In today’s harsh markets, many are having to wrestle with the very real possibility that we may end up making less than our parents. This is a first in American history — we should be paying attention.
This doesn’t just cause individual security concerns — about a third of adults ages 40 to 60 are regularly providing financial support to their older parents and relatives despite the obvious financial strain. It remains to be seen if this cycle is sustainable.
Most Americans believe that children should help an elderly parent in need of financial assistance. However, it’s become increasingly harder for today’s workforce to make ends meet on their own, let alone provide regular assistance to the generation before them.
So, what happened to the American Dream over time that made the golden standard survival? More importantly, what can we do now to make sure our children’s generation and so forth is dealt a better hand?
The Unsustainable Standards of The Past
America certainly isn’t what it used to be. While we still may have glimpses of our revered individualistic, boot-strapping, awe-inspiring status, it’s clear that what we used to consider “the American dream” simply doesn’t hold up to the standards of today. A huge part of that dream was the belief that regardless of your starting status, you could obtain some form of upward social mobility through hard work.
In a lot of ways, that’s never been fully true for marginalized communities. However, even so, groups that could build upon their parents’ wealth in the past aren’t living up to that expectation.
As you can see, Millennials aren’t growing upon the previous generation’s wealth, regardless of education status. However, that’s not necessarily their fault. I think it’s easy to chalk up Millenial’s financial peril to an incessant Starbuck’s addiction and fascination with avocado toast, but that detracts from the real cause of how we got here.
This graph alone displays one of the more debilitating changes in the past couple of decades. Rent and housing prices have continued to rise while wages have remained largely stagnant. On top of that, Millennials have been handed a major financial crisis in 2008— and it’s likely they’ll face another one on top of that with the current climate.
The Fall of Social Mobility
A headstone of the American dream is the ability to “rise in ranks” so to speak. Unfortunately, for those entering the working class today, choosing between education and financial security is a harsh reality of the situation.
It appears that achieving the “American Dream” is much more likely in other rich countries. The gap between the rich and the poor continues to widen in America, with the top 1% earning as much money as the entire middle class.
Let’s not forget that the barrier to enter the middle class is a feat in itself. For those earning about $25K a year as a part of the lower class, it’s almost impossible to believe that one can afford to spend at minimum $40K at a 4-year institution on just tuition. It’s certainly a catch-22.
Lower class individuals are stuck with two unfavorable options: 1) Go to college and risk a debilitating amount of debt for the chance of upward mobility or 2) Don’t go to college and potentially stay at the same socioeconomic status as your parents.
Even after gaining higher education, many Americans are finding it hard to get a job to put it to good use. A college education is no longer seen as a distinguishing factor in the job market. Rather, it’s a definite pre-requisite for a wide array of middle and upper-class employers. The problem is, the costs of college have gone up while the social interpretations of the perceived value of degree have degraded.
A degree is a gatekeeper but no longer a distinction for our labor force. In a winner takes all reality, the American dream dies for those who weren’t already halfway there to begin with.
Delaying Life’s Milestones
Growing up in an age of economic crisis can affect you in a number of ways outside of achieving the American dream. If it’s anything that Millenials and future generations are, it’s exceedingly cautious.
Millennials are getting married later at an average age of 27 for females and 29 for males. While some are buying homes before marriage, the average home-buying age is now right around 30 for the generation.
That means that it’s likely to take longer for this generation to pay off their mortgages leading to a stable, secure retirement. Corporate pensions have also taken a toll, with most employers opting for a 401(K) style retirement plan that requires the employee to contribute a portion of their paycheck to retirement, often with an employer match.
However, with debilitating housing costs and the onslaught of student loans, it’s easy to understand how contributing to retirement plans might not even be on the average worker’s radar.
Retirement itself has become a pipe dream, with some financial experts claiming that Millennials need to save almost half of their paycheck if you plan on retiring at or around the age of 65. At the same time, only 1 in 5 Millennials is saving more than 15% of their earnings.
It’s a harsh reality that many of today’s workforce will need to continue working well into their sixties and seventies in order to survive. Plus, with longer life expectancies and a decline in the overall birth rate, it’s all the more certain that this generation and future generations will have a serious retirement crisis if our current way of living remains unchanged.
America Can Return To Its Glory Days
It’s clear that today’s emerging workforce has been stunted in many ways based on the wealth grab of generations before them. In order to make the American dream a reality for everyone, we need to start with a level playing field.
By supporting policies that benefit the vast majority of citizens and the underprivileged lower class, we allow our nation to function together, not as factions. Bootstrapping is a valiant and admirable concept, albeit you’ll need boots, to begin with, to have a fighting chance.