What the American Dream Looks Like for Gen X

Generally speaking during most of our history America has been viewed as the land of opportunity. Likewise, our classic American Dream has been the promise that with hard work, anyone can improve their livelihood and lives (outside of targeted discrimination). So why does our classic American Dream feel like it’s fading away? It depends on who you ask.

Taking cues from anthropologists and advertising agencies that study context and behaviors to foresee trends, this series compares the classic American Dream to the American Dream as it’s trending and experienced by the generational cohorts we typically designate as Boomers (1946-64), Gen X (1965-79), Gen Y/Millennials (1980-94), Gen Z (1995-2012), and Gen Alpha (2013-25). As you compare your lived experience against our American Dream construct and trend for your cohort, we’d love to hear your feedback about what you think this series got right, wrong, or should have included.

Image Credit: LA Times

The Classic American Dream

The classic American Dream is a vision that combines hope, opportunity, freedom, and individual responsibility. While its meaning and context will almost certainly vary from person to person, several core themes have endured:

Opportunity for All

At its heart, the classic American Dream is the belief that anyone—regardless of birth, background, or circumstance—can improve their life through their effort, talent, and determination (apart from targeted discrimination). It also assumes a society where pathways to success are open and merit matters.

Upward Mobility

Traditionally, this American Dream centers on the promise of economic and social mobility. Whether for the individual or family unit, this usually includes stable employment, homeownership, financial security, access to skill building/education, and the ability to provide a better life for one’s children. In this view, everyone expected the kids to enjoy better economic and social standing than their parents.

Freedom and Self-Determination

The classic American Dream includes the liberty to define one’s own path—to choose a career, express beliefs, start a business, or reinvent oneself. In this way, it’s both material and existential; not merely having more, but being free to become more.

Equality of Chance, Not Equality of Outcomes

This American Dream is tied to a vision of fairness. Here, the ideal is that one’s destiny should not be predetermined by class, race, or birthright. The emphasis is on a level playing field and equal opportunity, even if outcomes differ. (We can all acknowledge the disconnect between the ideal and the reality. Still, the Dream strived for the ideal.)

Ideally and no matter one's station in life (poor, middle class, or rich), financial stability is typically an element of how every person's version of the American Dream plays out. To the extent that financial stability is disconnected from one's version of the American Dream, the more stress exists in that person's life. In other words, the more the financial instability, the greater the stress—followed by anger.

In essence, the classic American Dream is the promise that with hard work and fair chances, people can shape their own futures and pursue lives of dignity, prosperity, and purpose. It has long been a national aspiration as well as a deeply personal one, and in this way has also been a unifying American value. But is it still?

In the early 20th century, the American Dream focused on individual freedom and escaping old-world hierarchies. By mid-century, it usually meant a suburban home, car, steady job, and the chance for the kids to go to college instead of war. So if the American Dream does evolve, what does it look like in the 21st century?

How’s the Dream Working for Gen X?

Born into the long shadow of Boomer prosperity and mentality, Generation X (1965–1979) entered adulthood just as the economic and social foundations that supported previous generations began to shift. While these societal shifts were being observed and their consequences being predicted (see especially, John Naisbitt’s book Megatrends, Warner Books, 1982), learning to navigate these shifts and pivot in real time were the on-the-job skills Gen Xers had to master as they were stepping into what they thought would be their turn at the classic American Dream.

Image Credit: Kasasa

Shifting Realities

While Gen X was heir apparent to the Boomer experience, that didn’t necessarily play out. The Gen X economic experience included a corporate ethical shift from social responsibility to maximizing profit and shareholder primacy, the decline of pensions, off-shoring and deindustrialization, hostile takeovers and layoffs, and the rise of contract work and job instability, all while costs began to soar because, again, maximize profit became the primary corporate goal.

If I paint a gloomy picture of a typical Gen Xer’s launch, it’s because it was for many of them. The ladder of success they were told to climb was wobbly and, in too many cases, leaning against a crumbling wall. Two particularly shifting realities, or crumbling walls, were higher education and homeownership.

For Boomers, college and graduate school were gateways to the classic American Dream that were relatively inexpensive and offered a high return. But for Gen Xers, these gateways often shifted into burdens. Why? Because while higher education was increasingly necessary for higher paying jobs, it was becoming exponentially more expensive. It was also becoming financially risker as many Gen X students took on loans only to carry their student debt into their 40s and 50s.

