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From Boomers to Gen Z: The Fight for the American Dream

willw
Will Weisenfeld Updated: May 27, 2024 • 15 min read
Tug of the American Dream

The “American Dream” has evolved across generations, symbolizing America as the land of opportunity, where each generation has greater chances for success. Rooted in the idea that all individuals are created equal, it encompasses the foundational principles of life, liberty, and the pursuit of happiness.

Let’s delve into some history and examine how has the American Dream changed over time and what the American Dream looks like from the viewpoint of Gen Z in 2024. Stay tuned as we examine Gen Z’s unique battles and fresh perspectives and ask if the American Dream is still within reach.

How Has the American Dream Changed?

Broad social, economic, and technological changes have caused the concept of the American Dream to significantly evolve from Baby Boomers (those born between 1946 and 1964) to Gen Z (those born between 1997 and 2012).

Historian James Truslow Adams, in his book 'Epic of America', defined the American Dream as a land where life is better and richer for everyone, with opportunities based on ability or achievement, and without barriers based on birth or social class.

Historically, the American Dream was synonymous with owning a home, securing a stable job, and achieving a better standard of living than the previous generation. As each generation redefines its American Dream, they shift priorities and reshape the traditional pathways to success. This is based on upward and downward economic mobility and generational struggles.

The generational shift in the elastic concept of the American Dream shows a move from the initial primary goal of material wealth and financial stability to one of personal fulfillment, social impact, and life balance.

So, the question remains – Is the American Dream out of reach, especially for Generation Z? The answer can vary widely depending on individual perspectives and circumstances.

How Have Values and Priorities Changed?

Generations adapt the dream to fit the realities of their time based on economic conditions, technological advancements, and a shift in cultural values. Despite these shifts, it’s an ideal priority for all generations to be debt-free.

The reality for Gen X, Millennials, and Gen Z is that salaries have not kept pace with inflation. It’s important to note that all these generations confronted economic fluctuations, technological changes, the Great Recession, a problematic pandemic, and increasing income inequality.

Baby Boomers

For Baby Boomers, the American Dream often focused on material wealth. These ideals were passed down from their parents. Their parents (the Silent Generation 1928-1945) had job security and were able to benefit from the US’s standing after World War II. A consumeristic-based economy was the norm in the second half of the 20th century. Aside from people of color, many could easily live off one salary, buy a home and a car, have multiple children, and save for retirement.

Boomers’ idea of upward mobility mirrored their parents and was measured by homeownership, a comfortable retirement, and other milestones like marriage and having children.

There’s much dissonance when comparing Boomers vs Gen Xers vs Millennials vs Generation Z. Boomers entered the job market with a strong economy and experienced exceptional economic security. Also, Baby Boomers had more time to accumulate wealth during their critical earning years and were not as dramatically affected by market volatility caused by recessions.

Today, after living through The Great Recession and the COVID-19 pandemic, the main emphasis of the Baby Boomers’ American Dream is retiring comfortably.

50% of Millennials Became Homeowners

Generation X

For the generation born between 1965 and 1980, the 1980s recession and the dot-com bubble of the late 1990s started to influence and transform the American Dream for Generation X. The downturn in the 1980s was caused by a strict monetary policy to curb inflation — much like what we see today — but this was only a precursor of troubles to come.

With a more cynical view of government and corporations, Gen Xers’ view of the American Dream emphasized personal success over societal ideals. In short, Gen X primarily valued equality, education, home ownership, and work-life balance.

Americans of all ages were affected by The Great Recession of 2008 (the worst economic downturn in the United States since the Great Depression). Still, most agree that Generation X was the cohort that mostly felt the brunt. This recession affected Gen X’s perception of stability and success as they shifted their goals to achieve their dreams. Many turned to owning their own business as a way to gain independence, control, and fulfillment, embodying the entrepreneurial spirit in response to economic challenges.

Surviving the Recession Through Resilience

Gen Xers suffered greatly when the Great Recession of 2008-2009 occurred due to the real estate bubble burst. As they entered their 30s and 40s, many were amid crucial life and career stages. They took a huge hit.

