How Does the American Dream Influence the U.S. Economy?

According to the ideal of the American Dream, everyone deserves the opportunity to pursue happiness and economic prosperity, and the government should protect the right of every citizen to achieve their highest aspirations and goals. The notion of the American Dream was invented by the founders of the United States and was initially captured by language in the Declaration of Independence.

The Founders' Dream

The founders of America united the 13 colonies and led the war of independence from Britain. Later, they built the framework of government for the newly-independent colonies on republican principles. These republican principles, first conceived by the earliest leaders of the U.S., still influence the U.S. economy because they protect a system of free enterprise, or a free market. A system wherein business activities are regulated through private measures and the market determines prices, products, and services, rather than the government, is said to encourage entrepreneurship and an open society.

For these early leaders, the most prosperous country in the world would offer equal opportunity to everyone, regardless of their current social or economic standing. This has made the U.S. a destination for immigrants from around the world who want to be able to pursue a career outside of their family profession and escape any legal restrictions based on their religion, gender, or social status.

Immigrants Contribute Greatly to the U.S. Economy

Although some U.S. citizens still face discrimination based on skin color, religion, sexual orientation, and gender, among other things, their right to pursue education and employment is protected by the U.S. Constitution. The U.S. has more immigrants than any other country in the world. In November 2021, 46.2 million people living in the U.S. were born in another country. These immigrants have left an indelible mark on the country through their contributions in the areas of art, business, and culture.

According to the U.S. Bureau of Labor Statistics (BLS), 17% of the total civilian labor force were foreign-born in 2020. Research from the Center on Budget and Policy Priorities reveals the extent that immigrants contribute to the U.S. economy. They make up more than a third of the workforce in some industries. Many immigrants are geographically mobile, which enables them to respond to worker shortages in local economies. Immigrants support the aging native-born population, increasing the number of workers as compared to retirees. They also bolster Social Security and Medicare trust funds. In addition, children born to immigrant families are upwardly mobile, which is beneficial to the future U.S. economy overall.

Many of the millions of immigrants who have been drawn to the U.S. have left countries with crumbling political systems and brutal regimes where their choices and opportunity are limited. Not only have their contributions bolstered the economy, but at times they have helped to transform the American economy completely, especially in the case of the technology industry.

Innovation in the U.S. Economy

The strength of the U.S. economy is dependent on its ability to evolve in response to new technology. America's reputation as a global leader in technology innovation is due in large part to a history of opening its borders to people from other countries. Google, Yahoo, eBay, Qualcomm, VMware, and Facebook, among others, were all founded by first or second-generation immigrants.

In October 2018, the National Foundation for American Policy (NFAP) released a report with findings that revealed that 55% of America's startup companies valued at $1 billion dollars or more were started by immigrants. Immigrants also hold critical roles in product development or management in over 80% of the 91 companies studied. Additionally, the research revealed that the billion-dollar startup companies founded by immigrants have created an average of more than 1,200 jobs per company in the United States.

Examples of successful startups founded by immigrants abound in the technology sector. Google co-founder Sergey Brin—named by Forbes as the richest immigrant in America—moved to the U.S. from Russia when he was six years old. Taiwan-born Jensen Huang co-founded computer gaming chip maker Nvidia Corporation (NVDA) in 1993 and serves as the company's chief executive officer and president. Qualcomm (QCOM) cofounder Andrew Viterbi fled Italy and Benito Mussolini's fascist regime with his family, immigrating to the United States in 1938.

Without the streams of talented, ambitious people entering the U.S. every year because of the promise of opportunity, the U.S. would not be in a position of global dominance. In response to policies that were introduced by Donald Trump's administration that aimed to restrict the number of immigrants to the U.S., many economists and policymakers pointed out that immigrants are crucial for the nation's future economic growth. Suketu Mehta, associate professor of journalism at New York University and the author of the book This Land is Our Land: An Immigrant's Manifesto said, "America has succeeded, and achieved its present position of global dominance because it has always been good at importing the talent it needs."

The Bottom Line

The United States founders' dream of creating the most prosperous country in the world has come to fruition. Every person who lives in the U.S. has the right to improve their life, which in turn increases their contributions to national economic growth. Since its beginning, the country has had vast quantities of land, an abundance of natural resources, and neighboring countries that have never threatened the expansion of the American economy. These conditions, and the promise of the American Dream, have attracted millions of people from all around the world who have ultimately given the U.S. economy its competitive advantage.