The American dream has always been just that: a dream, nothing more. Some hit it rich in this country, many do not.
While some liken the American dream to fame and riches beyond one’s imagination. It has always been about gravitating to upper middle class suburbia: a larger than average home, two vehicles in the driveway, two-and-a-half children, and enough left after expenses to put into a slow-but-steady growing 401k that’ll let you retire somewhere between 55 – 60.
Experts like Greg Clark, an economist based out of UC Davis, don’t see things getting any better in the next four or five generations either. Clark has been quoted of late as saying, “The truth is that the American Dream was always an illusion.”
Don’t be fooled by an ever-growing dollar and a seemingly healthy stock market. If 2007 was any sort of revelation, costs will always go up and financial collapses, given the way our economy is currently governed, are an inevitable part of the same trends we’ve always faced.
It all comes down to inflation out-pacing wage increases among middle class workers.
Here are just a few of the out-of-control expenses that will always keep the hard-working middle class from progressing to “wealthy” status (not to mention the poor from reaching the middle):
1. Health Care Rates
Americans pay at least twice the cost per capita of any other nation. Currently, numbers are skyrocketing close to about $9,000 per capita. Thirty years ago, when it seemed that the average American was doing much better financially, that number was a paltry and do-able $1,110. Think this is just natural inflation? Numbers skyrocketed nearly 85% in the decade between 2000 and 2010!
2. Education Costs
Between 2000 and 2012, college tuition nearly doubled, jumping 86% from the tuition fees students paid in the 90’s for the same education. Even more frightening, tuition fees have hiked 1120% since the late 70’s, when again times were slightly easier and the free love era was still in full swing. The current $1,200,000,000 outstanding student loan debt in this country is no joke, with over 70% of American students taking an average of $33,000 in loans over their 4+ year college term. Add interest, buying a home after college, and the barrage of cost of living increases and middle class is a ways off for most of these students, if they ever make it there.
3. Child Care Expenses
The child care industry really has a good gig going. You want a family, you want that beautiful house in the suburbs to raise them, and you need to work 70 hours a week to do it. Right? Worse, you can’t just trust your kids to any old schmo who claims to have taken first aid. So you gotta get someone with all the certifications, background checks in tact, and who has a facility outfitted with the utmost in safety for your child. That equals $$$. Costs have gone up by close to 50% over the last decade and a half. Not as bad as health care or education, but it’s just another massive expense that will continue to rise as you try to work your way up the totem pole of financial security in this country.
4. Home Ownership
I won’t bore you with the dismal stats about current home ownership rates here in the US. Here are a couple of quick facts, which most of you are likely all-too-aware of already: 1) The number of mortgages being taken out are at a 17-year low as of now., 2) Recent surveys suggest that over half (52%) of all Americans say they cannot afford the home they’re living in right now. Wonder why? EVERYTHING costs way more than it did a decade, two decades, etc., ago! Higher interest rates, utilities, contractor rates, all combined with lower approval rates on remortgages (for repairs and/or living expenses) and loans (for the same things). So, those in need have to go to a high-risk lender and boom! There goes the potential for savings and security. Then our little economic friend inflation starts doubling and tripling real estate values just as America comes out of the gutter. Sure, delinquency rates are down on mortgages (source) but that doesn’t mean the middle class is thriving.
5. Zero Savings
Or near-zero for most middle class. Wanna hear something frightening? The apparent richest economy in the world and less than half of all Americans can come up with 4 c-notes in a pinch without borrowing or pawning something they own! If you’re not saving, you’ll need to hit the lottery to retire any time in the near future. Not to mention that your kids will have to struggle to afford healthcare, college, kids, home ownership and living expenses all on their own too! And on and on the middle class cycle goes!
So What Should Americans Do?
You have to leave those middle class dreams behind and strive for more. Much, much, more. There’s no silver lining in the current decline of the middle class. If you aren’t thriving, you darned well better be striving for mid 6 figures if you want any sort of chance at security and comfort in this life.
Forget suburbia folks! The American dream is dead!
Main image by Benjamin