During this time, we saw turmoil on a new level. When the housing market crashed, homes lost value, leading to underwater mortgages and unprecedented foreclosure rates.

As a result of the Great Recession, many of the Gen X cohort became underemployed or lost their jobs. Earnings stagnated when they should have been climbing at the peaks of their careers.

Despite the fortuitous circumstances of their birth or position, Generation X faced significant challenges. As many saw their 401(k)s and other retirement accounts plummet, they came to understand the vulnerability of their retirement security. In response, many adjusted their saving strategies, decided to delay retirement, or planned to work past the age of traditional retirement years.

Gen X was resilient despite these setbacks and took a more conservative investment approach. They shifted their strategy to future financial planning and real estate investments.

Notable things that most Generation Xers did to turn their financial situation around were engaging more with financial planning, investment diversification, and personal savings. The idea was to create a buffer against future economic shocks to ensure a more stable financial future.

Post-recession, Gen X took the opportunity to pivot in their career or start a new business. They sought to control their economic destinies by emphasizing financial literacy. Many sought out entrepreneurial ventures rather than rely on increasingly unreliable corporate jobs.

There was an emphatical shift towards a new work-life balance valuing flexibility, family time, and job satisfaction. Generation X greatly influenced workplace cultures and expectations, paving the way for remote work and flexible job arrangements that have become more mainstream today.

Post-Recession Legacy of Generation X

The economy was slow to recover from the Great Recession, but Generation X’s flexibility allowed them to recover better than most. Having been hit hardest during their peak earning years, the Gen X American Dream evolved to prioritizing owning a home and retiring comfortably.

The Gen X experience also impacts how they advise the younger generations. They emphasize the importance of financial independence, the risks of debt, and the need for career flexibility.

Even today, we find ourselves at a crossroads where economic stability isn’t what it once was. When comparing the success of older generations to the younger generations, the latter believe they have more challenges than their parents at the same age. Millennials and Gen Z’ers blame a tougher economic climate and more significant obstacles to financial success. This has further affected the evolution of the American Dream.

Millennials

Millennials are the generation born between 1981 and 1996. Millennials were fed the idea that to be successful, they needed a four-year degree. They are the most educated generation in history, but it came at a cost. The cost of a degree from a 4-year college has risen exponentially, and now student loans make up more than a third of most Millennials’ overall debt. Some Millennials remain tens of thousands of dollars in debt. If given the chance, many wouldn’t do it again the same way.

The Millennial American Dream is the freedom to pursue their passions and have overall financial stability. Millennials tend to value experiences and personal fulfillment over material gains. Their pursuit of non-traditional lifestyles also reflects broader social changes and increased diversity.

Millennial Challenges from Two Recessions

Financial resentment is shared among the most populous generation, facing two world-altering downturns – the Great Recession and the Covid-19 pandemic.

The Great Recession was a particularly trying time for Millennials. Those in college or just graduating faced immense challenges finding secure employment, as the rising unemployment rate delayed the start of their careers.

Additionally, they struggled with the burden of personal loans and student loans – debt that haunts some to this day. Millennials hope for new federal student loan forgiveness policies to provide much-needed relief.

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Impact of the COVID-19 Pandemic on Millennial Finances

A little over a decade after the 2008-09 recession, just as many Millennials had begun to rebuild their savings, the world was shocked by the COVID-19 pandemic, introducing further economic uncertainty.

The pandemic brought widespread economic disruptions, leading to widespread job losses and reduced incomes. This caused those still employed to postpone significant financial decisions like home purchases due to fears about job stability.

Despite historically low mortgage rates facilitated by Federal Reserve policies, the home value surge during the pandemic put many Millennials, especially first-time buyers, out of the housing market.

This situation forced many Millennials to reassess their long-term financial strategies, prioritizing rebuilding savings, debt reduction, and investment in liquid assets over homeownership.

Today, Millennials focus on financial resilience and independence, emphasizing the importance of early retirement savings and preparing for economic fluctuations since they are skeptical of the reliability of future social safety nets like Social Security.

Generation Z

Generation Z has grown up in a world of volatility with rapid technological change, economic uncertainty, and increasing awareness of global issues like climate change and social justice. Environmental sustainability, mental health, and social equality are important issues for the generation born between 1997 and 2012.

