By Jon Kolko
Originally published by Fast Company on August 7, 2020
In the 1958 episode of Leave It to Beaver called “The Bank Account,” Ward Cleaver gets Wally and Beaver a piggy bank, seeding it with 75¢. Ward explains, “You’re going to go to college one of these days, and you’ll find that money will come in mighty handy then.”
Leave It to Beaver shaped the American Dream: Dad goes to work, mom makes dinner, the family saves money, and the kids—without exception—go to college. It’s a comfortable story, and for the white, middle-class boomers that grew up watching, it became a template for their lives. Americans valued steady employment and the concept of living without much financial risk. The daily grind of work was the price to pay for a comfortable and predictable retirement.
This story has been passed down through several generations, with a basic formula for success. If you work hard and save money, you can have enough for your kids to then work hard and save money; the end game for one generation is golfing, and for the next, to repeat the cycle.
The American Dream has changed. The goal of comfort and quiet is being traded for one of adventure, fulfillment, and public spectacle. The new American Dream is to live large in the moment, be comfortable, do things we are passionate about away from the confines of a desk and an office—and to let everyone else know about it.
But for most, this new dream is as unattainable as the old one. Far too many young people are uneducated about their financial products and they’re getting caught in a cycle of high interest rates and late payments. More than 44 million people in the United States are saddled with what they were told was “good debt” from education that has no real job prospects. About 13 million people are working multiple jobs, many of which have no set hours or set salary. There are 16 million people working service jobs. Half of Americans don’t have any money in savings for retirement, and, in fact, most of these people don’t have anything at all in savings. Period.
For those of us caught halfway between our parents and our kids, this is a bleak truth—no guaranteed future, no security, and a public culture of wealth voyeurism. “Don’t live like this,” one generation pleads to the next. “Instead, get that bachelor’s degree, because it’s mandatory for success. Build a family in a safe neighborhood. Find a career that will make you comfortable. Be financially responsible and live within your means.” This advice, while sound and practical, is simultaneously demeaning and outdated.
The new American Dream has changed. There are influencers. There’s wealth, excitement, beaches, cars, and beautiful people enjoying beautiful food. There is experience everywhere.
But for most, achieving that dream is still simply impossible.
Instead of the new American Dream, we get vocations
Many of us grew up aware of a post-high school divide: Successful people go to college, and everyone else goes to work in a low-wage job. A million-dollar stat underscores how important the post-boomer generations have viewed college; the U.S. Census Bureau’s report called “The Big Payoff: Educational Attainment and Synthetic Estimates of Work-Life Earnings” describes that those with a bachelor’s degree earn on average $2.1 million in lifetime earnings.
Vocational training was an option for those who couldn’t attend college because it was too expensive or too hard; those who went, it was understood, were poor or dumb. Fast-forward to today: The average cost of college at a private four-year institution (tuition only) is $143,360, and where 50% of high school seniors self-report that they weren’t taught the skills and knowledge they need to prepare for college. Against this backdrop, only 60% of college students graduate in six years from the institution they started with; the rest take longer, transfer, or drop out. Our research with these college students highlights a pretty obvious but important point: Students drop out because they don’t see the relevance and value of their education, because they are overwhelmed with a life of childcare and multiple jobs, and because the subjects they picked, somewhat haphazardly, bore them.
Brian Romanko, VP of engineering at Bestow, was previously the CTO at Earnest—a lender providing college loans to students. He says that, “College was intended as a betterment for people. That’s why there were degrees in things that don’t generate you massive amounts of income. But now our society has really changed what the purpose of higher education is, but we haven’t necessarily changed the institutions to match. So we still offer degree programs in these things and you can spend hundreds of thousands of dollars on a degree that isn’t going to earn you the income to actually be able to repay that money . . . [We need to decide] as a society, ‘you know what, we value this role within our society, and we are willing to pay for that via another mechanism that doesn’t require the individual to take on the burden of debt.’”
Vocational schools have increased in popularity because they provide a clear, concise, and affordable path to money. These schools are laser-focused at skilling the future workforce. Students don’t learn literature and history and the traditional staples of higher education—they learn skills that can get them a job. And until we decide we value knowledge acquisition as an end in itself—and until we make tuition free—vocational schools are no longer a poor man’s alternative to higher education.
But the new American Dream doesn’t celebrate vocations—it celebrates play.
Instead of the new American Dream, we get the gig economy
We’ve traditionally made job security a top priority. In the past, we worked for a single employer, celebrated good benefits, and we slowly worked our way up the ladder. Pay raises were expected and delivered, and employers helped establish a structured retirement plan.
Enter the gig worker, our cultural response to the erosion of this job security. Gig workers string together short-term jobs and get paid only for the work they do. These jobs include everything from food delivery to driving for Uber. Some of these gigs require skills while others just require time.
