The Disappearing American Dream

02/14/2014 03:17 pm ET | Updated Apr 16, 2014

"It's called the American Dream because you have to be asleep to believe it." It seems like an increasing number of Americans are beginning to open up their eyes and realize that George Carlin's famous one-liner might be more accurate than many of us are willing to acknowledge. As the United States drifts farther and farther away from the idyllic scene of prosperity and opportunity that can be found in Horatio Alger's rags-to-riches stories and closer to the stark reality of inequality that came to define the gilded and the years leading up to the Great Depression, it seems plausible that for the first time in our nation's history the American Dream may be just that -- a dream.

The post-war boom that occurred following the end of World War II was one of the greatest periods of economic growth in our nation's history. This period of economic growth was marked by large-scale aid and infrastructure projects such as the Marshall Plan and the Interstate Highway System. During this period, economic growth benefited almost all segments of society. From the late 1940s until the early 1970s, income among all socioeconomic groups approximately doubled in real terms. During this time, the gap between the richest and poorest segments of American society, while substantial, remained roughly the same in percentage terms.

These gaping disparities in wealth and income inequality didn't arise overnight. Instead, the distribution of wealth and income has become increasingly unequal over time. The Center on Budget and Policy Priorities found that between 1979 and 2008, the top 1 percent of households saw their after-tax income increase by a whopping 281 percent whereas the middle fifth of households saw theirs increase by only 25 percent.

While there is a tenfold difference in the rate of growth among the top 1 percent and the middle fifth of households, it's the bottom 20 percent and their rate of income growth that best highlights the disparities in real income growth that have occurred since the 1970s. The liberal group United For a Fair Economy found (and Politifact confirmed) that the bottom 20 percent saw their real incomes decrease by 4 percent to 7 percent during the same period that the top 1 percent saw triple-digit growth.

This trend of unequal growth is one that has only intensified as of late. In 2013, economist Emmanuel Saez took a look at income data from 2012 and found that between 2009 and 2012, average real income grew by a modest 6 percent. Unsurprisingly however, this growth was not evenly distributed among income groups. The top 1 percent of incomes grew by 31.4 percent whereas the bottom 99 percent (this is quite literally a 1 percent vs 99 percent comparison) grew by a meager 0.4 percent. Ninety-five percent of the income growth from 2009-2012 was captured by the top one percent.

In addition the unequal growth of pre-tax incomes, one factor which contributes to the current trend is the United States' tax system and its relative lack of equitability when compared to tax systems in other industrialized nations. One way to measure how inequality exists within a country is by determining that nation's Gini coefficient. The Gini coefficient is a measure of wealth concentration within a particular country. A Gini coefficient of zero represents total equality, with every individual having the exact same amount of wealth. On the other hand, a Gini coefficient of one represents maximum inequality; all of the wealth is owned by a single individual.

The Organization for Economic Cooperation and Development analyzed the Gini coefficients for different countries and found that, before accounting for household taxes and cash transfer programs, the United States had the seventh highest level of inequality among all industrialized countries. After accounting for those two factors, the United States actually increased to fourth place on the list of inequality within industrialized countries. What this shows is that not only are pre-tax incomes growing at an unequal rate, but the United States' tax system is far less redistributive than that of most other industrialized countries -- despite the claims made by those on the far right.

There are still those who, in light of this evidence, argue that, at its core, the American Dream isn't about economic equality. Rather, it's the belief that everyone, regardless of where they start, can better themselves materially, economically, and socially. This traditional concept of the American Dream was accompanied by the belief that the path to prosperity was one which was unimpeded by barriers such as a rigid social order that benefits one class at the expense of the others. This conception of the American Dream is one which was near and dear to the hearts of millions of immigrants who were filled with hope about the prospect of social and economic opportunity. Just as importantly, this idea is one which bears many similarities to an economic concept known as mobility. Mobility, simply put, is the ability for an individual, household, or family to change their economic standing.

The Pew Charitable Trusts finds that right now more Americans -- more than 28 percent of them -- are experiencing downward economic mobility than are experiencing upward economic mobility similar to the type which defined America for much of the 20th century. We can turn our heads and ignore the rampant wealth inequality which has become so pervasive over the past decades. We can close our eyes and ignore the unbridled income growth experienced by less than one percent of Americans. We can even refuse to acknowledge the growing number of Americans who are living in poverty and destitution. But it's no longer possible to ignore the fact that social and economic mobility, the very underpinning of the American Dream, is disappearing at a rate which we've never before seen.

The American landscape is as rich and varied as ever. Countless Americans continue to rise out of poverty, seize opportunities and provide for themselves and their families in ways which were unimaginable to their parents or grandparents. Nonetheless, it is becoming harder to achieve this economic mobility and success. Fewer and fewer Americans are benefiting from economic growth. The gap between the richest Americans and the poorest Americans isn't only increasing, but is doing so at an alarming rate. The American Dream isn't dead yet, but it's closer to death than it ever has been before.