Intangible values such as diversity, flexibility, and purpose are at the forefront of Gen Z’s American Dream. Rather than financial achievement, most Gen Z’ers define success as meaningful work and their impact on their communities and the world. They have a more holistic approach to what it means to live a successful life, aspiring to a society where everyone, regardless of their background and every class, can attain their fullest potential and be recognized for who they are.

So, as Gen Z enters adulthood, their economic reality must be examined as they navigate the current landscape. In doing so, you can see why there is such a generational disparity with the young rising against the masses, looking to take control of their future.

Current Economic Realities Facing Gen Z

Gen Z faces intimidating economic challenges, including high student debt, an uncertain job market, and skyrocketing housing prices. However, they are innately capable of overcoming these obstacles. Let’s examine several obstacles and opportunities facing Gen Z’ers on their path to achieving their American Dream.

Higher Education and Debt

Economic challenges like student debt have led Gen Z’ers to have a more realistic and sober approach to higher education. They see Gen X’s and Millennials' financial troubles with student loans; therefore, they are reluctant to take on student loans themselves.

Most Gen Z’ers see college as an important step in their life because of being pressured by their parents to attend a postsecondary institution. The overall attitude remains that if it’s necessary for their desired career, then great, but many are open to apprenticeships or vocational schools. This holds back many Gen Z’ers from college, especially since interest rates have increased lately, impacting student loan rates.

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The Gen Z Job Market

Generation Z’s ability to navigate a rapidly changing job landscape will be crucial to their career success. The landscape is a mix of challenges and opportunities, exhibiting economic trends, technological advancements, and shifts in work culture.

Economic Recovery and Instability

Despite the stimulus relief checks, the post-pandemic recovery has been uneven and has affected job availability and stability. While specific sectors bounced back, some even with a vengeance, others have experienced more volatility. Economic uncertainties, inflation, and global trade issues continue to impact Generation Z, causing them to modify their lifestyles.

Technological Integration and Automation

Gen Z’ers are primarily digital natives. As they enter a job market highly influenced by technological integration and automation, Generation Z is well-positioned to take advantage of jobs in AI, machine learning, data analysis, and other tech-driven fields.

It’s important to note that automation also presents inherent challenges. Some traditional entry-level jobs are quickly becoming obsolete as some companies resort to technology to reduce human-to-human interaction. The notion is that this will increase profits, but it will create an existential socioeconomic divide. The reliance on automation will force Gen Z to adapt and continuously upgrade their skills.

Remote and Hybrid Work Opportunities

A significant shift to remote and hybrid work models offers Gen Z flexibility and broader job opportunities, though it complicates traditional in-person networking and relationship building. This is favorable for Gen Z’ers who value work-life balance, as they are no longer restricted by geographic location.

Emphasis on Diversity, Inclusion, Sustainability, and Corporate Responsibility

Companies increasingly prioritize diversity, equity, and inclusion, aligning with Gen Z's values and their American Dream. This generation seeks employers who embed these principles into their corporate culture and workplace policies.

However, Gen Z also puts potential employers under the microscope. Gen Z candidates often evaluate businesses based on their commitment to sustainability and ethical practices. Companies committed to environmental issues and social responsibility will likely attract Gen Z talent.

Ultimately, an emphasis on these issues is at the forefront for Gen Z candidates looking to enter the corporate world.

Gig Economy and Freelancing

Compared to previous generations, Gen Z is more open to nontraditional forms of employment, including freelancing, gig work, and entrepreneurship. While the flexibility and independence of gig work might be attractive, these roles can have an often-overlooked downside. Frequently, a lack of job security, benefits, and long-term career growth can be a significant downside that is otherwise available with traditional employment.


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Entry-Level Job Competition

The current job market is highly competitive, especially for entry-level positions. Many sectors require not just a degree but also relevant work experience. This can be a barrier for new graduates. Internships, volunteer work, and side projects are more important than ever for Gen Z to distinguish themselves from their peers.

