Where is the American Dream?
The Afternoon Shift kicked off the Front & Center: American Dream Deferred? series today with a conversation about the road to prosperity. Who's on it? What's it like? How has the notion of it changed over time? Does it still exist for most folks? If not, what or who is standing in the way?
"The American dream was a dream of shared prosperity," says author Hedrick Smith.
But that dream--a steady job, good benefits, owning a home, a better future for your children--has been put on hold for many middle-class Americans.
According to Smith, this is due to two factors:
"First, the shared prosperity under which American workers got their share of the gains, national economic growth, corporate profits and workforce productivity from the 1940s to the mid-1970s changed radically in the mid-1970s. And from then on you see productivity continue to grow over the last 38 years by 80%, but the growth of middle class pay, wages and benefits went up only 10%. CEO pay went up 300%...there was a wedge driven."
"Second, there was a power shift reacting to the middle-class power movements of the 60s and 70s (civil rights movement, environmental movement, consumers movement). Businesses reacted to that and took over the high ground politically in Washington and it dominates lobbying today. And you get a policy tilt that has favored corporations, that has worked against unions, that has lowered tax rates for people at the top and that's raised tax rate of payroll taxes of people at the bottom."
"So you get people squeezed economically, you've got the policy shift in Washington, and those two things combined have basically cut the middle class out of its share of America's growth and prosperity and left the middle class stagnant and in terrible financial trouble," says Smith.
Diana Elliot is research manager of the Pew Research Center's Economic Mobility Project. The project gets a read on the health and status of the American Dream based specifically on the factor of economic mobility.
"The way we define economic mobility is: Americans moving up and down the economic ladder within a lifetime and across generations. There are two ways we measure mobility. First, are you better off or worse than your parents in absolute dollar terms? 84% of Americans today have more income than their parents did at their same age. Then we look at relative mobility which looks at whether people are able to change their overall rank in income distribution over time. For exmple: if you were raised at the bottom, what are the chances that you stay at bottom. We've found that 43% of Americans raised in the bottom stay there a generation later. And it's very similar at the top: 40% of people raised in the top stay there as adults," says Elliot.