"The American Dream Needs a Reboot"

My conversation with the Better Life Lab

The Better Life Lab at the New America Foundation has a new series on inequality in America. It’s a great collection of essays, with more to come, that in their words: “consider how individualist narratives about getting ahead on one's own hold us all back, and the evidence that suggests we'd all be better off if we thought collectively.”

Writer Brigid Schulte interviewed me for an essay she was writing for the series on how to square deepening inequality with the American Dream. She liked my comments so much she published our conversation as a Q&A and, with her permission, I’m republishing it here.

(And sure, I could just jump right to the actual conversation, but I’m definitely including all the nice things she said about me to preface the Q&A, because sometimes you gotta brag.)

From the Better Life Lab, though I added section headers:

Where we are

The promise of America, the American Dream that has fueled so many families’ hopes and drawn so many immigrants here over the last 250 years, holds that if you work hard and play by the rules, you can live a stable, comfortable life.

You’ll have a safe place to live, enough to eat, and a stable job that pays a living wage; there will be a good education system for your kids; time for your family, friends, and community; parks and libraries to visit; and opportunity to meet new challenges, grow, and climb the socio-economic ladder. Living the dream means having the freedom to pursue happiness and create the life you want. In essence, it is the ideal that, in America, a “Good Life” can be available to all who work hard enough for it, and that we’ll all benefit as a result in a prosperous and fair society.

But that dream was never true for everybody. And it’s less true now. Economic inequality has been growing at a rapid pace since the 1970s. The rich have only gotten richer, and the poor, poorer. And the likelihood that your children will be better off than you has fallen dramatically since the 1940s. Many Americans are stuck, frustrated, and angry.

And yet, Americans continue to support politicians who promise to restore the American Dream but instead cut taxes for the wealthy and slash funding for supportive policies like health care and food aid. These politicians fail to invest much at all in things families need to live their American Dreams, like affordable child care, housing, transportation, and living wages. President Donald Trump’s recently passed tax law, which cuts taxes on the rich and big corporations and throws millions of people off Medicaid and food aid, is a case in point.

Congress hasn’t raised the $7.25 an hour federal minimum wage since 2009. And politicians have crafted a system that taxes the fruits of that hard labor as much as 37 percent. The rich, on the other hand, get most of their income through investments, which are taxed at a much lower rate of 20 percent.

Does hard work pay off anymore?

To make sense of the current state of the economy, inequality, the beliefs that shape our policies, and the pathway to recapturing the American Dream, I reached out to economist Kathryn Anne Edwards.

She’s super smart and funny, and can make complicated economic issues as clear as day. At the research organization RAND, Edwards and her colleague calculated that, between 1975 and 2018, nearly $50 trillion of wealth transferred from the bottom 90 percent of households to the top 10 percent in the United States. (A RAND update pegged that wealth transfer at nearly $80 trillion between 1975 and 2023.)

Yet, Edwards is an optimist. She co-hosts the Optimist Economy podcast, with episodes like, “A Million Reasons to Raise the Minimum Wage.”

She insists there is a better way, that we can create more ways to reach the American dream. She made me a believer.

In conversation

Brigid Schulte: So many people are losing faith in the American Dream, that their hard work will lead to a better life. Is hard work enough anymore?

Kathryn Anne Edwards: The question for me is less about hard work and more about the returns to work. Are people getting what they’re due?

Schulte: Yes! That’s it!

Edwards: That's different from, “Does hard work equal success?” Instead, it’s “Are you getting what you deserve?” And that’s where there’s so much more dissatisfaction. Because people are working hard, and they can’t afford housing. They can’t afford food. They can’t afford health care. They can’t afford transportation. They can’t afford care for their young ones or their elderly ones.

So, the idea that “I'm working but getting nothing in return” is affecting a growing share of the population. And that's only going to go in one direction until we do something dramatic about healthcare, childcare, elder care, transportation, housing, or wages—hopefully all of the above.

