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Anya Kamenetz Generation Debt

Anya Kamenetz, Generation Debt

Whose American Dream Is It, Anyway?

by Anya Kamenetz

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Posted on Tuesday, June 17, 2008, 12:00AM

A recent "USA Today" poll showed that, given the worsening economy, high prices for energy, and the housing crisis, Americans are more pessimistic about their lives than at any time in the past half-century. Most worrisome is that just 45 percent believe their children will be better off financially than they are, which caused reporter David Lynch to ask if the American Dream was, if not dead, then at least wounded.

I've been asking the same question since I started writing the original Generation Debt series for "The Village Voice" back in 2004. Back then the economy was booming, but the long-term data were already clear -- young men were earning significantly less than their fathers had 30 years ago (given inflation); young women were barely making progress on the gains in the workforce that their mothers had worked so hard for; and both were saddled with record prices for housing, health care, and education, as well as rising student loan and credit card debt.

Well, now I think it's time to take a fresh look at the issue. Maybe the American Dream is dead or wounded -- or maybe it's just outdated.

Perhaps the strongest symbol of the traditional American Dream is the single-family home in an automobile-dependent suburb. Today, in many places, those houses are unaffordable for the middle class.

With gas prices soaring to an average above four dollars a gallon, the car commute is unaffordable, too -- and no one is expecting gas to come back down to the 99-cent range anytime soon.

Furthermore, even if house prices continue to decline and cars get more fuel-efficient, it turns out that the driving commute itself cuts into people's happiness -- so much so, one pair of researchers found, that someone commuting an hour each way would have to earn 40 percent more to compensate for the decreased quality of life.

Another piece of the American Dream that we're saying goodbye to is lifetime employment with a single corporation that offers health care, a pension, and a gold watch upon retirement. Manufacturing has moved overseas, and large corporations simply don't operate like that anymore.

For high-school educated workers, the middle class job is all but kaput. GM was the largest employer in the country in 1970, with an average wage of $17.50 an hour. Today GM is all but bankrupt, and Wal-Mart is the nation's largest employer, with an average wage of $9 an hour.

But what about the most fundamental assumption of the American Dream, the idea that standards of living, as measured by money and ownership of material things, ought to keep rising steadily year after year, generation after generation? That one is looking to be on the shakiest ground of all.

First of all, by most measures, our country has long since passed the point where adding more income and more stuff will make us happier. Once a nation has a per capita income above $12,000, for example, there is little correlation between wealth and happiness.

And in the U.S., researcher Daniel Gilbert found, once an individual passes $50,000 a year in income, more money has little effect on his or her happiness on average.

In fact, not surprisingly, the top earners have far less free time than the poorest fifth of Americans, and their average mood is not much better.

Secondly, indications are mounting that the planet just can't take all this constantly increasing driving and shopping and fast-food eating. If the entire world consumed the way Americans do (China and India are the most obvious examples of countries headed in this direction), we would need six Earths full of resources.

So for those of you who, like me, hope to be living another 60, 70, or 80 years in this unique nation, it might be time to ask: What is our new American Dream? If it's not a house, a car, a lawn, a lifetime of job security, and a constantly rising standard of living, what are we looking for? What should we be looking for?

I don't have the definitive answer. But I have three suggestions and observations.

Time, Not Stuff

Young people prize flexibility with their time. More likely to be raised by working mothers than any generation in history, we've seen the tradeoffs and don't want to fall into the "two-income trap" where both partners work more and more hours, barely seeing each other or their kids, just to keep up with the Joneses.

Both young men and young women say over and over in employment surveys that they want time to take care of their families and their health, to be involved in their communities, and to "have a life."

As we weather this economic downturn, I predict that even more young people are going to choose -- or be pushed into -- a smaller-scale, downshifted lifestyle where they make do with less stuff and trade more money for more time.

People are already planting more gardens, driving less and riding their bikes or public transportation more, canceling their cable subscriptions, and spending more time at home. This is a perfect example of making a virtue out of necessity -- all these changes save money, but they also mean a slower, healthier lifestyle that for some is its own reward.

There are even reports in the media of young families going to the extreme with the trend of taking out a "Selling All Worldly Possessions" ad on Craigslist and taking to the road.

Meaningful Employment

Money and security are important, but research says young people really want meaning in their jobs, too.

This includes finding a personal passion and getting a chance to do something important for the world.

One employment trend that attracts young people is self-employment and entrepreneurship. This ties in to our interest in individuality and flexibility. Nearly a fifth of the workforce can be classified as non-standard in some way, and non-standard workers are twice as likely to be under 25.

