What the American Dream Looks Like for Gen Z

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 a 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 Z?

Gen Z (1997-2012) has been stepping into adulthood during America’s longest period of global political and economic chaos since World War II. While the ancient wisdom of military strategist Sun Tzu, “In the midst of chaos, there is also opportunity,” may have merit for those with the resources to forcefully take advantage of good opportunities, for most of us chaos is simply chaos. We’re reacting as best we can while working to squelch the chaos. Welcome to the American Dream challenges of Gen Z.

In the previous post, we illustrated how Millennials reimagined and reframed a “New” American as an alternative to the classic American Dream. As we show here, Gen Z is—in real time—further reimaging, reframing, and rebuilding the new American Dream into a construct that fits their chaotic reality rather than submit to a construct that's fading and caving in on them.

Image Credit: Kasasa

The New American Dream Gains Traction

Perhaps a spoiler alert for some, Gen Z as a cohort knows the classic American Dream is fading and caving, if not broken. They know this because they grew up watching national events like the Great Recession negatively impact their parents or their friends' parents, Millennials struggling with student debt and job insecurity, the deeper shredding of the social contract, gig-economy instability, the transparent rise of political and cultural conflict, and affordability concerns for everything, just to touch on some of the high-level issues.

What lessons have Gen Z extracted and opinions have they formed watching these events unfold? Unlike the prior generation, Gen Z’s lessons and opinions have forced them to outright reject old assumptions in favor of creating new ones fit for their chaos. What are those new assumptions? Unlike previous cohorts, Gen Z does not assume hard work guarantees success, or that college guarantees a good job let alone a career, or that homeownership is accessible, or that employers are invested, or that institutions are trustworthy, which are some of the basic assumptions no longer in play.

Perhaps the Gen Z perspective can be put on a bumper sticker: “The Dream requires economic stability, and that ship has sailed.” So how might Gen Z move forward? Just as they are. In being more skeptical and realistic, they’re exchanging a classic American Dream focused on human doing and material gains for a new American Dream focused on human being and values-driven gains. Let’s look at how the new American Dream is showing up in our classic categories of education, housing, and wealth building.

Education

Gen Z marks a turning point in that they’re the first cohort to seriously challenge, if not outright reject, the assumption that “college = success.” They do so because they’re aware college is more expensive than ever, and student loans may not offer a good return. They also do so because they’ve learned from many of their Millennial and Gen X predecessors that a traditional college education is no longer the automatic gateway into the American Dream.

As a result, many Gen Zs are choosing community colleges, trade schools, and certification pathways as their initial gateways to employment. They are also increasingly aware that their formal education(s) will likely be stretched across their lifetime, rather than front loaded into four years, as they retool and reinvent in response to further technology disruptions, market changes, and economic upheavals.

Housing

Reading the economic landscape, Gen Z sees the current challenges with homeownership. Some Gen Zers were able to start profitable careers early and buy homes in crowded markets, and some bought homes in lower-cost markets. For most Gen Zers, though, homeownership looks farther away than for any prior cohort. The factors impacting this reality include the lack of starter homes, housing prices at historic highs relative to average income, low housing inventory, and institutional investors with cash competing with families for ownership. Interest rates are always a factor for homeownership, but for Gen Z these other factors pose greater risks and obstacles than current interest rates.

In response, many Gen Zs can expect to rent long term, live with roommates and family, or pursue alternative arrangements as they arise on a case-by-case basis. For those eventually able to purchase a home in the traditional sense, that purchase will likely come later and cost more. One creative solution could be if Gen Zers in need of housing and Boomers in their too-big homes hit on the wisdom of house sharing. We’ll dub this model as “legacy homes” – a Gen Z family living with a Boomer in their home in exchange for mutual companionship and care.

Wealth Building

Solid employment and career advancement is the traditional keystone for classic American Dream wealth building; however, Gen Z as a whole does not enjoy the comparative economic stability of prior cohorts. They enter a job market defined by contract/gig employment, fewer defined career paths, employers reluctant to build trust, no guarantees of stable employment (with the possible exception of military service), and the relentless threat of AI undermining any and all plans.

Absent family monies or economic windfalls, Gen Z starts adulthood with less economic tailwind, faces greater costs, and has more earning power uncertainty due to continued technology and political disruptions. Accordingly, Gen Zers can expect to start building wealth later in life and with smaller amounts. It may be that Gen Z acquires wealth later in life through inheritance from parents and grandparents, but given the pressures of those cohorts, that’s another assumption Gen Z is wise to largely abandon.

The New American Dream – Gen Z Style

Gen Z appears to have no choice but to carry on the work of their Millennial predecessors in redefining and remaking the new American Dream. With a nod to Sun Tzu, the opportunity in the chaos that Gen Z is leaning into is redefining the American Dream around quality of life instead of around material accumulation.

For many Gen Zers, success looks different from prior generations. Rather than a wealthy life, they seek a stable life. Rather than excess and conspicuous consumption, they seek enough. Rather than prestige, they seek purpose. These values-driven markers for success spring from an optimism that life can be fulfilling, relationships matter, all persons have equal human worth (even if they don’t have equal economic worth), and that individual survival depends on caring for the individual as well as each other and our common planet.

For at least these reasons, Gen Z is pushing the American Dream to be more social and spiritual than economic and physical. In this way, they are prioritizing ideals and goals such as mental wellbeing, freedom and flexibility, creative and meaningful work, healthy relationships, social and environmental sustainability, and community over consumption.

The advantage behind redefining and remaking the new American Dream is that these are ideals and goals much more within the typical Gen Zer’s individual control, like the classic American Dream ideals and goals were often within a Boomer’s individual control. While the classic American Dream has largely faded out of reach for Gen Z, a new, more flexible, purpose-driving Dream is emerging in its place.

How can you best feed and live the new American Dream? Here are our top three suggestions for Gen Zers:

• Think and act creatively about how to meet your material needs, especially regarding earning and housing. What's old may be new again. Old models including multi-generational housing, apprenticeships that lead to skilled crafts, and communal living rather than false independence appear to be experiencing renewed interest and revival.

• 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.

• Become an advocate if not evangelist for the new American Dream. By initiating and engaging conversations with prior generations about the changing American Dream, you'll help them understand the disconnect between their experience and yours. With some mutual understanding, we're all better positioned to spot and lean into the good opportunities in the relentless chaos.

The next post in this series explores the American Dream as experienced by Gen Alpha. 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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