The American Dream at its core is the belief that every generation should enjoy greater prosperity than the generation before it. The American Dream 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 Baby Boomers
The Baby Boomer generation was born into an America of considerable wealth and economic security. Unlike Europe, America 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 Baby Boomers to find secure, well-paying jobs, which drove patterns of high consumption. Everyone owned a home, a new car and had two or more children because they could afford it.
Wages and Homeownership
In 1960, the average wage was $5,300, and the average home price was around $12,700 – 2.4 times the average salary. Today, the average wage is a seemingly impressive $45,000, but the average home price is now a little over $200,000, which is 4.5 times the average yearly salary. That means home prices have shot up 210% as compared to average wages. This is one potential explanation for why Generation X and Y seem so uninterested in homeownership – owning a home has just become too expensive for the younger generations.
In fact, this trend can be applied to nearly every facet of Generation X and Y consumption habits. For example, Generation X and Generation Y aren't buying cars as frequently as their predecessors. The Baby Boomer generation was only spending $2,600 on a new car, which came to 49% of their income. For today's generation, that same class of car is $30,000, which adds up to 67% of their income. It only makes sense that they would hold on to their older cars a little longer – or opt to buy a cheaper car that they can actually afford.
Changes in the American Dream
At the same time, these economic factors force millennials to revise what they believe the American Dream to be. Since millennials have a hard time affording a home, they don't feel as anchored to their hometowns. In fact, 38% of millennials report that travel is a part of their American Dream, while only 28% include retirement.
Millennials also tend to see self-employment as part of the American Dream – 26%, versus 16% of Boomers. It shows a clear shift in attitudes from Boomers, one that is likely brought on by the chronic job insecurity that so many millennials and Gen Xers face today.