Is the American dream dead?

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."

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