from Pew Trust
“According to recent studies, more than half of Americans believe the American Dream is dead, never existed, or is unachievable,” the newspaper said. “This breaks down along racial lines, with blacks and Hispanics taking more pessimistic views. Is the modern American Dream attainable?”
The Times asked Erin Currier, who directs Pew’s financial security and mobility project, to contribute an essay addressing the state of the American Dream. It appeared Jan. 1, 2015.
The American Dream is usually defined in terms of financial security, homeownership, and higher education. Our data on financial security shows why it is in doubt. When it comes to economic mobility—the ability to move up or down the economic ladder within a lifetime or from one generation to the next—your place on the ladder as a child can often be a predictor of your place as an adult.
Just 4 percent raised at the bottom rung of the income ladder make it to the top a generation later.
The Pew Charitable Trusts uses two different measures: absolute mobility and relative mobility. Absolute mobility measures whether people have more (or less) income or wealth than their parents had at the same age. On the income side, 84 percent of American adults today have surpassed their parents. But that hasn’t translated into greater wealth, which is all the financial assets a family has minus its debt—a strong measure of economic security. Only half of Americans are wealthier than their parents were.
Relative mobility, which looks at whether Americans have moved up or down the economic ladder compared to their parents, indicates similar cause for concern. Forty-three percent of those raised in the bottom fifth of the income ladder remain there a generation later, and 40 percent of those raised at the top stay there. Just 4 percent raised at the bottom rung of the income ladder make it to the top a generation later, highlighting the unfortunate truth that rags-to-riches stories are more common in movies than in reality.
Recent polling shows that Americans feel increasingly financially insecure, perhaps in part because of this lack of mobility out of the bottom rung of the economic ladder. It’s no surprise, then, that for many the American Dream may feel out of reach.