Skill-Based Hiring

Luckily for Gen Z, there’s a growing trend toward skill-based hiring. Acquiring relevant, tangible, and specific skills and experiences might outweigh traditional education. This shift can benefit Gen Z workers who have invested in developing digital, technical, and soft skills relevant to their industries of interest.

Job Market Breakdown

In 2024, the potential challenges posed by shifting economic uncertainties, inflation, and complicated global trade dynamics require that Gen Z remain adaptable, flexible, and proactive. These factors and an ever-changing job landscape underscore the importance of resilience and continuous learning.

Despite these challenges, Gen Z's job market is marked by competitive yet promising and diverse opportunities. This is particularly true in technological-related sectors. Gen Z must leverage their digital fluency to match their expertise. Skill acquisition and professional development remain crucial. One key to success for Gen Z is to continuously take initiative while navigating a rapidly changing job landscape.

Given the current economic climate, this blend of realism and optimism highlights the current job market as Gen Z navigates to secure a prosperous career path.

An Increasingly Difficult Housing Market Burdens the American Dream

Homeownership was once a cornerstone of the American Dream. Older generations comprise the bulk of the homeownership cohort, but surprisingly, Gen Z is outpacing Millennials and Gen X when it comes to homeownership by age 25. However, the American Dream is not solely about material wealth like owning homes or motor cars; it is also about a social order where individuals can achieve their fullest potential, regardless of birth or position, and be recognized for who they are.

The Great Recession held back Millennials as many attempted to enter the labor force. It was a prolonged recession, and unemployment stayed high for a long time. They moved to the metropolis areas to find jobs, but it’s in those areas that it is subsequently more difficult to purchase a home.

Gen Z experienced the pandemic recession, but that came with stimulus checks and student loan pauses. It was also a tough labor market. Still, due to remote working opportunities, Gen Z could choose to live in more affordable areas where homeownership was more attainable. It’s important to note that Gen Z homeowners are now likely to spend more of their income on mortgage payments.

According to apartmentlist.com, as of 2022, 50% of Millennials became homeowners. Unfortunately for those who missed out on the buying frenzy opportunity after the pandemic's beginning when mortgage rates fell below 3%, purchasing a home is no longer practical and continuously feels more and more out of reach.

Now more than ever, we see a large percentage of Millennials and Gen Z’ers calling themselves “forever renters.” Several economic and cultural factors contribute to this situation.

Elevated Home Prices and High Mortgage Rates

Following historic lows, home prices in the United States have soared to unprecedented levels. Additionally, the continual rise in housing costs doesn’t seem to be slowing down soon, as rates passed 7% for a 30-year fixed-rate mortgage in April 2024. Also, there aren’t any signals that the Federal Reserve will cut interest rates anytime soon. The Fed’s actions don’t set the rates but undoubtedly influence them.

So, as the prices rise, the barrier to entry for first-time homebuyers increases. This is making it difficult for many Americans to achieve homeownership.

An Undersupply of Housing

The supply of available homes has not kept pace with demand, contributing to the steep climb in home prices. This shortage is partly due to slower building rates, highlighting a persistent undersupply. Inventory levels struggle to meet buyer demands, fueling competitive housing markets.

Those who locked in low mortgage rates before the Fed’s rate hike in 2022 mostly prefer not to sell their homes. This has led to bidding wars where homes sell for over the asking price. This complicated situation continues to push the dream of homeownership further out of reach for the average American.

Combatting these challenges requires a multifaceted approach. New policies must be introduced to increase the housing supply and provide affordable housing options. Furthermore, lending practices need to be reworked to make the dream of homeownership a feasible reality for more citizens.

The Millennial generation is challenged by Boomers' economic policies

Building Wealth Amidst Income Inequality and Inflation

Stagflation has slowed, but prices remain far higher than before the pandemic. Income disparity and rising living costs can make achieving financial independence more challenging. Much of the recovery after the Great Recession of 2008-2009 has been erased, especially as wages do not meet the living standards. In fact, groceries cost roughly 33% more than they did at the start of the pandemic.

Building wealth presents a complex challenge for many individuals amidst economic inequality and inflation. Inflation continues to erode purchasing power, disproportionately impacting lower and middle-income households. African Americans, in particular, face significant disparities in economic opportunities and wealth accumulation compared to white Americans. Enhancing one’s financial literacy is crucial to counteracting these challenges. Individuals should make informed decisions about saving, investing, and managing debt.

