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Written by: Kamran Mofid

Published: 16 August 2019

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As noted in an article in the AlterNet, more than half of all people in the US don’t believe that the American dream is real. Fifty-nine percent of those polled in June agreed that “the American dream has become impossible for most people to achieve.” More and more Americans believe there is “not much opportunity” to get ahead.

The people in America have reached this conclusion for a very simple reason: It’s true. The key elements of the American dream—a living wage, retirement security, the opportunity for one’s children to get ahead in life—are now unreachable for all but the wealthiest. And it’s getting worse. As inequality increases, the fundamental elements of the American dream are becoming increasingly unaffordable for the ‘99%’.

Here are seven ways the American dream is dead on its track.

1. Most people can’t get ahead financially.

If the American dream means a reasonable rate of income growth for working people, most people can’t expect to achieve it.

As Ben Casselman observes at fivethirtyeight.com, the middle class hasn’t seen its wage rise in 15 years. In fact, the percentage of middle-class households in this nation is actually falling. Median household income has fallen since the financial crisis of 2008, while income for the wealthiest of Americans has actually risen.

Thomas Edsall wrote in the New York Times that “Not only has the wealth of the very rich doubled since 2000, but corporate revenues are at record levels.” Edsall also observed that, “In 2013, according to Goldman Sachs, corporate profits rose five times faster than wages.”

2. The stay-at-home parent is a thing of the past.

There was a time when middle-class families could lead a comfortable lifestyle on one person’s earnings. One parent could work while the other stayed home with the kids.

Those days are gone. As Elizabeth Warren and co-author Amelia Warren Tyagi documented in their 2003 book, The Two-Income Trap, the increasing number of two-earner families was matched by rising costs in a number of areas such as education, home costs and transportation.

These cost increases, combined with wage stagnation, mean that families are struggling to make ends meet—and that neither parent has the luxury of staying home any longer. In fact, parenthood has become a financial risk. Warren and Tyagi write that “Having a child is now the single best predictor that a woman will end up in financial collapse.” This book was written over a decade ago; things are even worse today.

3. The rich are more debt-free. Others have no choice.

Most Americans are falling behind anyway, as their salary fails to keep up with their expenses. No wonder debt is on the rise. As Joshua Freedman and Sherle R. Schwenninger observe in a paper for the New America Foundation, “American households… have become dependent on debt to maintain their standard of living in the face of stagnant wages.”

This “debt-dependent economy,” as Freedman and Schwenninger call it, has negative implications for the nation as a whole. But individual families are suffering too.

Rani Molla of the Wall Street Journal notes that “Over the past 20 years the average increase in spending on some items has exceeded the growth of incomes. The gap is especially poignant for those under 25 years old.”

There are increasingly two classes of Americans: Those who are taking on additional debt, and the rich.

4. Student debt is crushing a generation of non-wealthy Americans.

Education for every American who wants to get ahead? Forget about it. Nowadays you have to be rich to get a college education; that is, unless you want to begin your career with a mountain of debt. Once you get out of college, you’ll quickly discover that the gap between spending and income is greatest for people under 25 years of age.

Education, as Forbes columnist Steve Odland put it in 2012, is “the great equalizer… the facilitator of the American dream.” But at that point college costs had risen 500 percent since 1985, while the overall consumer price index rose by 115 percent. As of 2013, tuition at a private university was projected to cost nearly $130,000 on average over four years, and that’s not counting food, lodging, books, or other expenses.

Public colleges and universities have long been viewed as the get-ahead option for all Americans, including the poorest among us. Not anymore. The University of California was once considered a national model for free, high-quality public education, but today tuition at UC Berkeley is $12,972 per year. (It was tuition-free until Ronald Reagan became governor.) Room and board is $14,414. The total cost of on-campus attendance at Berkeley, including books and other items, is estimated to be $32,168.

The California story has been repeated across the country, as state cutbacks in the wake of the financial crisis caused the cost of public higher education to soar by 15 percent in a two-year period. With a median national household income of $51,000, even public colleges are quickly becoming unaffordable.

Sure, there are still some scholarships and grants available. But even as college costs rise, the availability of those programs is falling, leaving middle-class and lower-income students further in debt as out-of-pocket costs rise.

5. Vacations aren’t for the likes of you anymore.

Think you’d like to have a nice vacation? Think again. According to a 2012 American Express survey, Americans who were planning vacations expected to spend an average of $1,180 per person. That’s $4,720 for a family of four. But then, why worry about paying for that vacation? If you’re unemployed, you can’t afford it. And even if you have a job, there’s a good chance you won’t get the time off anyway.

As the Center for Economic and Policy Research found in 2013, the United States is the only advanced economy in the world that does not require employers to offer paid vacation to their workers. The number of paid holidays and vacation days received by the average worker in this country (16) would not meet the statutory minimum requirements in 19 other developed countries, according to the CEPR. Thirty-one percent of workers in smaller businesses had no paid vacation days at all.

