Racial discrimination still exists in the housing and labor markets, along with a racial wealth gap that persists between white, Black and Hispanic families. Redlining, a tactic used to prevent people of color from getting mortgages in certain areas, was outlawed by the 1968 Fair Housing Act, yet reports continue to show evidence of racial discrimination in mortgage lending, home appraisals and other areas.

In May, the Department of Housing and Urban Development announced new guidelines to guard against racial bias in the real-estate appraisal process. Under the Biden administration, the Justice Department has also prioritized pursuing redlining settlements against lenders it alleges have discriminated against borrowers of color.

Homeownership rates increased for all racial and ethnic groups between 2012 and 2022, according to the National Association of Realtors, but the increases were uneven, with Black homeowners seeing the smallest increase over that period.

Two-thirds of Black respondents to the YouGov survey said the biggest current barrier to achieving the American dream was the cost of living, followed by prejudice and discrimination. When asked about their perceptions of prior generations’ barriers, Black participants named prejudice and discrimination as the No. 1 barrier.

For the poll respondents as a whole, across all racial groups, prejudice and discrimination ranked ninth on the list of current perceived barriers. When asked about obstacles faced by previous generations, respondents said they thought prejudice and discrimination was the biggest one.

One encouraging sign, and one worrying one

Did the YouGov survey participants get it right about what used to make it hard to get ahead? It’s difficult to use current perceptions to gauge how hard it was for previous generations to achieve their version of the American dream. But Haddad agreed with the poll participants who counted prejudice and discrimination as the top hurdle for previous generations.

There are cultural clues to support that theory, he noted, like the widespread popularity in its day of Lorraine Hansberry’s 1959 play, “A Raisin in the Sun,” and the impact of Betty Friedan’s 1963 book, “The Feminine Mystique.”

Friedan studied dissatisfied housewives “almost like they are in someone else’s American dream, not their own,” Haddad said. Meanwhile, Hansberry’s play portrayed the diverging dreams of members of a Black family in Chicago as they purchase a home in an all-white neighborhood, a plot inspired by Hansberry’s family’s own experience with a racially restrictive covenant. The play’s title comes from the third line of Langston Hughes’s 1951 poem “Harlem,” which begins by asking, “What happens to a dream deferred?”

‘You need capital to launch yourself.’John Haddad, professor of American studies, Penn State Harrisburg

Haddad takes a long view of American history. The fading of prejudice and discrimination as a perceived barrier is encouraging, he said, but it’s discouraging that the cost of living has taken its place. “You need capital to launch yourself,” said Haddad, who is also the interim director of Penn State Harrisburg’s School of Business Administration. Women in particular feel that money pressures are holding them back, with 79% telling YouGov that the cost of living was a block to achieving their American dream, compared with 69% of men.

In 2017 – before the recent inflation spike – a study tracked how finances have influenced people’s chances of achieving the American dream. The researchers noted that while the exact definition of that dream varies across generations, “one constant is that children expect to do better – or at least to have a good chance at doing better – than their parents.”

Those chances, however, have dwindled significantly over time. Children born in 1940 had a 9-in-10 chance of making more money than their parents, according to the study. Yet people born in the late 1980s had only a 50/50 chance of doing the same, the research said.

The researchers, including economist Raj Chetty of Harvard University, wrote that the best hope for reviving the American dream of children being better off than their parents is to have “economic growth that is spread more broadly across the income distribution.”

But as wages have largely stagnated over the past few decades, especially for low- and middle-income workers, the opposite has happened: Wealth in the U.S. is increasingly concentrated at the top. The richest 10% of American households held 66.9% of the country’s wealth during the first quarter of 2024. In 1990, the top 10% held 60.5% of the wealth, Federal Reserve data shows.

Would the conclusions Chetty and his colleagues reached in 2017 be any different if they ran their study again in 2024? While it’s difficult to say, he told MarketWatch in an email, “I’m guessing we’d be in roughly the same place.”

‘You really have to have tenacity’

With much of the responsibility for long-term financial planning falling squarely on the individual, people can succeed as long as they focus on saving, said Wellington Moreno, who uses a budgeting spreadsheet and follows the advice of Dave Ramsey, a popular personal-finance commentator who stresses personal responsibility.

“A great tool we have in this country is called the 401(k),” because it’s meant to focus the mind on retirement, Moreno said. After tapping into his retirement account to pay off debts when he was in his 20s, he said, “as a 30-year-old, I started at zero. I learned a lesson. You want to build that up and feed it.”

Of course, saving for later is just another cost, and it’s one that is required to a greater degree for people today than it was for previous generations. The guarantee of an employer-funded pension fell away as companies began pulling back on such plans with the advent of the 401(k) in the 1980s. Now the guarantee of Social Security payments seems wobbly, too: At the current rate of depletion of its trust funds, in 2035, Social Security will be able to pay out only 83% of scheduled benefits.

In 2035, Darwin Stephens, now 44, will be in the midst of his peak earning years. At that point, he’ll still have seven years before he can claim any Social Security benefits.

This fall, Stephens, who is a real-estate agent in Dallas, and his brother were visiting their 86-year-old grandmother when the topic of Social Security payments came up. The brothers told her they doubted they’d see those payments for themselves.

“Her eyes got so big – like, shocked,” Stephens said. He remembered laughing in frustration. As he saw it, her surprise captured how removed many older people are from the retirement-savings crisis that younger people are facing. It makes the YouGov polling results resonate with him.

‘For the basic dream of being able to retire and not stress, she has it, and we don’t right now.’Darwin Stephens

“For the basic dream of being able to retire and not stress, she has it, and we don’t right now,” he said. That doesn’t even count the extra money it would take to build a business and give back to the community – two things Stephens said he wants to do.

He is getting his bachelor’s degree with the goal of one day running his own real-estate brokerage. “The road is harder. It’s much harder. You really have to have tenacity,” he said. “It does require you to have a certain mindset to be as successful as, or even better than, prior generations.”

How much would he need to earn in order to achieve his American dream? He puts the figure somewhere in the range of $150,000 to $180,000 – at a minimum.

“I’ll get there,” he said. “I’m not doubting that, but I’m hoping it’s enough to do what I plan to do with my money.”

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-Andrew Keshner

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