If we don’t, we’ll see a higher share of Americans who feel like they can't afford a decent life. The American Dream is not an unreachable fantasy. It’s just, I have a job, and I can afford to live.

Schulte: But so many people are working really hard, really long hours, and can’t afford to live.

Edwards: We Americans love success, but we also love fairness. And so the question is, are people who are successful today the result of a fair or unfair process? I don't want to cut off the pathways for success to be a function of hard work. And at the same time, I don't like the people who have gotten ahead through something unfair.

That really colors the view of whether or not our inequality is acceptable, whether or not our tax system is doing what it's meant to do, and whether or not we are all given an equal chance.

Think of the estate tax. People are against it. But, in reality, it impacts 0.07 percent of people. I mean, you have to die with $15 million before it is applied. That's a lot of money. I don't think people understand just how few people are in that position.

Then think of unemployment. America lowkey hates unemployed people, or mal-employed people, and thinks that they just need to go out and get a job. But I've always thought that hate comes from a sense of self-preservation. Because if they are actually just hardworking people who had something bad happen to them, then something bad could happen to me. And it's a lot easier for me to judge people who are unsuccessful as being lazy than to admit that I'm just as much at risk for lack of success as they are.

Empathy goes up and down. But we consistently believe in fairness. And that’s good, because the economy today is arguably the scariest it’s been since the Gilded Age, the period right before World War II, when the U.S. was its most unequal.

Schulte: So is the American Dream over?

Edwards: The American Dream isn’t dead. We don’t want it.

Schulte: What?!

Edwards: If we wanted the American Dream, we would have equality for children who show up to kindergarten. Economic inequality is imprinted on kids as young as five, and we don't do much about it and we don't want to.

Do you want universal childcare and universal school meals? If the answer is no, you are for inequality because you want certain kids to have a head start, and you want it to be determined by how much money their dads have. So, if that's how you feel, you don't want the American Dream. You want yours and to pull up the ladder behind you.

There's a lot of people who would never be able to admit that they really want to pull up the ladder behind them, but that's what they do. If you phrase it like that, they tend to say, “Oh no, I want my children to succeed based on their own merits.”

But if they did, they wouldn’t want their kids to outperform others in school simply because those other kids were hungry.

They want their kid to get ahead on merit, but they don't quite understand how much advantage has come from their own economic circumstances.

So there’s a lot of educating to do. A lot of fear to walk back.

Schulte: One thing that has puzzled political scientists and others is how many people who aren’t able to live that American Dream of a stable life vote for politicians like Trump who say they’ll help them, but then support policies that don’t, that only increase economic inequality. [The Yale Budget Lab projects Trump’s tax bill will increase incomes at the very top and drop incomes at the bottom.] Help us understand why.

Edwards: Have you read War and Peace?

Schulte: Tolstoy? Yeah.

Edwards: There’s a metaphor I think about a lot. Tolstoy didn’t like that Napoleon was glorified and seen as a great man who changed history. He describes it like a watch. If you look down at your watch, you think the second hand is moving time. But if you turned it over and opened it up, you would see all the machinery. The second hand is just a manifestation of the gears, and not the other way around. Tolstoy felt that Napoleon was a product of his historical moment, not the one making that moment happen.

That’s like now. The era we’re in of American politics is one of both growing inequality as well as blossoming misinformation. And [Trump] is not the source. He's the watch’s second hand. There are gears behind it. What he's doing is forcing into the front of the conversation the lies and myths that people have built for a long time. He's not generating them. He’s just testing their application.

Is it the case that immigrants steal our jobs? That's a lie that people have told for a really long time. So, increase the deportation budget for the U.S. so it’s 50 times the size of the FBI budget. What happens is: we have an unregulated police department that is going to kick out a lot of people who have jobs in our communities.

You're seeing the backlash already in the polling with immigration. At the start of the Trump administration, versus even six months later, the number of people who think immigrants should have a path to citizenship has already increased. There's a backlash to testing out the lies. [editor’s note: Support for Trump’s immigration policy continues to drop, while record high shares of Americans now say immigration is good for the country.]

