Harvard Business School alumni are more concerned with rising inequality, worsening poverty and the stagnating middle class than they are with slow economic growth, according to a new survey the school released Tuesday evening -- a sign of growing concern among American elites that the healing economy is not delivering equitably for all workers.
The survey shows those alums – a rich and powerful group with a large presence in the financial industry – see the U.S. economy and business environment as markedly improved from 2011, but they expect that improvement to mostly benefit the top 1 percent of income earners.
The 2,716 respondents were evenly split on whether American economic competitiveness is rising or falling when compared to other countries, and on the question of whether the U.S. business environment is pulling ahead of developing nations such as China, or falling behind them. Both those answers reflect a surge in optimism from a similar survey in 2011, when large majorities said American competitiveness lagged its foreign rivals. A report on the survey credits that change, in part, to “a generalized sentiment that the U.S. has become a better place to do business.”
And yet, the respondents agreed that those changes are mostly benefiting wealthy people like themselves. Asked to predict how future income gains would be spread across the American population, the Harvard alumni said more than 40 percent of them would go to the richest 1 percent of the country. They said barely one-third would go to the bottom 80 percent.
If they had their choice, the respondents said, the gains would be distributed evenly across income groups.
Perhaps most strikingly, only a third of respondents chose speeding up economic growth as the top economic priority for the country. A total of two-thirds said the top priority should be addressing rising inequality, middle-class stagnation, rising poverty or limited economic mobility.
“People have this economic unease, they have this economic anxiety,” said Karen Mills, a former head of the U.S. Small Business Administration under President Obama who is now a senior fellow at the Harvard Business School, in an interview. “And they recognize with all these good things going on” - such as a growing economy after the Great Recession - “we haven’t created an evenly-disbursed set of opportunity.”
By a variety of measures, inequality and the health of the middle class have worsened since the end of the recession, even as the United States has outperformed Europe and Japan in economic growth. Middle-class stagnation has become a theme of presidential campaign speeches, for Democrats and Republicans alike.
Candidates in both parties have touted small business and entrepreneurship as keys to revitalizing the American middle class. The Harvard survey includes signs for concern on both those fronts.
“Respondents from smaller firms tended to have almost equally positive views of America’s strengths but more negative views of the country’s weaknesses,” Harvard researchers noted in their assessment of the survey. “We suspect this pattern arises because larger firms find it easier than smaller ones to escape from, or compensate for, the shortcomings of America’s business environment.”
An even larger disconnect appears to be at work with entrepreneurship. The nation’s start-up rate - a key measure of entrepreneurial activity - has been declining for decades. But Harvard business alums report U.S. entrepreneurship is thriving, especially when compared to the entrepreneurial environment in other countries.
The alumni are a very entrepreneurial group, with 60 percent of them reporting they have started at least one business, and 80 percent of those businesses still in operation. The fact that such a group sees mostly sunshine in an area where economic statistics suggest cause for concern is, in itself, concerning, the researchers write: “Perhaps entrepreneurship in America has become more accessible for educated, well-connected individuals such as HBS alumni but less accessible to the population as a whole.”
Mills said the researchers will spend the next several months investigating that hypothesis and asking what is holding prospective “Main Street” entrepreneurs back. One clue might be found in a question from the survey, which asked alumni to rank things that are important for entrepreneurs.
The top three were “venture capital,” “skilled workforce” and “angel capital” — all things that are much more readily available to elite business school graduates than the population at large.