Going out on your own has its tradeoffs. This part of the workforce faces greater risk, and under our current laws, they have inadequate access to benefits such as health care and nondiscrimination protection. Yet it turns out many independent workers are more satisfied with their jobs than salaried employees at an equivalent level. That's in large part because autonomy is a major key to job satisfaction.

A second popular direction for young people seeking meaning in their employment is in public service. Teach for America, where college graduates go into underserved public schools for two years, is a top entry-level employer at many elite colleges.

And last year's College Cost Reduction and Access Act established a slew of new student loan forgiveness programs for young people who go into professions including social work, nursing, law enforcement, and firefighting, which should entice even more young people into these lines of work.

And they may well find satisfaction there. In one huge employer survey, the three job categories where employees were most likely to say they had their "Dream jobs" were, in order, teacher, police officer, and firefighter.

A New New Deal

This part is more political than personal. The old American Dream included a social safety net that provided a baseline of security. As noted, this is no longer being provided adequately by employers or the government.

Young people are the largest and fastest-growing group of Americans without health insurance, we lack access to pension plans, and the future of programs like Social Security and Medicare is threatened by current budget positions. Young Americans in polls hold a more favorable view of government solutions than older Americans, and we are calling for new government investments in portable, flexible benefits that will restore the social safety net while controlling rising costs.

These are scary times. But after Hurricane Katrina hit my hometown of New Orleans, I learned from the courage of people struggling to rebuild. I saw that pessimism is a luxury for easy times, while optimism is a necessity for times like these. The new American Dream may be smaller and less flashy than your father's Oldsmobile, but it's more sustainable -- and maybe it can take us farther.

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497 Comments

Showing comments 6-35 of 497<< PreviousNext >>
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  • Yahoo! Finance User - Friday, September 5, 2008, 11:52PM ET  Report Abuse

    • Overall: 3/5

    It is pretty crappy to suffer the consequences of the previous generations downfalls. I served 5 years for my country to get college paid for because my parents didn't save/plan for my education although I love them dearly they always drove new cars and had the newest TV's, computers...you get my drift? I completed 5 long years for the GI Bill. Now mind you placing me behind the curve because all the kids my age who had parents who planned for their education have already graduated with at least a bachelor's degree making $50,000 a year. I am 24 working full time for much much less trying to make enough to survive and finish school. This is exactly what the baby boomers in Washington Leadership have done with "their" children that will assume the white house in their place. Basicly spending and borrowing with complete disregard for future generations causing crash dummy markets. Basicly new white house leadership and generations are going to have to sacrifice on your behalf.... Now back to my parents, once again I love them to death, and no one can talk bad about them but me. They are going to reach retirement age with lets just say enough to get by with social security. Mind you my parents made $136,000 a year combined, and because of the "reassurance" social security provided saved very little. Which will leave me holding the burden of making up for the rest, because I love em. thanks for leaving a legacy, thanks for protecting our future, thanks for blowing all the money on useless stuff of no significance now so that we can pay your social security until YOU run it dry and leave us holding the bill. Not to mention shelling out money over a lifetime to a benefit we may never receive and paying off a debt we didn't create. Basicly you are the ones on a bull and we are the ones trailing behind you stepping in all your messed up bull ****

  • Mark - Tuesday, August 26, 2008, 7:30AM ET  Report Abuse

    • Overall: 5/5

    Your article implies drastic political changes. As European I do not see this happen in the USA. So although excellent you will stay as we call it a "a voice in the dessert" It would be nice if we Europeans had a voice in the next elections.

  • sameer a - Monday, August 11, 2008, 8:42PM ET  Report Abuse

    • Overall: 4/5

    OK!!!!!!!!!!!!!!!!

  • Douglas - Sunday, July 20, 2008, 7:52PM ET  Report Abuse

    • Overall: 2/5

    Too Many Americans Are cry babies and weinners, even our poor have it soft here, compared to the rest of the world. If your unhappy with your life, then change it go back to night school and learn a new trade, stop waiting for Stanta Claus :)))

  • Yahoo! Finance User - Friday, July 18, 2008, 11:01AM ET  Report Abuse

    • Overall: 5/5

    US needs to stop growing it's GDP. Buy as local as you can, consume less!

  • Jeff - Thursday, July 17, 2008, 1:13PM ET  Report Abuse

    • Overall: 1/5

    I guess Anya is right in line with Obama. She is not going to be happy until we are all living in little studio apartments riding our bikes to work (at our government jobs). Memo to Anya and Obama. The American dream is alive and well despite the bumps in the economic road! That is unless Obama and Co. push us further to Socialism. Then the American dream will truly die.

