Business

The era of shortages is unraveling the old American Dream. But that’s not a bad thing.

America is running out of everything in 2021: houses, workers, and all kinds of goods. It could usher in a better economy — and a new American Dream. ...
Child and father on a couch with American Dream imagery of a white picket fence, ford mustang, and a house above them.
The postwar American Dream is coming apart at the seams, but a new one is taking its place.

  • America is running out of everything in 2021: houses, workers, and all kinds of goods.
  • It's caused the postwar American Dream, driven by consumerism, to come apart at the seams.
  • It could usher in a better economy with more freedom to live where you want, better working conditions, and less spending on stuff.

Insider's Economy team has spent a lot of time waiting for furniture in 2021.

All 10 of us moved in the last year, and half of us bought new couches for our new pads. So far, we've spent a total of 45 weeks waiting for them to arrive. After a three-month wait, one editor's couch arrived and it was the wrong size, so she had to return it. The wait is set to get even longer.

Just like us, most Americans aren't taking couch shortages sitting down. Headline after headline bemoans the fact that many Americans won't be reclining in the new couches they ordered for their pandemic digs anytime soon. 

This isn't just a delivery breakdown. It's also a sign of the way the American Dream is breaking down in 2021.

When writer and historian James Truslow Adams coined the term in 1931, he defined the American Dream as the opportunity for a better life for all. The postwar boom of the 1950s introduced the house, white picket fence, and other consumerist trappings of the suburban idyll. The global health crisis that ushered in an era of shortages 70 years later is changing everything again.

The housing shortage, the labor shortage, and the supply shortage are coalescing in 2021 to challenge every aspect of the 20th-century American Dream: The affordable house in the suburbs with a white picket fence, the job that pays well and provides meaning, and the consumer culture that meets every need and desire. Americans are at a fork in the road, so what will the next dream be?

Housing has become a choose your own adventure

The American Dream home became a choose your own adventure quasi-gameshow during the pandemic.

Remote work freed knowledge workers from the chains of office life, bringing the postwar dream in sight as workers snapped up nearly every suburban home. But the dream of suburbia was stronger than the market's ability to support it, as the ensuing housing shortage left America short millions of homes. It boxed aspiring first-time homeowners out of a cash-is-king seller's market.

As housing prices continued their upward climb to a record highs of $386,888, the American Dream splintered into four different versions of a better life. "While considerable numbers of folks are still convinced that having the proverbial white picket fence will signify they've achieved the American Dream, many others are realizing there are other perfectly valid interpretations of the concept," Larry Samuel, the founder of Age Friendly Consulting and author of "The American Dream: A Cultural History," told Insider. 

A healthy 59% of Americans still aspire to be homeowners, a sign of the lingering allure of the post-World War II vision. But suburbia is now mostly attainable for the wealthy, less accessible to the 68% of millennials who have their sights set on homeownership. 

open house
The housing shortage has boxed many out of the housing market.

Alyssa Cinami, 32, who has spent 14 months house-hunting and put in five rejected bids, described the market to Insider as "insane, and very discouraging for first-time buyers who can't compete with people with lots of cash."

It prompted some 40,000 Americans in May and June alone to turn to more affordable housing in the exurbs, a rural community that is distantly commutable to a big city, or even further out to areas that urbanist Richard Florida has deemed "the rural fringe." 

Others are finding alternative options in a life on the go, bypassing debt-based homeownership for a more mobile lifestyle in a tiny house or a van, both of which saw a boom in sales since the pandemic began.

But that doesn't mean cities are dead. Skyrocketing rents and the 60% of wealthy millennials who plan to buy a home in a big city within the next year indicates that city life still holds an allure. Now, urbanites are living there because they want to, not because they need to for work, and it's reshaping cities as a place centered around personal interaction rather than the office.

As Samuel said, "The new white picket fence can be said to be the freedom and peace of mind that comes with not having to do whatever it takes to keep the fence."

