Chutes and Ladders: Why the American Dream is Slipping Out of Reach

Unless you were born with a silver spoon in your mouth or lacked ambition, you probably have bought into some version of the American Dream. You know the one, get a college education or a trade school certificate, work hard for many years and climb the economic ladder to prosperity. In return for your efforts, you'll buy a modest home, take nice vacations, support your children through college and then comfortably retire.

For the majority of people, the current ladder to economic prosperity is missing several rungs. That ladder may even have been pulled away for many. For some, the American dream has become a nightmare. We all know that we’re paying a lot more for the essentials of life: housing, cars, food and insurance. But when taking a macro view of our current budgets, the results can be shocking.

While the top 20% of households, (pretax income of $265,000 or more), spent only 43% of their pre-tax income on essentials, the lowest 40% of wage earners have little or no discretionary income according to the Federal Reserve Bank of St. Louis That means that 65 million people have nothing to put towards retirement, emergencies, education for family members or even a short, weekend vacation. There is no financial slack for these 40% of Americans.

What variables have changed and removed the rungs from families’ economic ladders to prosperity, let alone to stability? Whether you rent or own, housing is your largest essential expense. Real estate prices have always kept pace with inflation. However, between early 2020 and May 2024, home prices increased 40%. During that same period, rents increased 30%. Even renting basic shelter can be tough. For approval, not only do you need a good credit score, but you also may need to make as much as three to four times your rent payment. Many people in the bottom 40% of wage earners do not qualify.

In Morgan City, the Louisiana town for which I manage their foundation’s investments, the young cannot secure an apartment. The foundation’s president, also a grandmother, is currently trying to secure housing for her grandson. The market rate for a tiny two bedroom apartment in this Bayou community is $1700. She tells me that the system is broken, and upward mobility no longer exists. This foundation president not only finds it discouraging for her community, but hopeless for the majority.

There are many causes of unaffordable housing: high interest rates, lack of supply, inflation in building material costs and a lack of labor. In addition to these, home insurance rates have soared astronomically, especially in areas with periods of extreme weather.

If you are in the South and live in a hurricane or flood zone, it hasn’t been unusual to see your home insurance increase threefold in one year. Housing isn’t the only thing that has become prohibitively expensive. car and food prices have increased 20% and 28% respectfully.

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While unemployment has been fairly stable at 4.4%, being jobless has become tougher on two groups: people under 30 and those who have recently been displaced. As bad as things are for the bottom 40% of wage earners, they can become even worse if you lose your job or cannot secure your first position. The unemployment rate for individuals under 30, those without experience or recent college graduates, is almost 10%. Established workers who become displaced will find their job search to be brutal. 34% of current job hunters have been looking for a new position for at least six months. This is 16% higher than at the beginning of 2025.

Both categories of job seekers may be affected by corporations’ concern about the potential redundancy created by AI. Corporations recently surveyed reflect 6 out of 10 expecting to reduce their head counts due to AI. This toxic situation may be responsible for the increased number of car payment delinquencies - the highest level since the Great Recession-as well as the rising number of bankruptcies-up 12% in 2025 versus 2024.

It can take a person many years to recover from either of these “black marks.” While attempting to improve their finances, these individuals may be unable to secure housing, buy a used car or access credit in an emergency. For the bottom 40% of wage earners that get laid off or who cannot find work, they not only lose income, but they also lose their chance at any upward mobility. Or their economic ladder to a promising future may be pulled out from under them all together.

The game of Chutes and Ladders is won or lost by a roll of the dice, but our current economy shouldn't feel like a game of chance. When the cost of basic survival, shelter, food, and transport, surpasses the reach of nearly half the population, it isn't just a personal financial failure; it’s a systemic collapse of the 'ladder' itself. If we continue to allow the rungs of upward mobility to be dismantled by skyrocketing costs and job instability, we risk a future where the American Dream isn't just difficult to achieve. it’s a relic of the past. To restore hope for the next generation, we must address the structural 'chutes' that are currently dropping hard-working families back to zero before they ever get a chance to climb.

Link: Michelle Connell and Portia Capital Management