US system will exceed them fairly significantly, probably because they are much better-funded.

    It must be admitted that there are some clinkers in the US system. One can buy a mail order ‘degree’ with virtually no work, but this is pretty obvious. There are also religious colleges of fairly recent vintage whose graduates are of somewhat dubious reputation. Note that the vast majority of religious colleges are on the same standard as every other college – or perhaps a bit better. Harvard, Yale, and Brown Universities (Ivy League) all began as religious schools to train clergy.

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