Power is slowly shifting from employers to workers, and leaving shortages in its wake

For decades, the American Dream has valued the ideal of wealth through meaningful work: You want to work hard enough that you'll amass enough wealth to buy all the things you want, like a house, a TV, or a car.

But the economic reality for many workers hasn't kept pace with these all-important items. Wages have been declining for five decades; the student debt meant to finance the educations that supply the American Dream has skyrocketed, trapping many in untenable cycles of debt. Meanwhile, the opportunities available to workers are increasingly low wage.

The pandemic tightened the screws even further, with billionaires notching trillions in gains as low-wage workers found themselves on the frontlines — or just out of a job completely.

Workers have taken advantage of the hot post-vaccine labor market. For six months, Americans have been quitting in record numbers, with 4.4 million in September alone. Meanwhile, thousands of workers have gone on strike to demand better conditions. The workers that have joined "the Great Resignation" are effectively on strike, too, many of them expressing a new philosophy of "antiwork," where they document quitting over exploitative conditions and contemplate a future where work is decentralized from life.

Spirit Airlines pilot strike
Spirit Airlines pilots are on strike.

"I think that it has a lot to do with Gen Z," Kade, a Gen Z antiworker in Kansas, told Insider. After reading antiwork for months, he quit his job when his boss said they would confiscate phones if they caught workers on them. Gen Z doesn't "put up with employers' crap anymore, like the abuse and the low pay," Kade said. 

"We're getting tired of it."

These are still drops in the bucket against decades of stagnant wages and a weakened labor movement. But trends like antiwork seem to be making an impact, as employers have gone from continually bemoaning labor shortages to raising wages and offering better benefits.

Businesses shifting from becoming customer-centric to employee-centric could "start a lot of healing," Steve Rowland, the host of Retail Warzone, a podcast chronicling retail workers' "horror stories," told Insider.

"Customers are important, but your employee base is what keeps you going," Rowland said. "The first company that does that, you'll see a huge change — that'll all of a sudden be the company that people want to work for."

Supply chain shortages force a rethink of consumption 

It's not just couches — there's a shortage for every kind of thing. 

Factory shutdowns as a result of pandemic safety restrictions and labor shortages, congested shipping ports, the US-China trade war, bad weather, and global traffic jams have led to wait times for many Americans who became used to a "just-in-time economy" in the 2000s.

Part of it is a snarled supply chain and part of it is that Americans are just buying more, well, stuff. As the economy reshaped to prioritize remote work and a spread-out populace, Americans had more use for gym equipment and new TVs and less need to go to restaurants and hotels. The demand has outstripped supply at the same time that the supply has broken down.

The runaway spending could exacerbate the labor shortage: Rowland said that angry customers demanding their holiday goods could prompt workers to "start throwing their hands up in the air and walking out the door. They're just not going to take it." 

Container ships at the backlogged Port of Los Angeles in September 2021.
Container ships at the congested Port of Los Angeles in September 2021.

Canadian political scientist Krzysztof Pelc argued in the Financial Times that the key to happiness, and the next step in the evolution of our economy, is buying less stuff and more experiences. He explains that a shift toward service spending is a hallmark of developed economies, with effects on growth. 

Advanced societies may come to view high growth, spurred by goods consumption, not as progress, but a "necessary stage" of it. "The challenge is then to recognise when the moment has come for a shift in social purpose."

Gen Z seems to agree with Pelc: Research and advisory firm Gen Z Planet recently found that the generation is saving and investing more than it's spending, and now holds $360 billion in disposable income. 

Coming of age amidst the greatest economic catastrophe in 100 years could shape their economic behavior for decades to come, and early signs indicate they aren't just "antiwork" — they're anti-spending and pro-thrift, too. That means companies might have to appeal to their thrifty ways and higher standards for work to survive the era of shortages.

Gen Z may be saying they're thrifty while shopping just as much as older generations. But maybe, just maybe, the new American Dream is coming into view.

Read the original article on Business Insider

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