Perceptions often drive our actions. Our national self-image needs updating.
The "American Dream" has always been a bit ephemeral. When James Truslow Adams coined the phrase (in his book, The Epic of America, in 1931), it had an egalitarian ring to it - "a better, richer, happier life for all of our citizens of every rank."
Over the years, however, the American Dream has come to mean different things for different people. For more than a generation after World War II, it was strongly associated with doing better economically than your parents did. This was relatively easy to do during the post-war economic boom, and with the help of the GI Bill of Rights. More recently, the American Dream has often meant simply getting a good job. For many others it has referred to owning your own home. Still others have associated it with starting poor and getting rich, or famous, or powerful. President Obama likes to think he's an example, and so does House Speaker John Boehner.
But now the American Dream in any form is rapidly becoming a myth that masks and obscures a much darker reality - a society where the middle class has been shrinking, where about one-third of the population are now living in poverty, where home ownership is declining and has become a debt trap for many underwater mortgage holders, where there is only one job available (probably low-paying) for every five job seekers, where the chances of economic success largely depend on the success of your parents (upward mobility in our country is actually much more restricted than in European countries, or even Canada and class-conscious England), and where the only people who are getting rich are the Wall Street casino bankers and grossly overpaid corporate executives.
A few statistics tell the tale. Once upon a time the United States had the highest standard of living in the world, with a (relatively) egalitarian distribution of income and wealth, steadily declining poverty rates, and steadily improving social and health statistics. But all of this has changed radically over the past 30 years. Today, according to the Organization for Cooperation and Development (OECD), the gap between the rich and poor in the U.S. is the widest of any of its 30 members, except for Mexico and Turkey.
In 2010, the top one percent of income earners took home 24 percent of the total, while the top 10 percent received almost half (49%). The distribution of wealth (including housing but excluding cars, clothes and personal furnishings) was equally skewed, with the top one percent owning 38 percent and the top 20 percent owning 87.2 percent. The remaining 12.2 percent of the wealth was shared among the other 80 percent of us.
One measure of this radical change over time can be seen in CEO salaries. In 1950, Fortune 500 CEOs earned some 20 times as much as the average worker. Today that figure is 320 times as much. CEO salaries (not counting perks) have ballooned to an average of $11.4 million, while the real wages of workers have actually declined. From 1980 to 2008, the median income of high school graduates was down 28.4 percent (from $44,200 to $32,000). In fact, the median income of all households is down an average of seven percent since 1999, despite the "rising tide" at the top of the income scale.
The result of this wide disparity in income and wealth is a nation marked by islands of ever-growing affluence surrounded by a spreading sea of deepening poverty. Currently, there are at least 25 million workers who are either unemployed or underemployed, and this does not count the many millions of young people who have never been employed and cannot find jobs. Moreover, 47.3 percent of those who are working earn less than $25,000 per year, close to (or below) the official poverty line of $22,343 for a family of four. In 2011, some 50 million low-income Americans used food stamps, the vast majority being working poor, or children, or the elderly. There are also currently more than 49 million Americans without health insurance.
Safety net programs like unemployment insurance, food stamps, and Medicaid only partially compensate for our extreme income and wealth gap, judging by key health statistics. We now rank 45th among the nations of the world in infant mortality, below such countries as Cuba, Slovenia, Greece, Portugal and the Czech Republic, and our life expectancy at birth is even worse. We are ranked 50th behind such unlikely places as San Marino, Monaco, Liechtenstein, and Cyprus, as well as every other developed nation. Significantly, there is also a difference of 4.5 years in average life expectancy between the bottom and top 10 percent of the population in relation to income, up from 2.8 years in 1980.
We are also slipping badly in educating the next generation. Currently, less than one-third of our eighth graders are proficient in math, science and reading. We now rank 48th in the world in math education, according to the World Economic Forum, and we are in the middle among the 34 industrialized countries in science and reading test scores. We also rank near bottom in our percentage of high school graduates and sixteenth in our share of adults holding college degrees.
Indeed, we now have a two-tiered system in which the educated, wealthy elite perpetuates itself while a vast underclass lacks the education and skills (or the money) to move up the economic escalator; we have the lowest level of social mobility among the major industrialized countries. As the New York Times'columnist Nicholas Kristof puts it, today "poverty is destiny." To make matters worse, our states have been relentlessly slashing public school budgets, laying off teachers, and cutting school programs, rather than making improvements. And this is in addition to cutting unemployment benefits, tax credits for earned income, and food stamp eligibility, among other things.
Franklin Roosevelt, in his second inaugural address in 1936 -- in the depths of the Great Depression -- declared "I see one-third of a nation ill-housed, ill-clad, ill-nourished." The sad reality is that his words also ring true today, and it is time for us to face up to it. The American Dream has become a myth that serves only to justify the status quo. But this is not an argument for despair. Rather, it is meant to be a wake-up call.
What is needed going forward is an "Occupy Washington" movement armed with the demand for a "Fair Society" -- including a sweeping reform program that would provide a clear mandate for change in the next election. It has happened before in our history, with anti-trust legislation, the minimum wage, collective bargaining rights for workers, Social Security and Medicare, civil rights, women's rights, accommodations for Americans with disabilities, and more.
In short, there are numerous precedents for positive changes, and there is every reason to believe that it can happen again. Political scientists Jacob Hacker and Paul Pierson point out in their disturbing 2010 book, Winner-Take-All Politics, that politics got us into this mess and politics can get us out of it. But we are the only ones who can make that happen. As the TV host and commentator Bill Moyers put it: "The only answer to organized money is organized people."