What the American Dream Looks Like for Gen Y/Millennials
- Paul Knowlton
- 2 hours ago
- 8 min read
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 (subject to 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 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 next, 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 (subject to 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 or rich -- financial stability is typically an element of how every person's version of the American Dream plays out. To the extent financial stability is disconnected from one's version of the American Dream, the more stress 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 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 Millennials?
Where Gen Xers inherited the classic American Dream as it was shifting, Millennials/Gen Y (1981-1996) inherited it as its foundational assumptions were breaking. Those previously dependable cornerstones of the classic American Dream: 1) education, 2) housing, and 3) wealth building were becoming burdensome and elusive, if attainable at all.
For at least the reasons we offer here, Millennials increasingly replaced a fading classic American Dream with a reimagined and reframed “New” American Dream. This New American Dream may have grown out of frustration or need, or likely both, and is more than an attempt to level the playing field. Rather, it creates a second, different playing field.
Image Credit: Kasasa
The Classic American Dream Fades
Millennials stepped into adulthood during the worst economic times. This isn’t hyperbole or a case of being unduly sympathetic for this cohort, it’s their objective reality. Older Millennials with college degrees entered the workforce just ahead of the Great Recession (2008-2012) which means they encountered a collapsing job market just as they were getting traction in their careers. Middle Millennials had difficulty entering the job market because of the Great Recession and its aftermath, so they were clearly delayed in getting their careers started. And not to be lost in the upheaval, Younger Millennials were met with the world-wide COVID-19 shutdown, which absolutely upended labor markets and opportunities.
These disruptions created timing setbacks of at least 5-10 years for many if not most Millennials, during which time they earned less early in their careers, saved less, and delayed American Dream milestones like homeownership and children. For many Millennials, particularly those without strong financial help from family, the classic American Dream was a non-starter. Let’s look at just the Millennial specific hurdles of education/student debt, housing, and wealth building.
Education/Student Debt
Faced with collapsing job markets spanning from 2008 to at least 2021, many Millennials sought to create an advantage by pursuing graduate and post-grad degrees. Naturally, colleges and universities eagerly welcomed these hordes of paying customers and student ranks swelled. As a result, Millennials are the most educated generation in U.S. history, as well as the most indebted before entering the job market.
Many degree programs, even the traditional professions, were expected to unlock opportunity but instead created burdensome debt, delayed homebuying, lowered the rates of marriage and family formation, and preempted sayings and investment. Student debt is a great enough concern to garner political attention, but no practical solution, like interest-free restructuring of debt (which strikes a good balance between borrowers paying back monies and lenders limiting losses). Millennials able to start relatively stable careers free of student debt still had a shot at the classic American Dream, but their numbers were dwindling.
Housing Barriers
Given the over-arching disruptions Millennials had to navigate, it isn’t surprising that homeownership among this cohort is uneven. Housing specific disruptions that created additional barriers for Millennials, as compared to Boomers or Gen Xers, include the lack of starter homes, generally low inventory of homes, higher housing costs relative to income, and higher interest rates. While homeownership was achievable for some it was increasingly out of reach for many.
Those who were able to buy their primary home prior to the COVID-19 pandemic (first quarter 2020) were largely shielded from the additional barriers that followed and were able to start building wealth in one of the traditional ways. Those additional barriers (starting by second quarter 2020), include the start of skyrocketing housing prices, intense competition from investors and buyers with cash, and older generations generally staying in their (now oversized) homes because they frequently couldn’t afford to sell and buy something smaller because smaller was no longer less expensive. Especially after the pandemic, homeownership, a cornerstone of the American Dream, was not only uneven but increasingly not possible for this cohort.
Wealth Building
Given the disruptions dealt Millennials, it comes as no surprise that their wealth building is off to a slower start and realized less traction than prior generations. In recent years, however, Millennials have finally started accumulating wealth, especially those who were able to graduate college without debt, secure stable employment (especially in tech), avoid wage stagnation, buy a home, start a profitable business, or invest in the 2010-2020 bull market. Even better for those able to do at least a couple of these.
But for the majority of this cohort, they hold less wealth than Boomers or Gen Xers did at the same time. For those living the classic American Dream they often report being anxious, perhaps more so than previous generations, as they work to stay ahead of quickly escalating living costs while simultaneously trying to prepare for their children’s futures and their own retirements. Also, for many an anxiety increase is on the horizon as they step into their role of “sandwich generation” (adding the caring of aging parents to their plates).
The New American Dream
To the extent the classic American Dream is available to Millennials, it’s delay, more difficult, and more expensive. Because the traditional path feels increasingly stacked against them (it is), Millennials are responding by redefining success, and thus the American Dream, as less material and more existential. Like everyone they need the basic material things to live, but their priorities are shifting to conditions more within their control, such as personal wellbeing, meaningful work, work-life balance (i.e., work to live, not live to work), experiences over possessions, relationships, social impact, sustainability, and the like.
Perhaps the best general way to understand the Millennial experience with the American Dream is that this cohort doesn’t have just one version to hitch to, but a generally accepted option as well. No doubt they, like previous generations, want their children to be set up for success and do better than themselves, but success and doing better is evolving toward engaging with and enjoying life rather than engaging with and managing possessions. And that makes sense. For the generation that has had to overcome and reframe one disruption after another, it comes as no surprise that they have reimagined and reframed the disrupted American Dream.
How can we, collectively, sustain the American Dream? Here are our top three suggestions for Millennials:
Recognize that you haven't "lost" if previous generations acquired more stuff than you at your age, because you weren't in the same race or playing by the same rules.
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 (only since 1970) is a substantial contributor to the destruction of the classic American Dream.
Use some of your passion for social impact to advocate for American Dream cornerstones like starter homes (instead of McMansions), and guide your Gen Z and Gen Alpha kids toward occupational training for immediate employment (college can wait and will always be there).
The next post in this series explores the American Dream as experienced by Gen Z. 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.
Our vision is to benefit society by transforming capitalism's current core ethic of 'maximize shareholder value' to the better core ethic of 'optimize mutual value.' We achieve our vision by impacting learning, opinion, beliefs, and policy. Institute for Better Capitalism, Inc.
⭐⭐⭐⭐⭐ Our Amazon number 1 new release: Unleash more with Better Capitalism: Jesus, Adam Smith, Ayn Rand, & MLK Jr. on Moving from Plantation to Partnership Economics.
"This book merits close, sustained attention as a compelling move beyond both careless thinking and easy ideology."—Walter Brueggemann, Columbia Theological Seminary
"Better Capitalism is a sincere search for a better world."—Cato Institute
The Institute for Better Capitalism, Inc., is a 501(c)(3). We invite and are grateful for financial partners in this work. We invite you to donate here or contact us for more information. Thanks!
