My high school educated father worked at a small chicken hatchery in rural Iowa in 1948, where he earned what would be around $50,000 per year in today’s dollars.  He and my homemaker mom provided well for our family of five on his income and that year bought their first modest home for around $5,000.  Two years later, they purchased their first new car, a basic 1950 Ford for around $1,500.  We were solid middleclass in this area.

My parents lived the “American Dream” by persevering through the Great Depression with three kids, working hard and playing by the rules.  So, they achieved a comfortable life for our family and, in time, had a secure retirement.  A significant part of their success was owning a home.

Sadly, the middleclass has shrunk and many Americans now believe that working hard is no longer the key to success.  Frequently, they blame the political establishment – and even democracy. 

To make the American Dream a reality again, however, we must first understand why it faded.

Simply stated, the cost of achieving the fruits of the dream – owning a home, educating children, living comfortably and enjoying a secure retirement – has increased much faster since the 1970s than the salaries and wages of most working-class Americans.  Why?  Let’s dive deeper.

The U.S. median household income, where half earn more and half earn less, is a good indicator of financial wellbeing.   According to the Census Bureau, the median was $65,750 in 1984, when inflation adjusted to 2023 dollars.  The median household income in 2023 was $74,580, an increase of only 13% in real (inflation adjusted) income over the past four decades. 

The average price of a house, however, has risen over 500 percent since 1983, according to the St. Louis Federal Reserve.  The inflation adjusted cost of a four-year, college degree between 1980 and 1984 – including tuition, fees, room and board – was around $41,000 according to the National Center for Education Statistics.  That cost had almost tripled by 2020.  These statistics alone speak volumes about the declining prospects of working-class Americans.

Okay, why haven’t their incomes increased more?  Well, one reason is the decline in union membership.

In 1983, there were 17.7 million union members, according to the Bureau of Labor Statistics, a little over 20% of the salary and wage work force.  Today, there are 14.4 million union members, only 10% of that workforce.  The median weekly earnings of union members are 16% higher than non-union, also according to the BLS.  And union wages tend to push non-union wages higher too, as employers compete for workers.

State right to work laws are frequently blamed for declining union membership.  They dictate that workers cannot be compelled to become union members nor pay union dues if they work in a unionized workplace.  Twenty-seven – primarily Republican-controlled – states had enacted these laws by 2022, mostly in the South and West.  So, it’s not surprising that the median wage in these states is much lower than in states without these anti-union laws.

Minimum wage laws have also helped raise the pay of many working-class Americans, but not in all states.  President Franklin Roosevelt’s Fair Labor Standards Act established the federal minimum wage at 25 cents per hour in 1938 but it was not indexed to inflation.  Congress last increased it to $7.25 in 2009 and 20, mostly Republican-controlled, states have adopted this woefully inadequate wage.

Fortunately, progressive states and cities have raised the minimum wage significantly for their citizens, some higher than $15 per hour, and 13 states have indexed their wage to inflation.  In fact, in January, the minimum wage increased in 22 states.  And like union negotiated wages, these increases tend to boost wages for all hourly workers.  Still, most minimum wage laws only help workers survive.

Some economists believe that offshoring manufacturing jobs since the 1970s caused the stagnation in workers’ wages.  Certainly, that played a role but a 2021 research report by economists at the National Bureau of Economic Research indicates that automation for the past four decades was the real driver in depressing U.S. wages. 

A graph they produced shows that real (inflation adjusted) earnings of men without a high-school degree were 15% lower in 2017 than they were in 1980.  High school graduates had done a little better and so had those with some college but their real earnings were also less than in 1980.  Those with a bachelor’s degree had substantial real earnings growth but still much less than those with a graduate degree.  Women, on the other hand, did much better than men at all educational levels.

Other factors have also dramatically affected the American Dream: The cost of health care has skyrocketed over the past four decades; many corporations no longer fund defined benefit pension plans; and the S&P 500 stock market index has increased 3,057% since 1984, which has overwhelmingly benefited only the top 10% of wealthy Americans.

I believe frustrated Americans who blame the political establishment for their plight, paved the way for outsider Donald Trump’s 2016 election that ignited the populist fervor called Trumpism.  But here is the amazing irony, Trump and the GOP seem to be receiving lots of support from American voters whose grievances are primarily the result of Republican’s trickle-down ideology.

Well, I believe the American Dream can be significantly revived simply by voting most of them out of office.