The image of the “American Dream” that was envisioned and sold to Americans during the post-World War Two economic boom is now considered a core image of American culture. However, this image of a man who owns a nice home, has a wife, two kids and a dog all able to survive off a single income is becoming unachievable for most people. It’s clear now that the American Dream is dying, or maybe it’s already dead. To understand why this is happening, it’s important to chart what changes in the American economy have led to the position we’re in now.
One of the first things that got us here is the growing gap between productivity (how much money is made from workers) and compensation (wages and job benefits) over the past few decades. From 1948-1979, productivity grew to 118% and compensation grew to 107%, compared to 1979-2019 where productivity grew 59%, but compensations only grew by 13%. This is because back in the 1970s, policy makers worked to dismantle the policy to make sure compensation went up along with the growth of productivity. These included things such as excess unemployment being tolerated to avoid inflation (which was very high in the 70s), tax rates on top incomes being lowered and deregulation of businesses. Productivity stayed on relatively the same course of growth, while most of the money went straight to shareholders.
On a related note, wages stagnated for the bottom 90% of earners from 1979 to 2013, only growing a mere 15%, while the pay for the top 1% grew by 138% from 1979 to 2013. This, alongside the inflation we have experienced over the past 50 years, leads to serious wealth inequality. Since the last time the federal minimum wage was increased in 2009, the minimum wage has lost 30% of its value and the federal minimum wage is now below the poverty line of $15,650 per year. This means that people making minimum wage do not have the spending power to provide for themselves, others or put money into savings.
The second thing that got us here is the issue with the housing market. As of April 2025, private equity firms own at least 8,200 apartment buildings and around 2.2 million units, which amounts to 10% of the total housing market. Additionally, institutional investors (private equity, hedge funds, etc.) may control 40% of the single-family homes market by 2030. This large change in ownership since the 2008 recession has meant higher housing costs for buyers and renters (the average cost for rent is $2,050 a month). This means the average American cannot afford rent comfortably. One of the core pillars of the American dream fantasy, owning a home, is now almost unreachable.
Finally, the third thing that got us here was the rising inflation post-COVID. During the pandemic, consumers were spending less and saving more money. Once the lockdowns started to ease, people were spending more money, but the companies could not keep up with demand since they reduced how much they would produce. This inevitably led to higher prices for goods. The most important example: food prices have increased 23.6% from 2020-2024, outpacing overall inflation of 21.2% during that same time period. This means that now the price of essential goods is now getting too expensive and with this final bubble popping, life in America is becoming unaffordable for most people.
With all these factors coming together over the past half century, life is becoming unaffordable and wealth inequality is more apparent. From the average workers’ wages not sufficiently growing since the 1980s to the prices of homes and rent experiencing whopping increase over the past two decades, people are unsatisfied and suffering from the cost of living. It is clear the American Dream is dead, and what’s left is to understand what these above economic factors have in common and why they all seem to be getting worse for the average person. In the second half of this article to come, we will see why these changes are part of a declining system that purposefully does not serve the needs of the people; a system that is determined by oligarchy, where you will have less ability for ownership, where the richest people in America will have unregulated power over politics and where people’s existence will be merely data. This system is capitalism, and it killed the American Dream.