a second look at the american dream

a second look at the american dream

“A bedrock American principle is the idea that all individuals should have the opportunity to succeed on the basis of their own effort, skill, and ingenuity.”

-Ben Bernanke, Chairman of the Federal Reserve

The American dream is a cornerstone of how we conceive our nation, a driving force since the colonies were first established.  It is the idea that here any man can make his way in life if he is willing to work for it, regardless of race, class, or creed.  After centuries of European feudalism and monarchy, America adopted as an ethos the tenet that any individual should be able to achieve prosperity according to his or her merit, made plain in our founding documents as the right to “liberty and the pursuit of happiness.”  In the realm of sociology or economics, this is what’s known as social mobility, or the ability for an individual or group to move up or down in socioeconomic status.  Social mobility is a measure of the degree to which a person or family may change their position in life through their efforts, and as such is a key gauge of our realization of the American dream.

Brookings InstitutionWhile the notion that people should be rewarded in proportion to their efforts seems like a fairly basic concept, it is difficult to convey just how unique its position is within the American psyche.  Several polls have been conducted over the years assessing Americans’ beliefs about economic standing and merit, and the results have been as remarkable as they are consistent.  Americans are more likely to believe that people are rewarded for their intelligence, effort, and skill than citizens of other developed countries[1].  They are less likely to believe that coming from wealth or status is important to getting ahead [1], and they are more likely to believe that their children will have a higher standard of living than they themselves enjoy [2].  What’s more, these international differences in attitude generally exist by a significant margin, as can be seen in the data above.  Within our own society, we strongly assert optimism towards our own upward mobility, believing that both ourselves and our children will continue to move upwards in economic standing [3].  And by an incredible 71 to 21 percent margin, Americans “believe that personal attributes, like hard work and drive, are more important to economic mobility than external conditions, like the economy and economic circumstances growing up [3].”  The American dream is alive and well, and it consistently serves as the unique lens through which our nation views its economic prospects.

While this belief in individual merit is undoubtedly noble, is it reflected in our economic reality?  Unlike the opinion polls, the sociological data is unfortunately far less uplifting.  If our societal structure is one in which individuals are rewarded for their efforts or punished for their lack thereof, one would expect to see fluid movement both up and down in economic standing in proportion to variations in individual merit.  The current data, however, does not show this; in particular, individuals at either end of the socioeconomic spectrum demonstrate little potential for mobility in the future.  Roughly 40% of individuals in either the top or bottom quintiles will remain in the same quintile as their parents [4]; of those in the bottom quintile, at least 70% will remain below middle income status [4].  The likelihood of someone born to wealthy parents reaching the top 5% of the income distribution is more than 20 times that of someone from the bottom quintile and more than 12 times that of someone from the middle [5].  These figures represent individuals for whom the primary determinant of success is social status at birth.  In many cases this disparity cannot be bridged even by remarkable countervailing gaps in achievement; an individual from the top of the income distribution without a college degree is more likely to reach the top quintile than someone from the bottom of the distribution who does earn one [4].

Corak, 2006What perhaps makes these figures even more striking is their standing in comparison to the rest of the developed world.  One might expect that, given the unique importance our culture places on the idea of rewarding effort rather than class, we would be better than other nations at doing so.  In fact, America ranks nearly last in terms of relative social mobility, just barely beating out the UK [1], and mobility has been steadily declining here since the 70’s [6].  Our neighbors to the frozen north foster nearly 2.5 times the mobility as our society allows: children born to lower income homes in Canada are more likely to work their way up the socioeconomic ladder, while those born to wealth are less likely to remain there [7].  The American dream is indeed alive and well; it’s just now residing in other countries.

So why is social mobility now so much higher in these other countries, and what can be done to improve it here?  It’s worthwhile to note that social mobility is not a direct function of income distribution or inequality, though that connection is interesting to explore in its own right.  Rather, it stems both from policies that eliminate barriers at the lower end of the socioeconomic spectrum and those which discourage inertia at the upper bounds.  Access to quality education has been shown to be one of the primary drivers of upward mobility [8], as have access to health care [9] and various work supports [10].  Conversely, taxation and fiscal policy can have enormous influences on social mobility or lack thereof, particularly at the higher end of the income ladder [11].  It is discouraging, though not entirely surprising, then, that the US does such a poor job of this.  Of the more than $740 billion in annual expenditures that can be at least partially tied to promoting social mobility (such as employer-related work subsidies, homeownership subsidies, education and training), $540 billion bypasses those with lower incomes entirely [10]; more than three-quarters of the largest subsidies go exclusively to households in the top quintile [10].  Conversely, only about a quarter of mobility spending reaches lower-income households, and that percentage is scheduled to decline even further in the coming years [10].

The American dream is not beyond saving, but it is far more tenuous than we would like to think.  As it stands, those looking to actually earn their way in the world, to be rewarded on the basis of their merits and not of their parents’ social class, are better off looking elsewhere, as the American dream is now made more manifest outside the country which first conceived of it.  What was once the noblest of ideals is slipping through our generation’s fingertips, due in no small part to the social structure that our policies have created.  It is perhaps worth reconsidering how and where we invest our collective time and efforts should we wish this to remain the land of opportunity it is professed to be; without that reorientation, the meritocracy enshrined in the American dream may all too soon be nothing more than a historical curiosity.

 

 

*Note: To anyone interested in reading further on this subject, I highly recommend visiting the Economic Mobility Project by the Pew Charitable Trusts.  While many institutions and organizations have participated in research and analysis on the subject of economic and social mobility, the Economic Mobility Project is one of the most centralized collections of information in the field, all easily accessible and understandable, even to a novice such as myself.  I am highly indebted to their work for the content of this essay.

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