There is no safety net or healthcare benefits that come with these jobs, and the employment is spotty and reactive. And with little in the bank, and no guarantee of work, the trade-off between feeding the family and paying the rent is a reality not just for those we would typically consider living in poverty.
Meriah Garrett, chief design officer at USAA, a bank catering to those who serve or have served in the armed forces, describes the behavior her team observes when they speak with their members. “When we go out and do research with people who are making in the $30,000 or under range is that when you talk to them, they don’t actually have the ability to look forward . . . It’s not, ‘Okay, I’m living month to month but once I get out of that, then I’ll set these long-term goals.’ For so many people, it’s, ‘I can only focus on the next thing in front of me.’ Or, ‘I can only focus on figuring out which bill I’m going to pay and which bill I’m going to pay later.’”
While we’ve rationalized gig work as a flexible structure that gives workers more control over their schedule, the reality is an inconsistent source of income and an unpredictable ability to survive, day to day. This combination of a lack of savings, a lack of predictability, and no ability to plan an escape is a triple-whammy cycle of spin. And this spin cycle hits as many as 57 million gig workers.
The new American Dream urges us to work only when we want, and enjoy the downtime. But we’re not choosing gig work. It’s all we can get.
Instead of the new American Dream, we get an incomprehensible financial system
The cycle of spin emerges from a lack of strong financial habits and financial literacy, and those topics are nowhere to be found in the Common Core of education. Garrett described that this literacy isn’t taught in schools; “Most of the time,” she says, “we’re not taught. We inherit some kind of model from our parents. We inherit some kind of model from our influencers, and then we try to carry that model forward as best as we can. But there’s no Home Ec anymore. Nobody teaches you how to balance a checkbook.”
Forget checkbooks; it’s the credit cards that get us. Americans carry $5,700 of credit card debt on average, and households with a zero or negative net worth carry an average of $10,308 in credit card debt. Garrett explains that even something as basic as the language of finance is underpinning decisions, some of which comes directly from the industry itself. “One of the things we can do in all of our roles is really speak this stuff in a very human way . . . talking to people in a very basic way such that you’re humanizing the language. And that’s often in conflict with regulation. You need to explain things in certain terms, but how can you combine the human language with the required language there as well? It’s true in the way we talk about loans and APRs. People don’t know what that means.” She describes that in her research with customers, she even hears that participants don’t know the difference between a checking and a savings account. It’s highly unlikely those people will understand that interest compounds.
The new American Dream is about living large and making it big. But if we don’t have basic financial literacy, we can’t even make it small.
The old American Dream was only accessible to a few. The new American Dream is no different.
Generations watched Leave It to Beaver to live the new American Dream vicariously, and shows like this set a social goal. A generation celebrating influencers, Instagram, and experiences is no different. Many of us will never be rich or famous, but we can live the lives we want to lead online, shaping the way our followers perceive us. We strive to buy plane tickets and see our favorite artists instead of saving for the promise of a comfortable retirement. We’re trying hard to live in the now.
Cindy Chastain is a senior vice president at Mastercard, where she leads the design team. In her research, she sees consumers saying:
It might be hard for people who have managed their money to watch a generation not trying to save for that rainy day. But it’s exactly that rainy day that’s encouraging the behavior itself, and in some circular way, it makes strange sense: “If I have no real long-term job prospects, and a lot of debt, and I see everyone around me in the same situation, hey—you only live once.” And this is the financial culture of the new American Dream. Spend it now, because it may be gone tomorrow, and spend it on things that will get you a currency you understand: likes.
After Ward and June give Wally and Beaver the piggy bank and suggest that the kids start saving for college, the episode takes a twist: Impulsively, the boys buy their father, Ward, a new hunting jacket instead of saving responsibly. When Ward gets the jacket, he doesn’t reinforce his lesson of stability—instead, he’s proud of the boys. The episode offers a tiny glimpse of our future, where living in the moment is more important than saving for later. Except now, Beaver would probably crack that pig open and buy himself a new Supreme hoodie.
It’s inevitable that older generations will judge newer ones, and we should judge, harshly, a culture that values menial labor, offers no support infrastructure for those doing quick and dirty jobs, and that promises many that they will work until they die. But let’s not judge the gig worker who decides to sleep late on a Wednesday instead of showing up at a boring desk job from 9-5, or the community college student who drops out to take a second job waiting tables, or the 25-year-old who, with no savings, decides to fly to Coachella on a whim, or the mother of four who spends money on a giant television that she can’t afford. The new American Dream has new values and new aspirations. Savings, security, and predictability just aren’t part of the story.
Watch the entire New American Dream roundtable conversation here: