Work, and the paychecks and benefits associated with it, is the linchpin holding together the American dream, according to The 2009 MetLife Study of the American Dream, which was released yesterday. A disturbing 50 percent of Americans say they are only one month—or only two paychecks—or less away from not being able to meet their financial obligations if they were to lose their job, and more than half of these couldn't survive financially for more than two weeks. Even the "mass affluent"—those making $100,000+ in income per year—aren't immune with more than one-quarter (29 percent) saying that they couldn't meet their financial obligations for more than one month following a job loss.
According to the third annual MetLife study, the last twelve months have not only had a profound impact on Americans' financial stability, they have also had a dramatic effect on how Americans define and approach the dream. This year's study reveals that the American dream has been revised—not reversed—and is now buoyed by American pragmatism rather than consumerism. These tectonic shifts would typically be expected to span decades. Yet, according to MetLife's research, the country has experienced major changes year-over-year that will likely have a lasting impact on how Americans achieve and sustain the dream.
The Bar Stops Rising
In years past, MetLife's research revealed that there was an insatiable hunger for—and a persistent pressure to buy—more and better material possessions. The bar for "basic necessities" was continually rising. But this year, for the first time since MetLife fielded the annual study, there is evidence that the bar is holding steady. Nearly half (47 percent) of consumers say they already have all the possessions they need, up from 34 percent in November 2006, and three-quarters (74 percent) no longer agree that the pressure to buy more and better material possessions is greater than ever.
Americans still view material goods such as a car, washer/dryer and residential Internet access as necessities. Yet some discretional purchases have been recalibrated in consumers' minds. More than eight in ten (81 percent) Americans now view vacations as a luxury, up from 73 percent in 2006. Similarly, 91 percent see eating out as a luxury, up from 87 percent in 2006. Four in 10 Americans are even feeling "buyers' remorse" about past purchases—wishing they had spent less and saved more over the years.
Fear of Backsliding
In the midst of the economic crisis, Americans remain optimistic about their long-term ability to achieve the American dream. Roughly one-third of Americans (34 percent) believe that they have already achieved the dream—down only slightly from 37 percent one year ago—and 72 percent believe they can achieve the American dream in their lifetime. However, nearly half (49 percent) are worried about their ability to sustain the dream, highlighting fears of "backsliding."
Across all generations, more than eight in ten (83 percent) agree that the "U.S. still offers the greatest opportunities in the world for people of all backgrounds to achieve success and happiness." And nearly three in four (72 percent) still believe that they will achieve the American dream in their lifetime, up from 67 percent in November 2006.
This hope appears to be fueled in part by Americans' ability to adjust—and perhaps reinvent—their definition of the dream. Today's dream focuses less on external factors (e.g., stock market, home equity) and more on personal relationships such as family, children and marriage. In fact, 44 percent of Americans report that "the current economic situation in this country has caused [them] to reevaluate [their] priorities in life and place greater importance on things like personal life and family rather than finances."
In response to economic conditions—and in light of the dream's shifting definition—Americans are also making significant lifestyle changes. Most are eating at home more often, with 66 percent of all consumers—and 71 percent of GenXers—reporting fewer restaurant meals. Many Americans also report shopping more economically, with 39 percent transitioning to big box stores and 50 percent shifting from brand name products to generics. However, it remains to be seen whether this movement away from unbridled consumerism is a stop-gap in response to the current economic climate, or if it’s a true shift in the value-set of Americans today.
Other key findings from The 2009 MetLife Study of the American Dream include:
• Safety Net More Important. Americans are placing a premium on protection and stability. Across generations, eight in ten say having a personal safety net will be more important this year than last. However, nearly three quarters (74 percent) of Americans admit to not having an adequate safety net.
• Greater Demand for Guarantees. In keeping with consumers' increased appetite for security comes greater demand for predictable returns and guarantees. Eight in ten (80 percent) of those surveyed report that they are now more concerned with guarantees and stability than they are with returns. Despite budgetary pressures, 68 percent of Americans say they are generally willing to pay more for financial and protection products if they come from a company they trust.
• Americans Expect Long Haul. Fully 84 percent of Americans believe the U.S. economy is heading in the wrong direction, up from 64 percent in November 2006, and more than nine in ten believe that it will take at least 12 months for the economy to recover.
• Dream Fueled by Optimism for Minority Populations. Despite conventional wisdom, minority populations (African Americans, Hispanic Americans and Asian Americans) are more optimistic than Caucasian Americans that the dream is still possible. Nearly nine in ten (89 percent) Hispanic Americans believe that they will achieve the American dream in their lifetime, as do 82 percent of African Americans and 83 percent of Asian Americans. Only two-thirds (66 percent) of Caucasians concur.
To download The 2009 MetLife Study of the American Dream, visit www.metlife.com/dream.