President Obama has called the wealth gap and social mobility the “defining challenge of our time.” He will no doubt be speaking about this in his State of the Union Address today. Pope Francis has also shined a spotlight on income inequality. Here in NYC, the newly elected mayor, Bill DeBlasio made income inequality and the “tale of two cities” the theme of his campaign which he won in a landslide.
A while back, I posted an infographic entitled Broke? It Might Not Be Your Fault, which lists statistics and facts showing how it is hard to move up to the next economic rung. One of the main things I love about America is that we have much more opportunities compared to many other places. However, a growing amount of people are pessimistic about achieving the American Dream. I am a big fan of the Horatio Alger stories, the “rags to riches” type stories where those living in impoverished conditions rise from humble beginnings to live a richer life through hard work, determination, courage, and honesty. Recently, Laurie from the Frugal Farmer posted Can You ‘Bootstrap’ Your Way Out of Poverty?, where she cites to a Yahoo Finance article which answers the question in a negative. However, Laurie goes on to recount an inspiring story of how her mother was able to overcome many obstacles to “bootstrap” her way out of poverty. Charles from Getting a Rich Life posted a story about living in government housing and growing up poor, but is now a millionaire before the age of 40.
Hearing these stories definitely inspires you. If someone with these obstacles can succeed, so can others right? Comparatively, the details of my life are quite inconsequential. I was born in NYC to a working-class immigrant Chinese family. Growing up, my family lived a frugal life, but we did not live in government housing nor did we have to rely on welfare. We lived in a multi-generational extended family house which included my family, my uncle, aunt, 2 cousins and my paternal grandparents. We never had cable television, which made me think we were poor and deprived. For the longest time, we didn’t have a remote control for our television. My sister and I would take turns sitting next to it to flip through the channels. Indeed, First World Problems! We didn’t have many luxuries, but we always had food on the table and a bed to sleep in. That’s all you can really ask for.
My parents always told us that a good education and a good work ethic would give us a better life. I received scholarships from some private universities within commuting distance from where we lived, but I really didn’t want to stay home so I chose to dorm at a state university. It might not have been the best decision, financially speaking, but I needed to do it for the independence and it did teach me responsibility. I went to a public state university and received income-based grants from the federal government and the state, but did take out student loans. My parents helped out with the difference. I worked part-time throughout high school and college, but all of that money was for my own personal expenses. After graduating from college, I moved back in with my parents and found a job paying about $32,000. I paid my parents $700 a month for “rent” which helped them out with the mortgage. I didn’t see myself staying in my career track, and decided to go to law school. I chose to go to law school part-time in the evenings, while continuing to work full-time so that I could support myself. My “rent” was however cut to $600 a month. With my degree, I found a job in government which provides great benefits and a good income. While I am no where near millionaire status, I am securely in the middle class.
Many bloggers brought up great points in the comments section of my post Broke? It Might Not Be Your Fault, regarding difficult obstacles some face. Those in rural areas may lack access to opportunities that may be available to others. Those who are raised in a toxic environment, whether it be because of drug abuse or physical abuse, may never see that there are opportunities available to them or encouraged to access those opportunities. Many also face circumstances, beyond their control, where they are unable to take advantage of opportunities that are presented. I did not tell my story to say that anyone can better their lot in life since I was able to do it. While I did not grow up with many privileges or advantages, I did have all the necessities provided for me and a family who encouraged me to improve myself. Surely, much can be done to strengthen the safety net for those struggling and to help them improve their lot in life. But stories of those from humble beginnings who advanced themselves through hard work shows that it is possible for many.
Do you think it’s possible to improve your lot in life? Is this still the land of opportunity?
I think it’s definitely possible to move up the economic ladder in America. Hard, smart work will always provide positive results.
