The American Dream is taking on water. In a recent study, 70 percent say they still believe in the American Dream. Not bad. However, that number is showing some slippage from 4 years ago when 74 percent of those surveyed agreed with that statement. During the past 4 years of economic sluggishness, Americans are becoming increasingly skeptical about the long-term viability of the American Dream. For example, only 4 in 10 say the Dream is “alive and well.” A whopping 64 percent say that the American Dream will get harder and harder to achieve in the future. This perception that the American Dream is becoming more illusive may be tied to the slowness of the job recovery and the high rate of unemployment, but there is another narrative that is even more alarming. The American idea that anyone who works hard can effectively pull themselves up by their boot straps is simply less true than it was 40 years ago. Over the past 4 decades, the middle class has been shrinking at a precipitous rate. And the well-to-do, well, have been doing very well indeed. Today, the top-earning 1 percent of households now bring home about 20 percent of total income, up from less than 10 percent. The top-earning 1/10,000th of households — each earning at least $7.8 million a year— bring home almost 5 percent of income, up from 1 percent 40 years ago. Of course, on the other end of the spectrum, the number of those under the poverty line are also increasing.
How does this economic sea change impact small business people? In a variety of ways. When Americans are less optimistic, they may spend less, squirreling away money for a rainy day. The opposite may also happen. As the misery index increases, middle class consumers may look for instant gratification purchases: shiny, new electronics, affordable getaways, that sort of thing. As the poor gets poorer, business will need to provide more pay-as-you go opportunities for unbanked customers with no credit. More rent-to-own paradigms may be necessary. A wide-screen Plasma TV may be as much of the Dream that many of us will ever get the chance to live. Then, there are the super rich. How can we make a living off of them? Upscale boutiques, prestigious resorts, luxury cars and other services that appeal to the discriminating millionaire can also be very lucrative. But remember, you are appealing to a very small number of people, and even Richie Rich guy can only own so many yachts.
The American Dream will always be a matter of applying yourself. And the same is true for the success of American small businesses. Hard work pays off. It’s just paying off less for fewer and fewer.