  • DIANAD - Thursday, July 17, 2008, 6:49AM ET  Report Abuse

    • Overall: 5/5

    I agree with every single statement. Excellent article!

  • Yahoo! Finance User - Wednesday, July 16, 2008, 5:29PM ET  Report Abuse

    • Overall: 1/5

    Out of touch with reality. Teachers, nurses, police and Wal-mart all service jobs. Don't get me wrong all admirable and important professions, but nothing of tangible value comes from these industries. Information is the so called next industrial revolution and it is important. But nothing strengthens a nation more than is manufactuing base, which provides wealth. Some day all cars and even beer as it now looks will be foreign owned. Yes even though they are made here the money goes back to their country. So keep being happy buying your japanese cars and european, canada, south african owned "American" beers. Because at the end of the day it is still all about ME!

  • Yahoo! Finance User - Monday, July 14, 2008, 4:09PM ET  Report Abuse

    • Overall: 2/5

    I am an immigrant from another country. Things here look pretty good to me! Perhaps 1 year of education in a foreign country should be a requirement for all US students. Then they would realize how good they have it here! They would quit bellyaching about their parents. They would see opportunity. They would see a glass that is completely full.

  • Ektor - Wednesday, July 9, 2008, 12:58AM ET  Report Abuse

    • Overall: 4/5

    Great Job Anya! I will reply to the reader who said that being young is no excuse to being uneducated. Reader, it sounds like you are a free market enthusiast of old(er) age who reads a lot of history but thinks little about it. Regarding Dubai, it does not suffer from the resource curse while being a crucial port. There must be a reason why Halliburton relocated to Dubai from Houston TX. Multiply this reason by 1000 (for other similar cases) and you have your explanation about Dubai. Incidentally, there is nothing democratic or "free" about Dubai. (If you don't believe me try to go to Dubai and start a business) Regarding Anya being the fear of America. Anya is addressing the problems that your generation created with your attitude; climate change, huge debt, corporate scandals, one after another and a decay in popular culture and family values. These problems, Anya's generation is attempting to fix. Regarding the "American Miracle" the "weak American Colonies" were lush in resources, European population and work ethic, away from the ever treacherous Old Continent with its constant wars and conflicts but right across it to trade with its dominant countries, Spain, France, England and Holland. That looks like good real estate to me, doesn't it to you? Add the western expansion and the discovery of oil and precious metals (add slave labor) it was a perfect storm for economic expansion. No Conqueror's foot has stepped on US soil since the British. It is not the same story for most of the rest of the world. As far as mortgages and health savings accounts....they don't exist without a job, a well paying job. All in all, the US is an awesome country but to remain so, we have to recognize what generated its strength...it was the Anya's of previous generations that made this country what it is; true to self, intensely distrusting of convention, politically and socially minded, principled and humane

  • Morris - Tuesday, July 8, 2008, 3:03PM ET  Report Abuse

    • Overall: 4/5

    The American Dream has long been symbolized by things. What it really is, at bottom, is the possibility for someone with modest abilities and a modicum of initiative to rise above his or her current circumstances. Although people in this country talk about class, there are no real class barriers in American society. Anyone can own there own company or become famous or make money. It does appear that the steady increase in standard of living from one generation to the next is leveling out, but the main thing is that possiblities still exist for the individual.

  • Yahoo! Finance User - Wednesday, July 2, 2008, 5:33PM ET  Report Abuse

    • Overall: 5/5

    Modern American life is built on cheap oil. What was possible with gas at $1 a gallon is not possible at $4, $5, and $6 a gallon. Already one hundred US cities are scheduled to see all airline service to their airports cease by the end of 2008. Another one hundred US cities will lose all airline service by the end of 2009.

  • Yahoo! Finance User - Monday, June 30, 2008, 9:45AM ET  Report Abuse

    • Overall: 4/5

    I have two boys getting ready to enter college and I can tell you that they both are more interisted in jobs that will give them free time than jobs that will make them rich. They're both very bright straight A students, the type that in my generation went off to become doctors, lawyers and engineers, but my kids have seen the trade-offs those people made and aren't really interested. People have a lot of junk now ( huge flat screen TVs with surround sound, RVs, boats, McMansions in the suburbs etc.) and it's obvious to my sons that that junk doesn't make those people any happier. My boys want time, not more money.

  • JEFFREY - Friday, June 27, 2008, 11:24AM ET  Report Abuse

    • Overall: 1/5

    Suck it up and stop whining!!!

