Is the American dream dead?
If not, it's certainly ailing with the onset of huge student debt and the stagnation of investments that once seemed to grow magically.
The concept of the American dream—that this country is the land of opportunity, and that anyone can achieve success through hard work—has given hope to people born without privilege, and it's one of the main reasons people come to the United States from throughout the world.
But in recent years, the basic premise of the American dream has been questioned. The Great Recession had a much larger impact on the working class than it did on the upper and middle classes. Most of the people who lost jobs had a high school education or less. A recent report by Georgetown University's Center on Education and the Workforce found that employment among people who didn't attend college has been flat since the recovery began, meaning people who lost their jobs can't find new ones.
The uneven nature of job losses spurred by the recession has exacerbated income inequality, further spreading the gap between the wealthy and the rest of the nation. According to Nobel Prize-winning economist Joseph Stiglitz, the percentage of income that goes to the top 1 percent of American earners has doubled since 1980, while the percentage that goes to the top 0.1 percent has tripled.
In addition, the Organization for Economic Cooperation and Development (OCED) recently warned that structural income inequality in the United States threatens the long-term strength of the country.
"The U.S. education system is less effective than those of other countries in helping children realize their potential," OCED said in its June 2012 report. "The United States is one of only three OCED countries that on average spend less on students from disadvantaged backgrounds than on other students."
The stark inequalities between the upper and middle classes have become fodder for the presidential campaigns. More important to average American consumers, however, is what these changes mean as the nation's economy attempts to rebound. Are there still real opportunities to better your lot in life through hard work? Or is the American dream dead?
According to Scott Winship, a fellow in economic studies at the Brookings Institute, most of the research on economic mobility focuses on people who were born in the early 1970s. These studies have not reached a consensus on whether mobility is increasing or decreasing.
However, Winship says that when studies are done on people born in subsequent generations, they are likely to show a decline in economic mobility. "Kids born more recently, when they are in (their) middle age, will have experienced less mobility than we have in the past," he says.
But Winship adds that it's not clear whether this lack of mobility is structural or cyclical. Opinion polls show that many American parents believe their children will not be better off. "If you look at trends in public opinion on the question of whether children will end up better off, you do see very clear cyclical patterns," says Winship. "During downturns, people are more pessimistic."
Brian Domitrovic, a professor of economic history at Sam Houston State University in Texas, says the main factor that could limit economic mobility is debt, particularly debt in the form of student loans.
"When you're talking about college kids with $120,000 in debt, nothing like that has been in the landscape before, especially in terms of women," he says. "You're going to spike the impossibility of realizing the dream if you're saddled with that kind of debt coming out the gate."
Domitrovic adds that any lack of economic mobility is intensified by the anemic recovery of the U.S. economy. "I don't think there's going to be any problem with jobs and wealth in this county if we figure out a way solve the problems of the Great Recession," he says.
Lisa Kirchenbauer, president of Omega Wealth Management in Arlington, Va., says she believes the American dream of improving one's lot in life still exists, but it's becoming more difficult to accomplish.
"I'm not saying it's as easy to start a business as it was in past years, or that people feel they can afford to take some of the risks that they would have in the past, but it is still possible to increase one's wealth," she says. "It may take sacrifice in the short term, disciplined savings, a conscious approach to spending, (and) smart investment management, but it's still possible."
However, Kirchenbauer believes the era of growing wealth quickly through an investment is over. The tech and real-estate bubbles allowed people to climb the economic ladder swiftly, but that wealth was lost just as quickly when those bubbles burst.
"What we have also learned is that you cannot count on your investment portfolio to do all the heavy lifting for you. You have to add to it if you want to see it grow," she says. "I think that many investors had gotten used to the wealth being created almost by magic."
More from US News & World Report
- 12 Ways To Stop America's Decline
- 10 Ways to Give Your Money a Makeover
- 50 Ways to Improve Your Finances in 2012
The End of a Dream
It didn’t happen all at once, but the dream that was the United States of America, the Great Republic, has died. It wasn’t caused by other countries hostile to the idea of true freedom; it wasn’t caused by a radical religious organization. The downfall of the United States was all from within its own borders, by its own people. The people, for whom others have died, have allowed the country to die a slow death. The me too, me first attitude that started many years ago, along with the idea that all are entitled to the fruits of others hard work, has allowed this country to bleed to death. When the British raised the tax on tea, our forefathers should have just shut up and paid the tax. Almost 239 years later, what has changed? Thousands have died for absolutely nothing.
June 28th, 2012
Greenreaper...This just out. This is one of the reasons we are stuck in neutral...
New research into the impact of federal regulations on manufacturers, commissioned by MAPI and prepared by NERA Economic Consulting, confirms that since 1998 the cost of manufacturing-related rules has grown far more rapidly than manufacturing itself: Manufacturing regulations grew an average of 7.6% a year in that time span compared with average growth of 0.4% for the sector’s output.
Washington & Wall Street slowly poisoned the patient, and now the "patient is on life-support!" You see, Wall Street wanted more profits so beginning in the 1950’s they started to systematically decimate the then-thriving middle-class by paying-off (campaign contributions) the politicians who drastically cut corporate taxes and passed one-sided import-export treaties and tax laws that only served to hasten the demise of our industrial and manufacturing infrastructure…one after another after another! Then, those people that we sent to Washington compounded the problems by building a bigger and bigger bureaucracy adding layers and layers of rules, regulations, penalties with loopholes only for their Wall Street campaign contributor- friends (of course). So now, in 2012, 47% of us are on food stamps (go to Wal-Mart and see those people with $100 tattoo’s and body piercings using food stamps – it’s a hoot!); we have millions and millions of illegal immigrants working the dwindling number of jobs that many of those 47% people don’t want to do. Add Obama's socialism, and, this is America 2012. No Hope, but plenty of “Change” --- for the worst! The Death Watch has begun!
more protest in greece! go ahead idiots vote for obama!
US isn't dead but it has one foot in the grave and the other
on a banana peel! watch or listen to the howard stern interview
of obama voters on the street to see how STUPID AND
BRAINWASHED THEY ARE! they think mc cain is running
and ryan is a black man and Obama's running mate!!!
I agree with the tone of the article that the American Dream of every rising income and wealth has gone away. I feel sick that so many young people cannot find decent paying jobs and that even middle aged people like myself find themselves worse off than five or six years ago.
I really believe that the U.S. like most of the other developed world is going to face slow growth, high unemployment and hard times for quite a few more years. The excesses and waste of the booming real estate market may take a decade to overcome. Spain has 20% unemployment.
There are around 20 million unemployed Americans and only net job growth annually of 1 million; rising productivity and births add the equivalent of at least 1 million new workers annually. Job growth would need to rise 5 million new jobs annually do do away with all unemployment over five years.
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Breaking up big banks is an untested solution to the too big to fail problem that attempts to isolate and dismantle large, troubled institutions while protecting the rest of the economy.
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