Battered but not gone

The American Dream

The concept of the American Dream seems to be as old as the nation itself, but the term was first used in the 1931 book, The Epic of America,  in which historian James Truslow Adams defined it as the "dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement."

The American Dream is an important aspect of our national character. It is the beacon that attracts immigrants to the United States, and that gives citizens hope for a brighter future for themselves and their children. But, for many Americans, the dream remains elusive, and skepticism that they will ever achieve it is growing in the aftermath of the housing bubble and the Great Recession. Even as the economy begins to pick up steam Americans still worry about how they will pay for their children's college education.

• According to the American Enterprise Institute, surveys of Americans indicate that most fear the economy will never completely recover from the recession.
• Seventy-one percent believe that the recession has left us with a permanent change in normal economic conditions. A 2013 Gallup poll found that 43 percent of Americans believe that the average person doesn't have much chance to really get ahead, compared to only 8 percent of Americans who felt that way in 1952.
• A New York Times poll in late 2014 found that only 64 percent of Americans still believe in the American dream, down from 72 percent near the bottom of the financial crisis in early 2009. Only 52 percent believe that the U.S. economic system gives everyone an equal chance to succeed, with 45 percent saying that the same opportunities are not accessible to everyone.
• Furthermore, as recently as the year 2000, a CBS News poll revealed that 72 percent of Americans said their opportunities to succeed were better than those of their parents, while only 5 percent said their opportunities were worse. In the summer of2014, however, just 42 percent said their opportunities were better than their parents', and 32 percent said their opportunities were worse.
• Looking ahead to the next generation, only 21 percent in a recent NBC News Wall Street Journal poll said that life for their children would be better than it is for themselves, down from 50 percent in 1990.
• In 2001, a Gallup poll found that 76 percent of Americans were "very" or "somewhat satisfied" with the opportunity for a person in America to get ahead by working hard, while 21 percent were dissatisfied. In 2012, Gallup found that 53 percent were satisfied, while 46 percent were dissatisfied.
• Eighty-percent of Americans surveyed by McClatchy and Marist College said that it's harder than it was before to achieve the American Dream.
• A CNN Opinion Research poll in June 2014 revealed the troubling conclusion that 59 percent of Americans believe the American Dream can't be achieved at all.

All of this makes it sound as if the American Dream is dying. But there is a wealth of other polling data that suggests the situation is more complicated than that. For one thing, several surveys throughout the decades have shown similar results: Americans always tend to believe that the economy used to be better than it is today, even when times are good, so polls rarely show that Americans think it is easier to achieve the American Dream.

For instance, in a 1986 Roper/Wall Street Journal survey, 45 percent of respondents said the American Dream was harder to attain than in the past, while 32 percent said the difficulty hadn't changed and only 23 percent said it was easier.

Also, the definition of the dream is constantly shifting, so previous components of the dream-such as a car, a color TV, and a high school education-are now taken for granted.

For example, 84 percent of respondents in the 1986 Wall Street Journal survey said being able to complete a high school education was a key ingredient of the dream. Today, a college degree is the key ingredient.

Similarly, when a Reader's Digest poll asked people who were at least 30 years old to think back to their teen years, two-thirds reported that a family with two relatively new cars would have been considered well above average in terms of wealth. But most said that a two-car family would merely be considered average now.

In this sense, the American Dream is a moving target: As soon as we achieve it, we redefine it.

It isn't just that college degrees and cars are more common today: The ability to balance work and family life is now seen as an important element of the American Dream. Thirty years ago, it wasn't even mentioned in surveys.

Attitudes about the American Dream also vary by demographic group, reflecting the progress that's been made in our society through the movements for civil rights and gender equality.

A poll by the Washington Post and the Miller Center found that only 30 percent of whites expected their children to have a higher standard of living than they did. But more than twice as many African Americans (65 percent) and Hispanics (63 percent) believed their children's standard of living would be better than their own.