I also think you have to be realistic. The economic world is so incredibly different now than it was when my father started his career 40 years ago. Many of the entry-level jobs that would have been available to a 20-something back then have now been outsourced to other countries or replaced with robotics. I have a college degree, my father doesn’t — but so does almost every other 20-something looking for jobs right now, which puts me (and them) in a position of having thousands of dollars of debt right out of the gate, but faced with tons of similarly-credentialed competitors for a limited pool of jobs. At the same time, those jobs are slowly dismantling the benefits packages that my parents are accustomed to — fewer of my potential employers offer retirement plans or health benefits.
Despite all that, I can still move upwards. I just have to do it in a different way, by pursuing nontraditional income opportunities like online work, reprioritizing my goals (I’m 28 and I likely won’t buy a house for several more years — my parents had already purchased their first home by the time they were 22.), and staying aware of the fact that my economy is not my parents’ economy.
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Hey Adam, thanks for the comment…I actually was thinking about a follow up post “Are You (Financially) Better Off Than Your Parents?” Hard and smart work is definitely very important. But absolutely, we live in a different economic world these days and things are different from the previous generation.
Tough question to answer, but gun to my head, I think it’s possible for most people to improve their financial lot in life. There are notable exceptions (e.g. – people with severe disabilities). On a purely financial basis, I think a big part of the equation is learning how to live off of a portion of your take home income (90%, 75%, 50%, maybe a lot less than that, too) and saving/investing the rest. This may require a lot of dramatic changes (selling cars and homes, moving to a new part of the city, or an entirely different part of the nation).
I also think it’s possible the same way that becoming healthy is possible: it involves changing our daily habits, making sacrifices, and working (out) hard. So it’s simple, but difficult, and therefore a lot of us (most of us?) will not make those changes, and will not see the benefits.
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Agree…there are exceptions to the general rule but for most part it’s is possible to improve your financial lot in life. It may not be easy, but that doesn’t mean it’s not possible. I think the analogy with becoming healthy is a good one. You have to change your mindset and habits.
I think practically everyone would agree that some people are born into better or worse situations in life. Some are born into a family who give them every opportunity imaginable to succeed. Others have to deal with some very difficult living situations where success can only come out of sheer will and working smart. I think it’s difficult to go from poor to rich, but I also believe it’s possible, and the smarter you work – not harder – the better your chances become.
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You make a good point about it being difficult to go from poor to rich. I love those stories where it happens but they don’t happen all that often. It is possible though. And it is definitely possible, with some exceptions, to move up an economic rung through hard work and smarts.
Ditto on DB40’s response. Great article, Andrew, and thanks so much for mentioning my story and your own family’s story. Your parents are exactly the kind of people I think of – those who start with nothing but work their tales off for more, and live frugal lives to increase economical stability. The Freedom Thirty Five Blog had a post on a similar topic this week. I agree that there are exceptions, but I’ve seen and read about so many people, who have overcome all types of disadvantages, from abuse to addiction and whatever, go on to be successful, that by and large I would say that the chances are good for all people, at least in first world countries.
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Thanks Laurie…I really enjoyed your article and was inspired to finally finish mine. I’ll have to check out the blog you mentioned. It seems that this is the hot topic lately.
Good post Andrew! I think this is an incredibly important question to ask in today’s society as we are seeing a growing disparity between the “haves” and “have-nots”. When we were on vacation last week we saw something on the news where they were talking about a new study that came out showing that 85 families in the world have the same amount of wealth as 3.5 billion people in the world – roughly half of the world’s population. That is a sobering number to look at and thus leads to the importance of looking at this.
That said, I do still think it is possible to improve your lot in life, though it may be more difficult today. I also think it’s important to look at what that really means. For many it means having more “stuff” when that really isn’t true wealth in my opinion. I believe it means getting to that middle class type of place where you’re able to grow your wealth and begin to grow a financial foundation for you and your family.