The CEPR also found that 14 percent of employees at larger corporations also received no paid vacation days. Overall, roughly one in four working Americans gets no vacation time at all.

Rep. Alan Grayson, who has introduced the Paid Vacation Act, correctly notes that the average working American now spends 176 hours more per year on the job than was the case in 1976.

Between the pressure to work more hours and the cost of vacation, even people who do get vacation time—at least on paper—are hard-pressed to take any time off. That’s why 175 million vacation days go unclaimed each year.

6. Even with health insurance, medical care is increasingly unaffordable for most people.

Medical care when you need it? That’s for the wealthy.

The Affordable Care Act was designed to increase the number of Americans who are covered by health insurance. But health coverage in this country is the worst of any highly developed nation—and that’s for people who have health insurance.

Every year the Milliman actuarial firm analyzes the average costs of medical care, including the household’s share of insurance premiums and out-of-pocket costs, for a family of four with the kind of insurance that is considered higher quality coverage in this country: a PPO plan which allows them to use a wider range of healthcare providers.

Even as overall wealth in this country has shifted upward, away from middle-class families, the cost of medical care is increasingly being borne by the families themselves. As the Milliman study shows, the employer-funded portion of healthcare costs has risen 52 percent since 2007, the first year of the recession. But household costs have risen by a staggering 73 percent, or 8 percent per year, and now average $9,144. In the same time period, Census Bureau figures show that median household income has fallen 8 percent.

That means that household healthcare costs are skyrocketing even as income falls dramatically.

The recent claims of “lowered healthcare costs” are misleading. While the rate of increase is slowing down, healthcare costs are continuing to increase. And the actual cost to working Americans is increasing even faster, as corporations continue to maximize their record profits by shifting healthcare costs onto consumers. This shift is expected to accelerate as the result of a misguided provision in the Affordable Care Act which will tax higher-cost plans.

According to an OECD survey, the number of Americans who report going without needed healthcare in the past year because of cost was higher than in 10 comparable countries. This was true for both lower-income and higher-income Americans, suggesting that insured Americans are also feeling the pinch when it comes to getting medical treatment.

As inequality worsens, wages continue to stagnate, and more healthcare costs are placed on the backs of working families, more and more Americans will find medical care unaffordable.

7. Americans can no longer look forward to a secure retirement.

Want to retire when you get older, as earlier generations did, and enjoy a secure life after a lifetime of hard work? You’ll get to… if you’re rich.

There was a time when most middle-class Americans could work until they were 65 and then look forward to a financially secure retirement. Corporate pensions guaranteed a minimum income for the remainder of their life. Those pensions, coupled with Social Security income and a lifetime’s savings, assured that these ordinary Americans could spend their senior years in modest comfort.

No longer. As we have already seen, rising expenses means most Americans are buried in debt rather than able to accumulate modest savings. That’s the main reason why 20 percent of Americans who are nearing retirement age haven’t saved for their post-working years.

Meanwhile, corporations are gutting these pension plans in favor of far less general programs. The financial crisis of 2008, driven by the greed of Wall Street one percenters, robbed most American household of their primary assets. And right-wing “centrists” of both parties, not satisfied with the rising retirement age which has already cut the program’s benefits, continue to press for even deeper cuts to the program.

One group, Natixis Global Asset Management, ranks the United States 19th among developed countries when it comes to retirement security. The principal reasons the US ranks so poorly are 1) the weakness of our pension programs; and 2) the stinginess of our healthcare system, which even with Medicare for the elderly, is far weaker than that of nations such as Austria.

Economists used to speak of retirement security as a three-legged stool. Pensions were one leg of the stool, savings were another and Social Security was the third. Today two legs of the stool have been shattered, and anti-Social Security advocates are sawing away at the third.

Conclusion

Vacations; an education; staying home to raise your kids; a life without crushing debt; seeing the doctor when you don’t feel well; a chance to retire: one by one, these mainstays of middle-class life are disappearing for most Americans. Until we demand political leadership that will do something about it, they’re not coming back.

Can the American dream be restored? Yes, but it will take concerted effort to address two underlying problems. First, we must end the domination of our electoral process by wealthy and powerful elites. At the same time, we must begin to address the problem of growing economic inequality. Without a national movement to call for change, change simply isn’t going to happen.-AlterNet

...And now the six ways to bring the American Dream back from the dead 

‘Let America be the dream the dreamers dreamed -

Let it be that great strong land of love

Where never kings connive nor tyrants scheme

That any man be crushed by one above'.- Langston Hughes  

‘It is time to admit that the “American Dream” is dead. Its underlying conditions – strong, consistent economic growth and a meritocracy structured to keep the rich from gaming the system – no longer hold true.

