The American Dream is all about good prospects for the middle class that includes the following:
• Good prospects for jobs or small business
• Ease to own a car
• Relative ease to own a house
• Access to good health care
• Access to higher education
Most people of the older generation can tell you how much they have benefited from the American Dream. When you talk to the young generation of today, their reaction is one of surprise and disbelief. Those were the good old days! The American Dream seems like a distant past to reminisce only. Although the minimum wage has gone up from $1.65 in 1970 to $10 in 2014 (the fastest in California), this six-fold increase has fallen far behind the costs to maintain the Dream.
In 1970, the word “corporate outsourcing” to low-cost countries was seldom heard of because it did not happen on a mass scale. American factories were still humming with production. Nowadays, it’s hard to find a consumer product that is made in the USA.
The price of gasoline has risen from $0.25 a gallon in 1970 to around $3.50 (more than 10 folds). Owning and driving a private car has become more and more difficult.
A “starter” three-bedroom house cost around $25,000 in 1970. Nowadays, a new automobile can easily cost that much. You cannot find a similar house in the same neighborhood for less than $800,000 (more than 30 folds).
Health care is even worse. As a result of runaway health care inflation, nearly 50 million citizens cannot afford health care insurance. The cost of a hospital stay now averages $9700 per day (Agency of Healthcare Research and Quality, AHRQ). This has caused the biggest insecurity for the American middle class: Would I go bankrupt if I got severely ill? Yes, for sure unless I was really rich.
A public college in 1970 only charged $500 of tuition or lower per year (University of California for instance). Today, the annual tuition is $13,000 (26 folds increase). If the student chooses a private university, the tuition can reach as high as $40,000 per year. As a result, 60% of American college students owe money to the banks in the form of student loans even before they graduate. This is unprecedented.
According to the Federal Reserve Board of New York, there are about 37 million student borrowers. The average student loan is $24,000. About 160,000 students owe more than $200,000. The outstanding total student debts amount to one trillion dollars. What would happen if a critical mass of students default on their loans? A government bailout would approach that of the financial meltdown of 2008.
So long live the American Dream and the American middle class!