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Economics Professor: 'American Dream' Is Becoming an Illusion

Friday, 05 Jul 2013 07:48 AM

By Michael Kling

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The American Dream of homeownership and economic advancement may be under threat from stagnating wages and a weak economic recovery.

"If there aren't enough jobs in general, then we have a systemic problem that threatens the American Dream," said Steven Fazzari, an economics professor at Washington University in St. Louis, according to CNBC.

The American Dream holds that you'll be better off than your parents if you just get an education and work hard.

Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video

"In the United States, people who are coming from low-income families are highly likely to be low-income themselves," Erin Currier, director of the Pew Charitable Trusts' Economic Mobility Project, told CNBC. "That sort of rags-to-riches story ... is very unlikely."

Wages have been unable to outpace inflation in recent decades. Adjusted for inflation, median household income in 2011 was almost 9 percent less than it was in 1999.

Plus, the collapse of home values in the housing bust combined with high unemployment in the Great Recession gave a severe blow to the American dream.

A Gallup poll last year showed that only about half of Americans are satisfied with the opportunities the poor have to move up the income ladder through hard work, CNBC noted.

Americans have grown increasingly negative about their own finances, according to The Pew Charitable Trust. Less than a third (32 percent) in a 2011 poll rated their financial situation as "excellent" or "good," down 9 points in just a year and down 23 points since the recession started in 2007.

According to The Pew research, just 4 percent of people who grew up in a household at the bottom fifth of household income made it to the top fifth as adults.

Its research also shows that 83 percent of Americans exceed their parents' family income by at least $1,000.

Half of Americans exceeded their parents' family wealth, and 47 percent have at least $5,000 less wealth than their parents.

Black Americans are less likely to experience absolute upward income and wealth mobility than whites, and a greater proportion of dual-earner families surpass their parents' family income than do single-earner families.

"The ideal of the American Dream is complex and we see again that one's ability to achieve it is impacted by race, education, and family background," said Erin Currier, manager of Pew's Economic Mobility Project.

Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video

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