The LookoutAmid unemployment and inequality, is the American Dream at risk?
For well over a century, the American Dream has acted as a beacon of hope to people around the world: the notion that by working hard and playing by the rules, anyone can build a secure, comfortable life for themselves and a bright future for their kids. But as the country struggles to shake off the Great Recession, amid persistent joblessness and growing inequality, is that idea at risk?
"I've kind of lost hope in the American Dream," one unemployed Yahoo! reader told us earlier this month.
She's far from the only one. When we asked readers over the summer to share their stories of long-term joblessness, thousands responded, and many lamented having lost faith in the country's ability to provide for ordinary Americans. "I am scared to death of what lies ahead," one reader from Maryland wrote.
In May, a Pew poll found that just 47 percent of Americans think their kids will enjoy a higher standard of living as adults than they themselves do. As recently as 2009--the height of the economic downturn--that number was 62 percent.
This growing pessimism isn't hard to explain. Fourteen million Americans are officially unemployed, and the number spikes to around 26 million if you count people who have grown discouraged and given up looking for work. The average duration of joblessness is now at a record 9 months. Meanwhile, GDP growth has been limping along since the official end of the recession over 2 years ago.
The young have been especially hard hit. Unemployment for Americans in their 20s has skyrocketed in recent years. And a growing number are moving in with their parents as they struggle to make ends meet.
At the same time, Americans have also been debating the thorny question of inequality--an issue spotlighted lately by the Occupy Wall Street movement, which started in lower Manhattan and has since spread rapidly across the country. A CBO report released Tuesday--just the latest in a series of studies to confirm the massive rich-poor gap--found that income for the wealthiest 1 percent of Americans had exploded since 1979, by a whopping 275 percent. Meanwhile, income for the poorest 20 percent grew by just 18 percent in the same period.
Americans don't seem to be happy with that split. A study by professors at Duke and Harvard Business School (pdf) asked people how much of the nation's wealth should ideally be controlled by the nation's richest 20 percent, and its poorest. The responses: just over 30 percent, and just over 10 percent, respectively. That's not anywhere close to the reality; the top 20 percent controls nearly 85 percent of the wealth, and the bottom 20 percent controls a share so small it didn't show up on the researchers' chart.
But the heart of the American Dream has always been about mobility. As long as people feel they have a fair shot at building a better life, they've usually been able to put up with periods of economic turmoil, even with relatively high levels of inequality.
That idea of mobility--crucial to the image of America as a land of opportunity--may also be overblown, though. An exhaustive, long-range 2006 study by the Brookings Institution (pdf) found that middle-income kids are only half as likely as kids from the richest quintile to reach the top of the income ladder themselves. The education system may be part of the problem. A separate study from 2005 by the liberal Economic Policy Institute found that high-income students with low tests were more likely to finish college than low-income students with high test scores.
Of course, concerns about the flickering of the American Dream are hardly new. Back in the recession of the early 90s, Generation Xers graduating from college were told they'd struggle to do better than their parents had--a prediction that wasn't borne out.
But this time may be different. Economists say that even once growth gets back to normal--whenever that may be--employment will likely come back lower than we've grown used to, thanks in part to increasing offshoring of jobs and automation. And our political system appears even more dysfunctional than it did even back then. Last week, Republicans in Congress blocked efforts to spur job growth that would be paid for by raising taxes on millionaires.
"It's time to reclaim the American Dream," then-Sen. Barack Obama declared back in 2007. At this point, it looks like we've got a long way to go.
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