  • john - Wednesday, June 25, 2008, 7:36AM ET  Report Abuse

    • Overall: 2/5

    Interesting. No more pensions, healthcare is expensive, less wealth than ever before! How is it that every family now has 2-3 cars when our parents had to share 1? How is it that every house has 3-4 TV's and our parents only had 1? How is it that there are more homeowners in 2008 than ever before? As the author and most "generation me" people stand by complaining- the rest of us will work hard, rely on no-one but ourselves and provide a comfortable life for ourselves and our families. These are NOT scary times. Get educated, work, save and invest. Anyone that is relying on the governement or their employer does so because they can't rely on themselves. Too bad but this is nothing new. The rest of us are doing just fine.....

  • Mark - Tuesday, June 24, 2008, 4:41PM ET  Report Abuse

    • Overall: 3/5

    Not happy with the system? Elections are coming and hold the solution. Do not send anyone back to Washington who has held office there in the past. The system is broken and those who broke it can't be trusted to fix it.

  • JTurn - Tuesday, June 24, 2008, 4:31PM ET  Report Abuse

    • Overall: 4/5

    One truth is that the American Dream changes over time. In the 1800s, it was '40 acres and a mule,' a half-dozen kids, and some chickens. In the 1950s, it was an office or manufacturing job, a little house with a tiny yard, and a picket fence. Today it's a corporate job, a McMansion in the suburbs, two kids, and an SUV to drive them to soccer practice. But see how the dream has evolved - always to a position of less physical labor, more leisure time, more luxury goods. Quite frankly, no generation of any nation ever on the face of the planet ever had it so good. But there is one glaring problem, and that is nearly ten trillion dollars of debt. We have purchased our current prosperity on credit, and Anya's generation will bear the first burden of paying that off, or at least bear the burden of living in a society that throws away hundreds of billions of dollars every year to pay the interest on their parents' largess. Since 1980, we have done our nation and its children a huge disservice, attempting at every dip in the stock market to shore it up on credit, to smooth the road for today's investors by laying the burden on our kids and grandkids. For example: - Our recent $150 billion 'economic stimulus' package - paid for totally with debt. - The Bear Stearns buyout, backed with debt. - The war in Iraq, paid for on credit. The American Dream is now held hostage to our creditors, both internal (borrowed from Social Security) and external (borrowed from China). We need the ability to devote our economic power to developing new jobs, new industry, new inventions, better infrastructure, and stronger markets. And we need to shoulder the burdens of our times on our own backs, not lay them on the backs of the next generation. How can we convince them to stay out of debt when they are all $33,000 in debt the moment they are born?

  • Yahoo! Finance User - Tuesday, June 24, 2008, 9:55AM ET  Report Abuse

    • Overall: 3/5

    I agree with the comments just before mine "The American worker has been sold out to Corporate America. How do you like working twice as hard so the CEO can have a million dollar pay day?" I would like to add that I am so mad that as a son of an immigrant I am more American with more love for my fellow Americans than the average American. America wake up! You are giving away your fortune for a bowl of soup!

  • Gary B - Tuesday, June 24, 2008, 8:25AM ET  Report Abuse

    • Overall: 3/5

    The American worker has been sold out to Corporate America. How do you like working twice as hard so the CEO can have a million dollar pay day?

  • brendan - Monday, June 23, 2008, 10:25AM ET  Report Abuse

    • Overall: 3/5

    why do you look so annoyed?

  • Watchman - Monday, June 23, 2008, 9:54AM ET  Report Abuse

    • Overall: 2/5

    Stop whining. As to your experience after hurricane Katrina, sit back and watch what difference it makes when a disaster hits people who have a real work ethic, as opposed to to lazy fat asses in the "Big Easy". The midwest is getting destroyed by floods, right now, but I bet you they will be back on their feet, while your hometown is still whining about not getting enough help. Bhaaaaa!!

  • Yahoo! Finance User - Sunday, June 22, 2008, 3:28PM ET  Report Abuse

    • Overall: 2/5

    its easy for an employed person to put a positive spin on any situation. What the youth of today fail to see is that government has forsaken them. The only opportunities for them is enrollment in the armed forces and sacrificing their lives for corporate greed, a case in point the no-bid oil contract awards in Iraq. We are in a downward spiral and once great nation will go down in history as a has-been.

  • Cubert - Sunday, June 22, 2008, 2:19PM ET  Report Abuse

    • Overall: 2/5

    The American Dream is that I can post comments on a public forum, such as this one, and not fear that my government will harass me in return.

  • samr - Sunday, June 22, 2008, 10:46AM ET  Report Abuse

    • Overall: 5/5

    very clear analyses.... exactly the direction we re heading as a nation. i am optimistic that we are now able to focus on 'happiness' rather than possessions!