Nonetheless, an American Dream 2.0 is still possible, and it will be up to those now contending for the White House to offer a blueprint for making it a reality. For starters, America’s leaders need to explain the problem clearly. The Declaration of Independence proclaimed the “pursuit of happiness” a central feature of American life. Since 1776, each generation has sought upward social mobility; and for a long time, many – though not all – met with prosperity.

For over a century after the American civil war, breakthroughs in energy, medicine, telecommunications, and transportation reshaped America (and the world). Economic productivity grew dramatically, as did the average lifespan. And for most of this period, a rising tide really did lift most boats. Politicians from both parties embraced the national ethos that anyone could get ahead through hard work and gradually, if imperfectly, made it accessible to immigrants, non-whites, women, the disabled, and others who had historically been excluded from the promise of American life.

But when economic growth began to slow in the 1970s, voters grew frustrated, while oil shocks, Watergate, and the ignominious end of the Vietnam war compounded the public’s sense of what President Jimmy Carter called America’s “malaise”. It was against this dismal backdrop that Ronald Reagan campaigned in 1980 on a promise to deliver “Morning in America”. With the US Federal Reserve having signalled its willingness to do what was necessary to rein in inflation, taxes were cut, and America was fundamentally transformed from a country of savers into one of borrowers.

In the ensuing decades, financial leverage drove growth onward, but the American Dream was living on borrowed time. Americans were going into debt to buy foreign goods, and the producers of those goods were buying US government debt, thereby keeping interest rates low. Though Americans felt prosperous, the real economy was growing at only half its previous rate, and median wages were plateauing.

Meanwhile, the Fed busied itself trying to put out periodic fires in the financial markets. Yet it inadvertently made the problem of rising inequality even worse. By 2007, its policies had artificially expanded financial markets, where assets are held largely by the wealthy, to three times the size of the real economy.

The American Dream works only when growth is broadly shared and structural impediments to advancement are scarce. Neither is true today. According to the Congressional Budget Office, annual growth rates of 4% are not coming back – at least not anytime soon; 2% growth is the most that should be expected. Moreover, the innovations that drove growth in manufacturing employment and upward mobility in the past have been superseded by digital technologies. For all their convenience, the Amazons and Ubers of the digital economy are destroying working-class jobs and driving down wages.

Making matters worse, the US tax code has increasingly come to favour capital over labour, which helps to explain why labour’s share of national income has been declining. All told, there is too much debt for the young, too little retirement savings for the post-1945 baby boom generation, and a lack of job flexibility and security for the displaced and unemployed. Trying to get ahead has become a Sisyphean task.

Six Steps to a Better Dream

Fortunately, a better narrative is possible. We already know what we need to do to help rebalance the playing field and restore deficit-neutral growth and dynamism. For starters, we should be reducing student debt in exchange for national service in fields such as teaching, emergency services, and rural medical care. Not only is this the right thing to do, but it would also galvanise a new generation of public servants in socially important areas currently suffering from labor shortages.

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Second, we must eliminate tax breaks – namely, the stepped-up basis loophole for estate taxes and the carried-interest rate – that widen and entrench the wealth divide. In doing so, we could unlock hundreds of billions of dollars in new tax revenue.

Third, that newfound tax revenue should be used for three key purposes. First, America needs to provide tuition-free community college to retrain its workers, many of whom have been – or eventually will be – displaced by automation and other new technologies. Second, we need a national infrastructure programme – a modern version of President Franklin D Roosevelt’s Works Progress Administration – which could employ many of those who have lost manufacturing jobs. And third, it is time to establish a national trust fund for student loans, which should then be repayable from a predetermined proportion of the student’s subsequent income for a specified number of years. Students who end up with low future incomes would pay less than they borrowed, but this would be offset by higher earners.

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Fourth, the federal minimum wage must not only be raised, but also be indexed to the rate of inflation. This would both help people keep up with the rising cost of living and, as the Federal Reserve Bank of Chicago has shown, increase aggregate economic activity.

Fifth, we must make access to basic childcare a universal good, or women’s participation in the labour force will continue to fall short of its potential.

And finally, we need to give everyone access to the same retirement-savings benefits as the rich; namely, through an expansion of the Thrift Savings Plan, which acts like a 401k but provides critical tax benefits that most workers currently lack.

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And finally, we need to give everyone access to the same retirement-savings benefits as the rich; namely, through an expansion of the Thrift Savings Plan, which acts like a 401k but provides critical tax benefits that most workers currently lack.

Empires rise and fall – and sometimes they rise again. America’s current trajectory does not bode well. But if we act now, we can still fashion a new American Dream for the world’s largest economy.’-Alexander Friedman, The Guardian, Fri 16 Aug 2019

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