Like you, my family didn’t have a whole lot growing up. We had food on the table, the bills were paid most of the time but not a whole lot of stuff. My parents paid for a very small part of my college education and I covered the large majority of it through working while in school and student loans. I worked hard and with a little luck was able to make some headway. I think those are two of the key things that are needed to be able to improve ones lot in life. It certainly doesn’t guarantee it but it makes it more possible at least.
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Thanks John! I definitely think the statistic you mentioned is problematic. It isn’t healthy to have so much wealth consolidated to such a small amount of people. Hard work and some luck…definitely factors in improving your lot in life.
Let me preface my response by saying, I have always been a “glass is half full” kind of gal, so I absolutely believe that you can change your lot in life and anything is possible. Anything is possible, though, with a ton of hard work, and I think as technology has improved and some areas of our lives have become “easy” people expect more easiness in life. From my perspective, hard work always pays off and it may not pay off immediately, but it always pays off over time.
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That seems to be the overwhelming theme: hard-work pays off! All too often, people don’t want to do the hard-work yet expect success. Now of course…there are exceptions where even hard-work is not enough.
Is this a land of opportunity? That depends upon your skill set! If you are in the manufacturing sector, China is probably the land of opportunity. If you are into software, nothing beats the US!
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Yes, much more opportunities exists for those with specific skill sets.
Andrew
It starts with the mindset of wanting to change your life and developing the habits to reach your goal. There will always be those with a better advantage than you but it’s irrelevant. Your skill set and determination will be the deciding factor as you could’ve settled at your 32k job. You didn’t and now you and your wife will provide your son the opportunities you never had. A lot of my childhood friends had way more than I did so they got complacent, I just wanted it more.
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I definitely agree that it starts with your mindset and that skill set/determination are important factors. I do think that often times, those who grew up privileged get complacent. Not always true though.
I like to think it is. If it’s not, that might be too devastating of a thought. But, being someone who has seen others rise from lower to middle class, or from middle to upper middle and even the wealthy class, I’m confident it can be done. I’m also confident that it takes the desire and determination of that person. You have to want things to be different for you so desperately that you will do nearly anything within reason to change your circumstances, not wait for someone to change them for you. You worked and went to law school part-time to better your lot in life, and that’s damn awesome. You made that change, and took the opportunity that was given to you. It’s all about people taking advantage of the opportunities afforded them.
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Desire and determination…yes absolutely necessary qualities to be successful. “You have to want things to be different for you so desperately that you will do nearly anything within reason to change your circumstances, not wait for someone to change them for you” I think you hit the nail on the head with that statement.
Great article! I think anything is possible, however, it certainly helps to have support be it financial, community, family…even if that’s just someone telling you “you can do it!” I think as a kid if you’re told “you will never amount to anything” it’s probably a lot harder to overcome, and may make the road harder, but like I said anything is possible.
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Thanks Tonya. You’re right, it does make a huge difference when you have support from your family and community. Many won’t realize that there are opportunities available or may lack the knowledge to take advantage of these opportunities without such support.
Great story! It’s always inspirational to hear someone who’s made it to millionaire status from humble beginnings.
I definitely believe that hard work is part of the equation, but it’s obviously not the whole thing. There are plenty of folks who are doomed to institutional poverty simply because their schools aren’t as good and their home lives are unhealthy. Either way, it’s great to see it work out.
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Thanks. Charles’ story of going from government housing to millionaire status is definitely inspirational. You make a valid point about institutional poverty and how a toxic home environment and the schools make it difficult to have a successful life.
I definitely think it’s possible to change your life under the right set of circumstances. I work with formerly homeless individuals who are diagnosed with severe mental illnesses. Despite some of the “hands” that they were “dealt” (physical and sexual childhood abuse, drug addiction, poverty etc.) some of them have still been able to “get ahead”. They are living in their own apartments, working jobs and contributing to society in positive ways (volunteering etc.). There circumstances are obviously much more extreme then most of the population, but when I look at them and what they’ve been able to achieve, I think almost anyone who believes in themselves and has people who believe in them, can achieve success (even if they are small successes-relative to what you and i might consider success). Basically, I want to believe that the American dream still exists 🙂
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Wow that is an amazing story. Dealing with those circumstances and still being able to get ahead is truly inspirational.
