Why you should care
Many Americans dream of being wealthy, and a surprising number achieve it — at least for a little while.
We tend to think of income groups such as the “top 1 percent” as being relatively stable collectives, particularly in nations like the U.S. that, despite popular rhetoric, enjoy rather low levels of social mobility. But the truth is more complicated, and more volatile: The average American’s chances of attaining the American dream, at least in terms of a high income, are greater than you might think. So are the odds of waking up from that dream.
By the time they turn 60 years old,
21% of U.S. adults have enjoyed an annual household income of above $250,000
for at least one year of their working lives.
That’s according to an analysis reported in the new book Chasing the American Dream. And the number of people who temporarily join the ranks of what amounts to the top 2 percent of earners has more than doubled since 1979.
The authors of the study, Mark Robert Rank, Thomas A. Hirschl and Kirk A. Foster, used longitudinal data from the Panel Study of Income Dynamics, a representative sample of U.S. families and individuals dating back to 1968, to examine social mobility trends in America. The researchers argue that “even when looking at shorter periods of time, affluence is a relatively common event” in America, but one that is also typically short-lived given the “sizable amount of turnover and movement within the top levels of the income distribution.”
The phenomenon also extends further down the income spectrum to a group that marketers and money managers refer to as the “mass affluent” — the roughly 25 million households with an annual income of at least $75,000 who are responsible for about 40 percent of U.S. consumer spending. Incredibly, more than three-quarters (77 percent) of working Americans, primarily older professionals, educated singles and working married couples, have for at least one year enjoyed an annual household income greater than $100,000.
For many, however, the experience is fleeting. Even if more than one-fifth of working Americans will ascend to the top 2 percent for at least a year, only 4.6 percent will do so for five or more years.
The short-lived affluence of the impermanently rich is often driven by a specific event — a new job or promotion, a yearly bonus, a spouse entering the labor market — that is either temporary by nature or subsequently undermined by a job loss, medical problem or family break-up.
Still, those who briefly enter America’s top income brackets often settle into the tier of the mass affluent over time and their somewhat illusory gains appear to have a very real impact on everything from their consumption patterns to their politics.
“For many in this group, the American dream is not dead,” says Mark Rank, the lead researcher and a professor at Washington University in St. Louis. “They have reached affluence for parts of their lives and see it as very attainable, even if the dream has become more elusive for everyone else.”
According to a recent analysis by the AP-NORC Center for Public Affairs Research, this group of “new rich” Americans tend to rely on income and not wealth to preserve their social status and tend to be more socially liberal but fiscally conservative than lower income groups. They’re generally in favor of gay marriage and abortion, for example, but largely opposed to programs like food stamps that target the disadvantaged and to government attempts to combat inequality.
Can either major U.S. political party tap into this emerging group of fiscally conservative social liberals? If the group’s view on opportunity in America is any indication, then the GOP may have the inside track. The AP also cites a Gallup poll from last October finding that 60 percent of those Americans who bring home more than $90,000 per year feel that the average American has “plenty of opportunity” to succeed — a sentiment shared by 67 percent of Republicans but only 38 percent of Democrats.
Of course there’s much more to the American dream than a six-figure income, but it certainly doesn’t hurt when it comes to the rising cost of everything from healthcare to food to a college education. And even if you agree with the late comedian George Carlin that “it’s called the American dream because you have to be asleep to believe it,” it’s clear that for the growing number of temporarily affluent among us, the American dream has evolved into a very convincing power nap.