Is The American Dream Attainable? Evidence From Recent Survey

Dude, where is your American dream?

My heart broke when I read about American public opinion shifting towards pessimism when i comes to getting rich. Seven Americans out of ten believe it is harder to get rich. Compared to 1999, there are eight times more people that have lost faith in the American dream.

One thing is sure: American aren’t trying their best to have better financial situation. If you doubt this, take a quick look at the best selling books on Amazon.com. Most of them are going to be either about self help, personal finance, investment, entrepreneurship and career or business management. In other words, if there is anything on American mind, it is money for sure.

So how come, despite all their effort, Americans just came to the conclusion that the American dream is no attainable? My opinion is that plain economic reality has hit most Americans in the face. By economic reality, I’m not talking about the current recession. What I mean by economic reality is the fact that there just seems to be less money in the hands of average Americans and that they start being aware of it.

Low income plus high debt is killing everybody

When asked about the biggest obstacle to getting rich, more than half believe it due to low income. Of course, the cost of living never diminishes. Again, we can’t really blame Americans for their misfortune by saying that they don’t work hard enough. If you are skeptical about this, take a look at productivity growth vs wage growth for the last 15 years. It is obvious that wages haven’t grown as much as productivity does. In fact, Americans have been penalized for their good productivity by seeing their jobs being shifted aboard for less competitive salaries.

Basically, the only thing we can blame Americans for is to not work for the same wage Chinese or Indians work for. But then, if Americans decided to work for the same low wages as in Asian countries, how many of them would be able to buy new plasma TVs, iPhones, laptops, iPad, etc? The answer is they won’t be able in the long run. Of course, they can always do their spending on credit. But sooner or later, when incomes decrease and that expenses stay steady or increase, something bad is going to happen. And this is exactly what happened with the current economic crisis that started with a credit (mortgage) crisis. With decreasing income, Americans will have to learn frugality which means that they will have to find a way to explain to their kids that they won’t be able to have the next iPad.

My opinion is that American dream is attainable if there is balance between productivity and wage growth. If this issue gets fixed, then people will see an increase in their income, people will rely less on credit and might believe that they will, one day, get rich.