The Dream Is Fraying, Not Finished : Fears of Downward Mobility Ignore How Far We’ve Come

We are now being assaulted by the idea of downward mobility. The middle class, NBC News told us recently, is “running harder but losing ground.” The Wall Street Journal similarly warns that society is polarizing between rich and poor, with the middle class shrinking. Americans between their early 20s and early 40s, the “baby boom” generation, supposedly are faring worse than their parents did. The American Dream is fading.

Hold the obits.

From generation to generation, though not necessarily from year to year, Americans’ living standards have risen. They still are rising. In that sense the American Dream is intact. But downward mobility seems plausible because recent experience has been so discouraging. The economy is a mess compared to the rosy visions of 20 years ago. Unemployment and poverty have risen in the past decade. Some sectors (farming, oil) are depressed. Many Americans’ living standards have fallen.

But these disappointments haven’t turned America into a downwardly mobile society. The middle class isn’t disintegrating. At worst, it’s fraying a little at the edges. By most measures, baby-boomers live better than their parents did at a similar age. Younger Americans have higher incomes and more creature comforts. What is crumbling is an American fantasy: a misguided belief in automatic and almost effortless economic advance.

The Depression-era generation’s dubious advantage was to suffer through the Depression. Low expectations were gloriously overfulfilled by the great postwar prosperity. In 1946, 60% of Americans feared another depression. By contrast, the same prosperity conditioned baby-boomers to expect constantly rising living standards and permanently low unemployment. These high hopes were dashed by inflation, recession and industrial dislocation.

The sense of slippage is sharpened by misinformation. On the NBC Nightly News, correspondent Garrick Utley praises the ease of buying a home in the 1950s and then says, “Today’s reality is that fewer than one-half of Americans under 30 will ever own their own home.” Political analyst Ralph Whitehead Jr. of the University of Massachusetts says, “Baby-boomers are not better off (than their parents) by such measures as income and homeownership.” These statements are misleading or wrong.

It’s true that younger workers today aren’t receiving the income gains of their parents. Indeed, in the early 1980s incomes (after adjustment for inflation) dropped. But that change, reported by economist Frank Levy of the University of Maryland, doesn’t mean that baby-boom workers are worse off than their parents. Levy also found that younger male workers in the early 1980s still had incomes about a fifth higher than their fathers at a similar age in the late 1950s. Younger workers started out with much higher incomes. Even with smaller gains, they ended up ahead.

As for homeownership, an anchor of the American Dream, high interest rates in the 1980s clearly have made buying harder. Homeownership rates have dropped slightly, and the declines have been well reported. But, even with these declines, a greater proportion of couples under 35 now own homes than in the 1950s or ‘60s.

The theory of downward mobility often amounts to an exercise in economic amnesia and cultural nostalgia. It overlooks real economic advances and romanticizes past life styles. Many things that baby-boomers assume as normal parts of the American Dream were only barely established when their parents were young. Until the 1950s, fewer than one in eight Americans went to college. Now nearly half do. Private pensions and health insurance were in their infancy in the ‘50s. Today almost two-thirds of doctors’ bills are paid by private health insurance.

As for stresses on the middle class, prosperity plays tricks: It creates new discontents. Some disillusion with the American Dream reflects this. But old life styles and customs weren’t trouble-free, either. Prosperity has created new choices, and if all the choices aren’t perfect, they may be better than yesterday’s lack of choices. In one poll, 77% of baby-boom respondents thought that they had more control over their lives than their parents had.

No one knows the future. Living standards could stagnate or decline. But that would reverse previous American history. Much of the economy’s recent disappointment reflects the aftereffects of the 1970s’ inflation and the severe 1981-82 recession that it provoked. Even the size of the drop in living standards is debatable. As economist John Weicher of the American Enterprise Institute points out, the declines may be exaggerated by the way the government adjusts incomes for inflation.

As nurtured in the 1960s and ‘70s, the American Dream was a fairy tale fated to self-destruct. Gone was any sense of the unpredictable or imperfect nature of progress. There was no idea of struggle, and little tolerance for setbacks. The American Dream became a state of mind. People were supposed to have their wants satisfied, even if their wants were unrealistic or inconsistent. Downward mobility in that sense became almost inevitable because the American Dream was a moving target increasingly difficult to hit.