“Do you think it’s possible to improve your lot in life? Is this still the land of opportunity?”
Yes, it completely is. It comes down to two words: Hard work.
I’ll point to myself as an example. Growing up, we didn’t have much. I was the first one in my immediate or extended family to graduate from college. I busted my ass off and graduated Magna Cum Laude in Biology and Chemistry. I continued busting my ass off at work and moved up quickly. I just made sure I worked harder than everyone around me. Although you wouldn’t know if from my possessions, I’ve definitely climbed up the ladder.
My biggest motivation was wanting to have a better life than the one I grew up with. Even as a child, I could see my parents screwing up badly in some areas and I vowed to never be like them.
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Thanks for sharing your experience…pretty impressive. Hard work definitely pays off. It’s great that you decided not to follow the financial mistakes that your parents made, because many times kids use their parents as their financial role model which perpetuates a cycle of poor financial decisions.
I dunno. I make good cash, but I worked for a family owned company where they looked at us all like we were lazy. You know, because all you need to do to become a multi-billionaire is just work hard. Their attitude was sickening – and a main reason why I quit.
Scaling that down, I don’t think the correlation between working hard and income/wealth is as strong as once was. I think to some degree, many people are “stuck.” But they tend to be middle class so not a lot of sympathy is thrown their way. Rising above the poverty level is something I believe to be achievable for most Americans today.
Of course, even Kuwait has government housing [….] they’re 4000 sq ft and come with a servants quarters!
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You’re right, I think many of the really wealthy people look down on those beneath them and think that “hard work” can get them where they are. However in most cases, they were born on third base and have so many more advantages that others didn’t have. Interesting tidbit about Kuwaiti government housing!
Yes, l do believe it is still a land of opportunity. So many people are literally dying to come here still. You are able to improve your lot in life, maybe not become a millionaire , but definitely self sufficient if you take advantage of the opportunities. I grew up in a 3rd world country and l find it hard to muster up sympathy for first world problems sometimes. I think if people really saw how others lived in the rest of the world, they would thank their god daily. Very thought provoking article.
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Very true. My wife was born and raised in a 3rd world country as well and some of the “problems” here are truly first world problems. There are much more opportunities available here when many other places.
I think that your article applies to all countries. Although in some there are more opportunities (and I believe that the U.S. is one of them), there are others where you have limited options to turn your dreams into reality, because of political, economical and geographical reasons. But still, just as you said, there are people everywhere who manage to do it and even though out of all those who try only a small percentage succeeds, you can still be one of them. In the end, there’s not much you can do but keep trying: if you just say that you’re in the wrong place/situation and do nothing, then certainly you won’t be able to make your dream happen.
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I think it applies to many countries but not necessarily all countries as some countries, especially with third world countries, I don’t think that hard work and determination is enough sometimes. The conditions and circumstances are so dire that those living in them are kind of stuck there.
I still think that this is the land of opportunity, but I’m afraid that it’s slipping away from us. I recently read that the richest 85 people in the world have as much wealth as the bottom 3.5 billion. And it has mostly gotten that way over the past few decades. If the trend continues, I shudder to think how many more people will end up in poverty, or worse.
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There definitely seems to be a trend where the gap has widened. It is never a good thing when so much wealth is concentrated in such a small amount of people.
Just like others have said above, if you really think you can change your situation, then you will. There are many stories out there (such as yours) that show it is possible. It might not be absolutely perfect, and perhaps it will look different than it was years ago, but there are still ways to make a better life for yourself. I’d rather be positive than think our country is going completely downhill.
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It’s good to be optimistic and have a positive attitude! I’d like to think that it’s true too.
