The American Dream at its core is the belief that every generation should enjoy greater prosperity than the generation before it. It is often portrayed as reaching certain milestones, such as buying a home and a car, getting married, and having children.
While this description may accurately portray the dream for Baby Boomers, it is starkly different for younger generations.
- The American Dream has traditionally been defined as each generation achieving greater prosperity than the one before it.
- Baby Boomers’ version of the American Dream is different from that of Generation X and Millennials, as salaries have not kept pace with rising costs, such as buying a home.
- Millennials consider pursuing their passions as a much more important part of the American Dream than Gen X and Baby Boomers.
The Baby Boomers
The Baby Boomer generation was born into a U.S. of considerable wealth and economic security. Unlike Europe, the U.S. had no debt associated with rebuilding after World War II, and the factories once used to construct wartime goods were retooled as engines of economic growth and job security.
This allowed the parents of many Baby Boomers to find secure, well-paying jobs, which drove patterns of high consumption. A large percentage were able to own a home, drive a new car, and have two or more children because they could afford it.
As we look back on that period, it's important to note that the 1950s and early 1960s, when the Boomers were children, predated the 1964 Civil Rights Act and many of the reforms that have slowly begun to change the shape of American society. Only some segments of post World War II America were as prosperous as our stereotypes of that time depict.
Wages and Homeownership
Home prices have risen dramatically as compared to average wages over the last several decades. In 1960, the average income for a family was $5,600, and the median home price was $11,900—2.1 times the average salary, according to the U.S. Census Bureau. In 2019, the median household income was a seemingly impressive $68,703, but the median home price was $315,000, which is more than four times the median yearly salary.
The average wage, while much higher, has about the same purchasing power as it did 40 years ago, according to a 2018 study by Pew Research.
This is one potential explanation for why Generation X and MIllennials seem less interested in homeownership than Baby Boomers were. Owning a home has just become too expensive.
Just 56% of Millennials and 59% of Gen Xers see homeownership as the top ingredient of the American Dream, compared to 68% of Baby Boomers, according to a 2018 study by Bank of the West, which compares the three generations. Meanwhile, more than two-thirds (68%) of Millennials and 55% of Generation X who have bought a home have regrets compared to just 35% of Baby Boomers, the study found.
Generational Differences in the American Dream
Being debt-free is the second-most important ingredient of the American Dream for all three generations, according to the study. Baby Boomers are ahead of the pack in thinking so (61%), followed by Millennials (51%) and Gen X (50%).
Baby Boomers also put a bigger emphasis on retiring comfortably (73%), compared to Gen X (59%), and Millennials (49%). Of course, the oldest Boomers are turning 73 in 2019, so that's not surprising.
Millennials rank pursuing their passions much higher as part of the American Dream than older generations, with almost half (47%) saying as much. Only 29% of Gen X—and 27% of Baby Boomers—feels the same way.