Or consider women's opportunities. Gallup conducted identical polls in 1946 and 1997. Both times, fathers were asked whether the opportunities for their sons would be greater than the ones they had, and mothers were asked the same question about their daughters.

In 1946, 64 percent of fathers believed their sons would have better opportunities, and 51 years later, the results were almost identical at 62 percent. The big difference was in the mothers' responses. Sixty one percent believed their daughters would have greater opportunities than they had in 1946, but by 1997, 85 percent saw better opportunities for the next generation of women.

Interestingly, attitudes about the American Dream also vary by political party. The CNN Opinion Research poll in June 2014 found that 55 percent of Republicans still believe in the American Dream, compared to just 33 percent of Democrats. So this isn't a case where the party that isn't in the White House feels pessimistic about its opportunities under the current administration.

Based on this analysis, we offer the following forecasts:

First, currently only 12.5 percent of Americans will actually be able to afford the American Dream. According to research by Marketwatch columnist Howard R. Gold for USA Today, living the American dream would cost the average family of four about $130,000 a year.9 Gold calculated the average cost of home ownership at $17,062 a year, and added the U.S. Department of Agriculture's April 2014 figure of $12,659 for a moderate-cost grocery plan for a family of four. He included AA1\.s estimate that it would cost $11,039 a year to own one fourwheel-drive sport-utility vehicle, and the Milliman Medical Index estimate of annual health insurance premiums and out-of-pocket medical expenses at $9,144. Then he used various estimates for the costs of restaurants and entertainment, one family summer vacation, clothing, utilities, cable or satellite, Internet and cellphone, and miscellaneous expenses. At this income level, total federal, state, and local taxes would be 30 percent. Current educational expenses for two children were estimated at $4,000 a year and college savings at $2,500 per year per child. In addition, he added the maximum annual pre-tax contribution to a retirement plan for people under 50, $17,500, for a total annual cost of $130,357. U.S. Census Bureau data show that only 16 million U.S. households, or one in eight, earned that much in 2013. The median household income is roughly $51,000.

Second, Americans' pessimism about achieving the "official" version of the American Dream including the big house with a white picket fence, a spouse, a few children playing in the yard, and a large bank account-doesn't mean that they necessarily aspire to that dream in the first place. In other words, Americans are highly individualistic, and not everyone defines the American Dream in the same way. Consider the results of a 2011 survey from MetLife/Strategy First Partners/Penn, Schoen, and Berland. The pollsters found that 71 percent of Americans believe it's possible to achieve the American Dream without being married; 70 percent without having children; 70 will actually be able to afford the American college education; and 59 percent without owning their own home. Remarkably, only 51 percent said it was possible to attain the American Dream without "having great friends."

Third, a significant percentage of Americans have already achieved the American Dream or will do so eventually. From 2009 and 2012, between 40 and 44 percent of Americans asked by CNN said they had already achieved it, while similar percentages said they would achieve the dream eventually. Rising standards of living have elevated the quality of life for most people in the U.S. compared to their parents' generation, thanks to relentless advances in health care, biotech, automotive safety, the Internet, information technologies, and so on.

Fourth, the American Dream will be rekindled as the Deployment Phase of the Fifth Techno Economic Revolution unfolds. In fact, it will become a self-reinforcing virtuous loop, as growth brings more confidence among businesses and consumers and confidence brings behaviors that drive growth, such as business investment, job creation, and consumer spending.

Fifth, a large percentage of Americans will continue to believe that they do not have the same access to the American Dream as other people. As the economy gains momentum toward a recovery, the current environment enables those who have accumulated wealth and/or valuable skills to live well; those people who lack both don't see opportunities for upward mobility. Worst of all, the problems with the family structure cited in the January 2015 issue of our sister publication Trends doom many people to lives of despair because they lack the context for acquiring the cognitive skills and behavioral ( character) traits needed for success.