FOR the past three years, the most successful shows on American television have been “American Idol” and “The Apprentice”. This spring, millions tuned in to watch Carrie Underwood, a 21-year-old country-and-western singer from small-town Oklahoma, win the entertainment contest and to see Bill Rancic, who put himself through university by cleaning boats, land a six-figure salary as Donald Trump's chosen sidekick. The success of these shows in America testifies to the endurance and popularity of the American Dream—the idea that anything is possible if you work at it hard enough.

America's founding document declares all men to be created equal. From Benjamin Franklin, the 15th child of a candlemaker, to Bill Clinton, whose mother was widowed before he was born, the American creed proclaims that the ladder of success can be climbed by all. A decline in social mobility would run counter to Americans' deepest beliefs about their country. Unfortunately, that is what seems to be happening. Class is reappearing in a new form.

For the quarter-century after the second world war, income growth in America was fairly evenly spread. According to a study by the Economic Policy Institute (EPI), the poorest fifth of the population saw its income increase by as much as the next-poorest fifth, and so on in equal steps to the top. But in the past quarter-century, the rich have been doing dramatically better than the less well off. Since 1979, median family incomes have risen by 18% but the incomes of the top 1% have gone up by 200%. In 1970, according to the Census Bureau, the bottom fifth received 5.4% of America's total national income and the richest fifth got 40.9%. Twenty-five years later, the share of the bottom fifth had fallen to 4.4% but that of the top fifth had risen to 46.5%.

A harder climb

This makes America unusual. Thomas Piketty and Emmanuel Saez examined the incomes of the top 0.1% of people in America, France and Britain from 1913 to 1998. The fortunes of the three countries' super-rich kept fairly closely in step for most of the 20th century, until America began to diverge in the late 1970s. Now the top 0.1% of Americans earn two or three times as much as their peers in Britain and France (see chart 6). If America is a ladder, the rungs have been moved further apart.

Perhaps Americans think the rich deserve their success. They certainly work more than they used to. In the 1970s, the top 10% worked fewer hours than the bottom 10%; now the reverse is true. Back in 1929, 70% of the income of the extremely rich (the top 0.01%) came from capital (dividends, rent and interest). Now, 80% comes from wages and stock options, which is earned income of a sort.

Or perhaps what really matters is how the poor are doing in absolute terms rather than in relation to the wealthy. Americans' average salaries have risen over the past 30 years, though admittedly not by much. A far smaller share of the population lives in poverty now than in the supposedly golden age of equality in the 1950s (12% compared with 22%). Moreover, a surge of immigrants on minimum wages tends to bring down the average: home-grown Americans are probably better off than the figures suggest. The rich have not got richer at the expense of the poor. The rising tide has lifted dinghies as well as yachts.

Anyway, what Americans seem to mind about most is equality of opportunity—and people do not feel there is any less of it now than there used to be. Some 80% (a higher proportion than in the 1980s) think it is possible to start out poor, work hard and become rich. A poll for the New York Times found that twice as many Americans reckon that their chances of moving up a notch have improved over the past 30 years than think their chances have gone down. Most Americans say their standard of living is higher than that of their parents, and that their children will do better than they are doing.

So, on the face of it, rising inequality is not affecting the optimism and ambition of average Americans, and these are what matter to the country's entrepreneurial spirit and social cohesion. But there are three big problems with this rosy view. The first is that America has never been as socially mobile as Americans like to believe. According to a long-term research project carried out at the University of Michigan, led by Gary Solon, America's score on social mobility is not particularly high or low, but middling.

That does not sound too bad. But it means that, if you are among the poorest 5% of the population, your chances of achieving an average income are only one in six. If you are among the poorest 1%, they become very dim indeed. Moreover—and this was the most surprising thing about the study—despite America's more flexible labour markets, social mobility there is no longer greater than in supposedly class-ridden Europe, and if anything it seems to be declining.