The other challenge, homeownership, was still generally achievable for Gen X, but harder because of higher prices relative to income, student debt, and less certainty about long-term affordability. Many Gen Xers eventually bought homes, but often later in life. Those who bought early in low-cost markets have usually been able to build homeownership wealth. Those who bought late or in more expensive cities are more likely to feel squeezed. Importantly, Gen X begins the shift where upward mobility through education and homeownership and are no longer default expectations.

Shifting Dreams

For Gen Xers, the American Dream shifted while they were trying to live into it. Three significant shifts–disruptions really–regard work, wealth, and retirement.

As regards work, Gen X lived through the shift from “job for life” stability to frequent job changes, downsizing and outsourcing, and declining loyalty between employers and employees. This required Gen Xers to learn to be self-reliant and adaptable, which created both some of the most entrepreneurial people in the workforce as well as the most over-extended. Gen X didn’t inherit the relative workplace security the Boomers enjoyed. Rather, they had to hustle for it, even to the point of reinventing themselves in response to industry or market implosions.

Wealth on the Gen X landscape is generally a division between the Have and Have Nots, with Gen Xers being the first generation in modern US history projected to retire less wealthy than its previous generation. Why? Major factors for Gen X include fewer pensions, more student debt, housing price explosions, wage stagnation, and the high costs of raising children. Some of the primary results are: a small segment of Gen X has built solid wealth, often through real estate and tech-era careers; a large middle swath is under-saved for retirement; and many are financially stretched, having to take their turn at being the sandwich generation (caring for both children and aging parents) before becoming financially secure themselves.

Perhaps more than wealth, retirement is a looming concern for Gen X. They are the 401(k)-experiment generation, forced to transition from guaranteed pensions to self-funded retirement. General sentiments among Gen Xers is that many feel unprepared for retirement, many expect to have to work past traditional retirement age, and as health care costs are the number one cause of bankruptcy for American families, many fear that a significant healthcare issue as they age could decimate them financially.

The Dream Is Strained But Not Yet Dead

For Gen X, the classic America Dream is still possible, but as a cohort it is far less accessible, far more uneven, and far more stressful than it is for Boomers. Some sentiments from Gen Xers about their version of the American Dream include, “it requires more work,” “it comes later in life,” “it’s less guaranteed,” “more than before it depends on luck and geography,” and “it may not be dead but it’s on life support.”

These sentiments appear well-founded, as this generation is squeezed between rising costs and stagnant wages, sharply split between those fortunate enough to build assets during regular disruptions and those less so. They carry heavy financial pressures and approach retirement with uncertainty. Despite the challenges (or more likely because of them), Gen Xers have learned to be resourceful, entrepreneurial, resilient, and self-sufficient, all to their great credit. It feels reasonable to summarize the Gen X experience with the classic American Dream as “attainable but fragile.”

What can Gen X do to sustain the American Dream they inherited? Here are our top three suggestions:

• However near or far on the horizon it may be, reimagine retirement. Rather than viewing retirement as an old school end to employment, reinvent yourself yet again into a new chapter that is (finally?) at once productive, enjoyable, and financially sustainable. You've done it before, so you know you can. Or, if it didn't work out before, then be grateful that as long as you breathe you have another shot at fulfilling your American Dream. A great stop to start could be with Mitch Anthony's now classic book, The New Retirementality.

• Join us here at Better Capitalism to help change the national business ethic from “maximize profit” to “optimize profit” (comprising the ethics of ‘enough’ and ‘mutuality’). The relatively new ethic of maximize profit (since 1970) is a substantial contributor to the destruction of the classic American Dream. It's never too late to benefit from a better playing field.

• Recognize that, for better or worse, we all have to operate within the context that we find ourselves. This includes taking our turn at being the sandwich generation. If that's where you find yourself and you're not in a strong financial position, then you may not be able to provide for aging parents, adult children, and yourself as much as you'd like. As it's been said through the ages and in the most recent version, "Put your own oxygen mask on first before helping others." You can only help financially to the extent you have financial resources to give, and you should never go into debt to finance your urge to help.

The next post in this series explores the American Dream as experienced by Millennials. We'll add that link as soon as that post is live. Meanwhile, review the suggestions immediately above, consider again what you can do to help restore the American Dream, and get started!

Fix Capitalism. Fix the American Dream.

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