Unfortunately, when the current administration talks about unequal wealth, it is a prelude to proposing some sort of taxation or redistribution. Do we really want to give the government the ability or right to wantonly confiscate the wealth of anyone they deem too rich? Does anyone honestly think that the definition or rich will continually be lowered until nearly everyone is at risk of having their own wealth taken? I know someone will call me cruel but I think the pay gap is just and necessary. Do we want our surgeon to be paid the same as a janitor. Yes, extreme example I know. But it gives people something to strive for. If everyone is in this absolutely equal utopia, eventually no one would do anything at all. If the government just keeps their noses out of things, then yes, there is still opportunity in the U.S. Thanks for allowing me to comment.
I know what you’re saying, Kathy. That’s basically what happened with Obamacare. We were told that no one making less than 250K would see a tax increase but the new healthcare law hammers anyone who makes a decent living since the subsidies drop off at 94K for a family of four. All of a sudden, 94K became the “rich” who could afford to pay so much more.
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Thanks for your comment. Yes, it really is a very complicated and multi-faceted issue. I’m not sure if most people are up in arms with the pay gap between a surgeon and a janitor. I think it’s the pay gap between the low waged worker and the CEO who makes $20 million. Does the CEO add that much more value? While I agree that the government can sometimes be overly intrusive, I think that sometimes it does need to intervene to even out the playing field. The “robber barons” of the 19th century exploited many in poverty…child labor, poor and dangerous work conditions, they controlled politics, etc. Without some reasonable government intervention, this would have continued and that is not conducive to a successful country.
I believe there are lots of opportunities in the US, and life can be really cheap if you are ready to move to cheaper cities. Being a waitress in NY is an almost sure way to stay broke but in the Midwest you can slowly build savings and improve your life with the same low salary. You just have to be ready to make some drastic changes.
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Yea, it is tough living in a high cost of living area in NYC. Being a waitress should only be a short term plan. There are many opportunities in NYC though.
Any one can change a bad situation or circumstances to become successful, but you have to make smart choices and it’s hard when you have no support at home or role models to follow. I am thankful that my parents placed great value on education and made sure we had the opportunity to go to college. If you don’t have that support system, it’s much less likely you will become successful. I wish people would be more responsible about bringing children into a situation where they take no responsibility for making them into productive citizens.
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I absolutely agree that support from family/friends and good role models are very important in making smart choices. I’m thankful that I had that as well. And I do agree that people would be more responsible in bringing up their children…reminds me of your post about those kids with no ambition or aspirations living at home.
I think this is a really interesting question. I think the answer is yes, there is still almost limitless opportunity. But as I said in my comment on your previous article, I know there are many people out there who were raised in REALLY bad situations without any role models or examples of that opportunity around them and plenty of people actively doing things to make them think there wasn’t any opportunity. So while I do think it’s possible for almost anyone to achieve a better life than they have now, I think there are very real situations where it’s hard for individuals to understand how that’s possible.
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Yes, I remember your comment and definitely a valid point. It is many times more difficult to get ahead when you’re faced with dire circumstances like that.
I think it’s always possible to improve your lot in life. The question becomes by how much and how much is really important to you? It’s easy to say, of those that went from rags to riches, are just one-off stories. But if you search, you’ll find tons of people that have went on fascinating journeys and became successful. A lot of it, I think, does depend on being at the right place at the right time, but opportunities are also only opportunities if you a.) realize them as opportunities and b.) take advantage of them.
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A lot of it does depend on being at the right place and right time…you’re right. I think many who grew up in certain circumstances have much less chances of being at the “right place and time.” However, with hard-work and determination, it is possible to create your own opportunities.
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I think it depends so much on the family and home/community environment you are raised in. If you have no one setting an example of hard work or teaching you skills you can use later on in life, how are you supposed to learn?
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I’m definitely thankful that my parents set a good example and provided me with an environment conducive to succeeding. It is much harder for those who don’t have that benefit.
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