The truth is there. It's just a matter of getting people to arrive at it.

Schulte: I was just reading some research that found that, as economic inequality increases, so, too, does our sense of individualism. What will it take for us to start caring about, not just ourselves reaching the American Dream, but all of us?

Edwards: Leadership.

Immigration's a great example. America has been on the fence about immigration, holding incredibly contradictory views for a quarter-century.. But the surge of undocumented immigrants mainly occurred before 2007. And we have absolutely failed in the two decades since to voice any type of coherent policy about what needs to happen. If you don't have leadership, the vacuum that's left is one that hate fills.

We've had stable levels of undocumented immigrants for two decades. We still haven't passed the peak of 2007. Yet we're manufacturing a crisis to deport them in really cruel ways.

You need to give people an alternative policy and sell it in every way you know how, based on truth and experience, as opposed to letting hate build up to the point where it's empowered by policy.

Schulte: So many politicians have been too afraid to address it.

Edwards: They were all too afraid to say the truth, which is that we need immigrants here. They're in your community. So if they're good citizens in all but name, let's make them citizens, so we don't have employers take advantage of their lack of legal status in order to push down the wages of Americans.

I've never heard a federal politician say that, even though probably the single worst thing that immigrants do in our labor market is be exploited.

Have you ever heard a politician say, “Here is why we need free child care,” or free school lunches, or paid sick days and paid family leave for all workers? We have had little leadership on any of these policies to pursue the American dream. So fear dictates both sides.

But truth is power. Evidence is power.

So is the American Dream really dead, or did politicians just stop fighting for it?

Schulte: So how would you articulate a policy goal to the American people, say, why they should support universal child care?

Edwards: Do you want me to talk to a Republican mom about who plans on staying home about why we need universal childcare?

Schulte: Yes.

Edwards: I would say childcare is a system that includes a couple of components: The first is paid family leave so parents have more time to care for their newborns. And the second is an actual childcare system. The vast majority of women would tell you they don't have a choice about whether or not they can stay home or work. Some type of economic circumstance is going to force their hand in either direction.

So if you felt empowered to choose to stay home, you should know you're in a privileged minority. Most women don't have that luxury. You might not like what they choose, but do you want them to stay as trapped as they are?

Did they get paid family leave? Their employer decides. Did they get health insurance? The government decides. Could they afford childcare? The market decides. You're taking all these decisions out of the hands of moms. They know what's best, like you do, and yet they don't get to decide.

So when I say I want a child care system, I'm not telling you, “You have to go to work.” I'm telling you, “I want more women to decide what's best for their children.” And not a for-profit childcare sector that does a bad job. Not an employer who's going to tell them that they don't deserve to stay home for six weeks. Let the mom decide.

If you strongly believe that women want to stay home with their kids, you should give them a four-month head start with nationally guaranteed paid family leave. See how many go back to work. That's a choice. Without paid family leave, there is no choice at all.

Schulte: I love that, focusing on just how much choice we really have. Or don’t.

Edwards: I can go further. A lot of women who stay at home with their children get to the point where they have a new baby that they essentially don’t get to pay attention to because the four-year-old or three-year-old takes all their time. And some of these mothers really want child care so they get to have more time with the baby.

Schulte: I remember when I was interviewing Pat Buchanan, who was so instrumental in killing the bipartisan universal childcare bill in the early 1970s in the Nixon administration. He said, if mothers want to work, it’s a free country. But if you want me to pay for your child care, “No Way, José,” was his direct quote. I’ve heard a similar sentiment from a number of policymakers over the years.

What’s your argument for someone like Pat Buchanan? Who had no kids of his own, by the way.

Edwards: It depends on how feisty I was feeling. On one level, I would say, it takes a lot of arrogance to tell women what they need to do with their children.