For those looking to navigate these turbulent economic waters, prioritizing education, seeking higher-paying job opportunities, and exploring side hustles can play pivotal roles in wealth accumulation.

Furthermore, this is why we consistently see many Gen Z’ers advocating for policies that promote economic equality. They want a new economic and financial reality that provides a robust social safety net. Generation Z hopes to even the playing field, ensuring more people have an opportunity to build and sustain wealth.

Younger Generations Turn Against Boomers

OK, Boomer, let’s get a few things straight. The younger generations resent the idea that they will have to clean up the messes caused by the Boomers. Many young Americans feel that the economic policies and systems established by the Boomers have not favored them, leading to a more challenging economic landscape.

Generation X might be the last to enjoy Social Security benefits, and the reality is grim for the rest unless changes are made. Legally, Social Security payments can’t exceed the program’s resources. There is a trust fund, but given the current outlook, the fund can only make up the difference until 2034.

Additionally, work isn’t as rewarding as it once was. So, Boomers can stop trying to degrade us for our ethics. Boomers were rewarded much more for working. They had benefits and pension plans, and the dollar gave them much more purchasing power. Home prices were 4-5 times the median income, but now it’s closer to 8 as the dollar’s purchase power has decreased.

Now, let’s get to the issue of a college degree. It used to be much rarer for someone to have a degree, and for those who did, it gave them leverage in the job market. Nonetheless, Gen X and Millennials were convinced they “needed a college degree” to succeed. These degrees came at a cost as younger generations face high levels of student debt and challenges in securing stable, well-paying jobs.

Socially, culturally, and politically, there are differences in values and priorities between Boomers and younger generations. Younger generations typically prioritize climate change, equality, and inclusivity. Young Americans feel that older generations, particularly Boomers, who mostly hold the seats of power in government, need to take more action. Gen Z and Millennials feel that Boomers demonstrate a disregard for future challenges, further fueling resentment.

The Bottom Line

Lately, economic reports may look strong on paper, although in reality, they certainly don’t feel that way. Luckily, Gen Z has the advantage of time. Even though the youngest generation might face more significant obstacles to financial success, there’s much to learn from previous generations' experiences to avoid repeating the same mistakes.

Overall, most young Americans are more concerned about making enough money to live comfortably and stress-free. They worry less about upward mobility and being more financially successful than their parents.

After living through the Great Recession and the COVID-19 Pandemic, it's safe to say there’s an altered perspective and a New American Dream amongst Generation Z.

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What is the American Dream in 2024?

For Millennials, the American Dream still comprises traditional aspirations like homeownership and financial independence. However, in their pursuit of success, they focus more on personal fulfillment, pursuing their passions, work-life balance, social responsibility, and sustainability. The Gen Z American Dream seeks personal fulfillment by redefining success in a way that incorporates flexibility, diversity, and societal well-being. This generation values work-life balance and meaningful employment and is more inclined toward entrepreneurship and technological innovation.

Why do younger generations feel a dissonance with Baby Boomers?

Younger generations perceive that the economic policies and conditions favored by Baby Boomers have not benefited them. This has led to a challenging economic landscape as they work towards financial independence. Issues such as climate change and social equality, where they feel Boomers have mostly been inactive, further fuel this generational dissonance.

What strategies are Gen Z adopting to navigate their economic challenges?

Gen Z is taking a more realistic approach to education by considering alternatives to traditional four-year degrees, such as apprenticeships or vocational training, to avoid the burden of student loans. They also focus on acquiring specific in-demand skills and exploring non-traditional employment models like freelancing or gig work to adapt to the evolving job market.

willw
Written by Will Weisenfeld

Will is an expatriate from Arizona, USA, who studied Political Science at Arizona State University. As a passionate personal finance enthusiast, he combines his expertise with a keen interest in current events to create engaging and insightful financial content. Outside of his professional pursuits, Will enjoys the nostalgia of old-school video games, adding a unique touch to his multifaceted profile.