A study by Katharine Bradbury and Jane Katz for the Federal Reserve Bank of Boston found that in the 1970s, 65% of people changed their social position (that is, moved out of the income bracket in which they had started the decade). In the 1990s, only 60% did. Not a huge change, but consistent with Mr Solon's study showing that the correlation between parents' and children's income is even closer now than it was in the 1980s. The authors also found decreasing amounts of social mobility at the top and the bottom. This is squeezing the middle class. Americans may be sorting themselves into two more stable groups, haves and have-nots. This is the same trend that geographical mobility has been encouraging. Decreasing mobility may one day come to erode Americans' faith in the fairness of their economy.

The second reason for pessimism is that mobility may continue to decline because it is rooted in fundamental changes to the economy. These explain both the big rise in income inequality and the smaller shift in social mobility. Over the past 25 years, globalisation has increased rewards for intellectual skills, pushing up the value of a degree. The income gap between college graduates and those without university degrees doubled between 1979 and 1997.

This has gone hand in hand with changes in the nature of work. It used to be possible to start at the bottom of a big firm and work your way up. But America's corporate giants have got rid of their old hierarchies. Lifetime employment is at an end, and managers hop from job to job. That makes a degree essential. In the 1930s and 1940s, only half of all American chief executives had a college degree. Now almost all of them do, and 70% also have a higher degree, such as an MBA. People with a university degree are now more likely to move up an income bracket than those without. This is a big change since the 1970s, when income rises were distributed equally across all educational levels. America is becoming a stratified society based on education: a meritocracy.

But what if education itself becomes stratified? Historically, America's education system has been the main avenue for upward mobility. Mass secondary education supplied the workforce of the world's most successful industrial economy in the late 19th century; mass university education did the same for the period of American economic dominance after the second world war. But now, worries Lawrence Summers, the president of Harvard University, what had been engines of social mobility risk becoming brakes.

At secondary-school level, American education is financed largely by local property taxes. Naturally, places with big houses paying larger property taxes have schools with more resources. At university level, the rise in the cost of education has taken Ivy League universities out of the reach of most middle-class and poor families. The median income of families with children at Harvard is $150,000. The wealthy have always dominated elite schools, but their representation is rising. Between 1976 and 1995, according to one study, students from the richest quarter of the population increased their share of places at America's elite universities from 39% to 50%.

Even outside elite schools, students from poor backgrounds are becoming rarer. The budget squeeze on states in 2001-04 forced them to increase fees at state colleges, traditionally the places where the children of less wealthy parents went. Those children also face increasing competition from richer kids squeezed out of the Ivy League. As a result, a student from the top income quarter is six times more likely to get a BA than someone from the bottom quarter. American schools seem to be reinforcing educational differences rather than reducing them.

The third reason for gloom is perhaps the most worrying. It is the possibility that, as Isabel Sawhill of the Brookings Institution argues, your chances of a good education, good job and good prospects—in other words, of moving upwards—are partly determined by family behaviour. On this view, the rich really are different, and not just because they have more money; moreover, these differences are becoming embedded in the structure of the family itself. Class stratification, in other words, is more than a matter of income or inherited wealth.

College graduates tend to marry college graduates. Both go out to work, so in the households of the most educated the returns to a university education are doubled. College-educated women are also postponing children for the sake of their careers. On average, they have their first child at 30, five years later than in the 1970s and eight years later than their contemporaries who have not been to college.

The trouble with being poor

At the bottom of the heap, you see the opposite: women have children younger, often out of wedlock and without a job. True, out-of-wedlock births are falling and welfare reform has increased the chances of mothers holding down jobs, but the gap is still vast. If, as Ms Sawhill argues, the key to upward mobility is finishing your education, having a job and getting and staying married, then the rich start with advantages beyond money.

This does not mean that America's meritocracy is a fake, or that nothing can be done. The country faced a similar rise in inequality in the early 20th century and rallied against it. President Roosevelt sought to save American capitalism from its own excesses so that “malefactors of great wealth” would not become a hereditary aristocracy.

Today, policy changes, such as reforming the way schools are financed, or giving federal help to poorer college students, would lessen social inequality. But for that to happen, American politicians and the public must first acknowledge that there is a problem. At the moment, they do not.