Most people are under the gross misconception that what determines a kid's outcome is the type of care they receive from zero to five. That doesn't matter as much as their parents’ income. So to tell a woman she needs to stay at home and not earn money, in an economy where income determines a child's outcome, is a little two-faced. You either need to do something so that income doesn’t play as big a role, or you need to let them work because they're trying to do the best for their children. You, Pat Buchanan, are saying, “The kids of rich women do better, but I won't let you be rich.” That’s not fair.

The other argument is a little bit more feisty: “I find it shocking that a Congress that would repeal the entitlement to cash benefits for women with children would turn around and say, “It's your choice whether to work.” Food stamps, TANF, [Temporary Assistance for Needy Families] and Medicaid all have work requirements. So no, they don't really have a choice to work, do they? You've actually guaranteed that they don't. You just don't want to support them. Just say you’re cheap. That you don’t like these women and don’t want to help them. But don’t make it about them and their choices. It’s about you and your prejudices.”

Schulte: That’s pretty feisty.

Edwards: The last argument I would make is that it's a dereliction of duty on the federal government's part to leave so many families vulnerable to the whims of the childcare market. “Families don't need you to tell them what to do with their kids, Pat Buchanan, but they do need you to use your ability as a market leveler to make childcare more fair and affordable.

“Child care is a market failure. It gets more expensive every year, rising faster than the cost of prescription drugs. So you are not doing your job as a market regulator. Then you go around blaming women for wanting to work. They’re a convenient fall guy for you being bad at your job.”

I’m an economist. I see through that.

Schulte: One last question. I’m puzzled. I’ve been talking to a number of people from all walks of life about the American Dream for some research we’re doing. I’m shocked about how so many people are struggling, and yet they still believe in not just the American Dream, but the American Fantasy of a rags-to-riches life. One home care worker and widowed mother I spoke to barely makes minimum wage, and scrapes by with about six different jobs. Yet she’s convinced she has an invention that will make her a billionaire one day.

But the inequality data is pretty damning. I’m thinking of the research on The Great Gatsby Curve that shows that in countries with high levels of economic inequality, like the United States, there’s less social mobility. If you’re born in the top 1 percent, your kids are likely to stay there. The same appears to be true for those at the bottom, and then there’s a lot of precarity in the middle. Other research found the odds of the typical American reaching the top 1 percent and staying there are .06 percent. The best predictor of those that do are that they’re educated, married and white.

Edwards: Having upward aspirations is such a key part of our economy and it's not the fault of the woman you spoke to that she’s not making it. The federal government has actively pursued a policy of economic inequality for the past 30 years. We have decided that the rich need more money from the government and that we will not support broad investments in children.

Those are two decisions that we have made. As a government, we have passed tax cuts totaling over $11 trillion within a 24-year time period. So people's aspirations to be billionaires, which we know, based on the evidence, are ridiculous, are not the problem. The problem is everything that policy has gotten wrong.

Americans have crazy aspirations, and I'm like, “Yeah, we do. Yeah. You go girl. I want you to be a billionaire too.”

Schulte: I want that for her, too!

Edwards: It's actually a bigger risk to convince her that she’s at the bottom and always will be, because there is a magic to her belief that people in a lot of other countries don't have.

Policy’s job should be to create the right conditions and give her a shot. I don’t think she’ll make it, but I also love that she wants to. And that’s more important than adding a work requirement to Medicaid.

All this evidence about why it wouldn’t work, we can at least try to fix. These are things that policy can change.

But we should never try to change the idea that so many people have that they’re one good idea away from being billionaires. That’s something intangible and important in America, and if we ever lose it, we'd never get it back.

It's the intangibles that make us American, and it's not necessarily a dream. Maybe it's our positivity, maybe it's our aspirations, maybe it's our delusion, whatever. We're impractically aspirational. Policymakers can do a better job of meeting us there.

You can't make people aspirational. But you can help them meet their aspirations.

Photo by Jakob Owens on Unsplash