The American Dream has long been considered to be raising your children so that they can grow up to achieve more than you did, and the idea that society will get better with each generation has been a symbol of hope both in America and to the rest of the world. It turns out, though, that the American Dream isn't working the way it's supposed to work. According to a new study, older millennials aren't making as much money as their parents did. This fact isn't necessarily surprising, but it is deeply disheartening for all those who as younger adults subscribed to the notion that hard work equates to a more successful life, and that the country and its people are constantly moving forward.
According to The Washington Post, a group of researchers led by Stanford's Raj Chetty recently discovered that only half the children born in the 1980s grew up to earn more money than their parents did. This includes adjustments for inflation. This is a stark contrast from people born during the 1940s, of which 92 percent grew up to earn more money at the age of 30 than their parents did at the same age. The percentage drop is enormous, and is an important indicator of larger economic problems plaguing our country.
The New York Times called the research the “most eye-opening economics work in recent years," as well stating that "it’s 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." The reason for this alarming drop between people born in the 1940s and the 1980s seems to be inequality. The Times points out that the American Dream was a "virtual guarantee" for those born in the '40s, because the economy at the time "was growing rapidly, and the bounty from its growth flowed to the rich, the middle class, and the poor alike." That is no longer the case.
In the present day, people born to middle class families and in the Midwest have seen the steepest declines. According to research done by Chetty and his team, 70 percent of income gains went to top 10 percent of earners in America over the last 30 years. If the economy had stayed as fruitful as it was in 1970, the researchers believe that 80 percent of 30-year-olds would currently out-earn their parents.
If we want to "revive the American dream," Raj Chetty says America needs “to have more equal growth." It will be interesting to see, of course, how all this plays out in Trump's America. The president-elect has promised to grow the economy by 3.8 percent, according to Newser's Michael Harthorne, but experts believe it's most likely going to be closer to 2 percent. Chetty's team stated that, without addressing inequality, the economy would need to grow by 6 percent annually to reverse these current trends.
For now, though, it seems, if we really want to fix the problem, that inequality must be addressed first and foremost.