The Rise and Fall of the American Dream: What Went Wrong?

How the American Dream Slipped from Our Grasp—and What History Teaches Us About Getting It Back

The American Dream once shimmered as a beacon of hope, a promise that any child, regardless of background, could rise higher than their parents. For much of the 20th century, this was not just rhetoric—it was reality. In his sweeping history, 'Ours Was the Shining Future,' David Leonhardt chronicles how the Dream was painstakingly built and, more recently, how it has come undone. This blog journeys through that story, unraveling the complex web of economic, political, and cultural forces that first propelled and later imperiled the Dream.

Leonhardt begins with the era when the Dream was at its zenith. From the 1940s through the early 1970s, America experienced an unprecedented boom in shared prosperity. Wages rose for workers, unions were strong, and business leaders saw themselves as stewards of both their companies and their communities. The federal government invested massively in highways, schools, and scientific research. The result? A blue-collar worker could buy a home, send kids to college, and retire with dignity. Intergenerational mobility soared: children born in 1940 had a 90% chance of out-earning their parents. 1

But cracks began to show in the 1970s. Economic shocks, globalization, and technological change battered traditional industries. Power shifted decisively away from unions and toward corporations and wealthy individuals. The culture, once defined by moderation and collective sacrifice, pivoted toward individualism and deregulation. Tax cuts favored the rich, public investment slowed, and safety nets frayed. The result was a slow-motion unraveling of the Dream. By the 1980s and beyond, wage growth for most Americans stagnated, while the wealthy pulled far ahead. Today, a millennial has only a 50/50 chance of earning more than their parents. 3

The consequences reach far beyond economics. Leonhardt details how declining mobility has fueled anxiety, political polarization, and even public health crises. Life expectancy for working-class Americans has stalled or declined, driven by so-called 'deaths of despair.' Communities once knitted together by shared purpose now fragment along lines of class and geography. Yet, as the book and this blog argue, the story is not one of inevitable decline. American history is cyclical: every period of stagnation has been followed by renewal, often sparked by grassroots activism and bold leadership. The lessons of the past—about the importance of unions, public investment, and a culture that values the common good—remain as urgent as ever. 3 4

To revive the Dream, Leonhardt and many analysts suggest we must rebuild the pillars that once made it possible: empower workers, invest in education and infrastructure, and cultivate a culture of shared responsibility. The American Dream, after all, was never a guarantee—it was a promise, renewed by each generation. The next chapter is ours to write.