  • Boiseag - Saturday, June 21, 2008, 8:46PM ET  Report Abuse

    • Overall: 4/5

    There are lots of folks giving one (*) rating, they simply have not understood yet what is going on now; especially what the younger generation feels (and it is scary for them). This is from a 50 year old guy, who hopes our next generations will be OK; but I already know they will find a way, and it may be very different way than us baby boomers did.

  • Yahoo! Finance User - Saturday, June 21, 2008, 6:32PM ET  Report Abuse

    • Overall: 1/5

    Anya. Being young is no excuse for being uneducated, which is the real problem. You should be the hope of America, not the fear. Learn your history. In 1789 the Constitution of the United States took effect. Within 100 years 13 weak colonies became a superpower that produced 60% of the worlds good and services with only 5% of the worlds population. The most amazing transition in history because of Freedom. Then in 1913 we passed the income tax and began the long journey of turning over that Freedom and accepting government control of our lives. We no longer know what Freedom means. For most of our history, the government had no idea how much money we made, because it was none of their business. We have now turned our servant into our master. We used to dream and accomplish amazing things. The tallest buildings, longest bridges, technology that defied imagination - now we complain that someone else has a bigger piece of the pie than we do and devise ways for the government to take it from them and give it to us. We have lost the ethics of our ancestors, who when they wanted a bigger piece of the pie went out and baked more pies. As we wallow in self pity, we have given our legacy of Freedom to others. Where is the tallest building in the world today? Until last month it was the Petronas Twin Towers in Malaysia, a poor Asian country who adopted our example of economic freedom in 1963. As of May 18, 2008 the tallest building in the world is the Burj Dubai in Dubai, one of the smallest countries in the world. Lacking the oil riches of its neighbors in the 1990's Dubai opted for economic freedom and has miraculously tranformed itself into nothing short of a wonderland. There are still people who dream and carry out their positive vision of the world. Be one of them. The reason gas is $4/gallon is because 30 years ago we stopped producing and refining our own. Now China is set to produce the oil on our shores that our regulations won't allow us to produce. We may not be able to control the path that our nation is taking, but we still have the power to control our own destiny within it if we are willing to take responsibility for ourselves and our own financial education. Start now. Educate yourself about Health Savings Accounts and stop paying tens of thousands of dollars a year for bogus health insurance that goes up every year. Google "Mortgage Savings Accounts" and learn about a simple way to stop paying 90% of your mortgage payment to interest and save hundreds of thousands of dollars. The answers are still there for us, both individually and as a nation, but we have to be willing to take responsibility for ourselves instead of pawning it off on the government.

  • Good Guy - Saturday, June 21, 2008, 5:13PM ET  Report Abuse

    • Overall: 2/5

    People must realize WE are RESPONSIBLE for our own way of life. One must decide on whether the HARD work to obtain one's goals in life, whatever they may be, is worth the sacrifices and TIME it will take to reach those goals. Perhaps we are better off lowering our expectations on the life we want to lead. However, if lofty goals are obtained, they'll feel a lot sweeter. It's YOUR choice on how to lead your life, not the government's responsibility to provide everything for you!

  • Craig - Saturday, June 21, 2008, 1:08PM ET  Report Abuse

    • Overall: 1/5

    Something for nothing? Big Brother taking care of us? I don't think these things are part of the American dream. I would hope some of these people complaining about how awful the state of our country seems would go spend some time in developing countries. (No, the class trip to Paris doesn't count.) The level of opportunity we have in the US is still the envy of most the world. If anything, young people should be more thoughtful regarding debt. Should I take out 100k in student loans for this degree in sociology? Do I need an iphone? Should I be leasing a $30,000 car when I work part-time at Starbucks?

  • ERICH - Saturday, June 21, 2008, 11:13AM ET  Report Abuse

    • Overall: 5/5

    very good!!

  • Yahoo! Finance User - Saturday, June 21, 2008, 7:56AM ET  Report Abuse

    • Overall: 2/5

    We have good paying jobs going unfilled because of a lack of skilled labor. Where is your story on this. Lets take some personal responsibility and move this country forward.

Showing comments 6-35 of 497<< PreviousNext >>

More from Anya Kamenetz

Read the Generation Debt Book

According to economics professor Laurence J. Kotlikoff, Generation Debt offers "a truly gripping account of how young Americans are being ground down by low wages, high taxes, huge student loans, sky-high housing prices, not to mention the impending retirement of their baby boomer parents." Generation Debt will inspire you to take charge of your financial future.

Read more from Anya Kamenetz here and here.

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