A new report from the New York Times shows that Millennials will make less money than their parents.
“In 1940, a child born into the average American household had a 92 percent chance of making more money than his or her parents… For Americans born in 1980 – today’s 36-year-olds – that figure dropped to 50 percent,” the report says.
The “American Dream” that we think of is a product of the 1950s – two kids, a dog, and a house in the suburbs with a husband who pays the bills and a wife who packs the lunches. There have been other iterations of the Dream, too, documented in this publication.
Dreamers imagine a life where they might not be fabulously wealthy, but they can pay bills on time and afford the occasional dinner out or an annual family vacation. Comfort and security are constant themes in different visions of success. Living one doctor’s visit or car repair away from financial ruin is not a dream – it’s a nightmare.
American success is not defined entirely by wealth. Wealth is not a perfect measure of standard of living. When our parents and grandparents were in their 20s, no amount of money would have allowed them to have a vaccine that prevents chicken pox or a handheld device on which to send instant electronic communication.
Today, we can buy those things – and they cost money. Dollars don’t define the American Dream, but it’s impossible to achieve the Dream without them.
It’s hard to predict the political and social impact of an American generation that is less successful than its parents, because this phenomenon hasn’t happened before.
The NYT report presents “a portrait of an economy that disappoints a huge number of people who have heard that they live in a country where life gets better, only to experience something quite different.”
People feel like they’ve been cheated out of their slice of this country’s promise. They feel left behind. This is one reason why “Make America Great Again” resonates with so many people. They hear the slogan as “Allow Me to Dream of a Stable Middle-Class Life Again.”
Not only will we have less money, but the money that we do have will go less far.
The prices of groceries, college, health care, and child care have all increased faster than the rate of inflation. So, our dreams must be revised according to new realities. This is not impossible, and three steps are particularly attainable in the span of a few years.
“The dream home is being replaced by a dream condo or apartment.”
“We may see a resurgence of trade schools offering more bang for fewer bucks.”First, we dream of bursting the college pricing bubble. Even if you were part of the lucky few whose parents paid for college, you very well may not be able to do the same for your kids. College prices are rising faster than incomes, while the value of a college degree is shrinking. We may see a resurgence of trade schools offering more bang for fewer bucks. If Washington gets it right, they’ll stop artificially inflating the price of college in a misguided attempt at “affordability.”
Second, the dream home is being replaced by a dream condo or apartment. Today’s young adults remember the misery of the 2008 housing crash. A house used to signify stability, but we now see them as huge risks. Our jobs are highly concentrated in cities, where housing prices are highest. Millennials invented the sharing economy, so sharing a roof with our neighbors only makes sense.
Third, we dream of flexible jobs for working parents. Flexible jobs are a necessity when both parents are working, as is the case for most two-parent families today. Less than 1 in 3 mothers of kids under 18 now stay at home. Today’s adult women are more educated than any cohort of their predecessors, which is helpful to them considering that it is very hard to raise children on a single income.
The new economy is forcing young adults into difficult financial situations. Our goals are shaped by the new economy – and if we can shape the new economy, our American dream can be realized.