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4 ways to fight and claw your way to the increasingly elusive American Dream

The American Dream is a great story.

Since the days of Horatio Alger [3], Americans have been (literally) buying the story of how, through hard work and persistence, we’ll all get to live a comfortable life in a respectable neighborhood, and raise our kids to do even better.

This story gets part of its truthiness [4] from the fact that we all know someone, or can point to an American we admire, who really did pull themselves up by their bootstraps through ingenuity and elbow grease and pep. The belief also serves a useful purpose: Thinking you can better your situation through sticktoitiveness and moxie is a great motivator. It’s part of why Americans work lots of hours compared to those in other industrialized nations, and why we have the most productive workers in the world.

Unfortunately, for lots of people, it’s just not true. The likelihood that you’ll work hard your whole life and never even reach the middle class is increasing. Many of the jobs being created today really suck, both in terms of their ability to fulfill basic needs of human dignity and in their pay. As a recent story [5] in the American Prospect points out, in 1960, America’s three biggest employers were General Motors, AT&T and Ford. In 2013 they’re Wal-Mart, Yum! Brands (Taco Bell, Pizza Hut and KFC, yippee!) and McDonald’s.

According to a recent study [6] by The Pew Charitable Trusts, if you imagine American earners as sitting on a ladder with five rungs, those born to parents in the bottom rung have a 70 percent chance of being trapped on the bottom two rungs for life. For a frame of reference, households on the bottom rung of the ladder make up to $20,592 (or about $10 an hour with one income earner), and those on the second rung make up to $39,736 (or about $20 an hour), according to the latest numbers from the Census.

So why am I telling you all this, instead of feeding you the saccharine pap you’ll find on some other personal finance blogs? Is it to get you to throw up our hands and accept that you’ll be the same or worse off than our parents, while extracting what happiness you can from a hand-to-mouth existence? Do I want you to convince you to vote for politicians whose policies I think will change this sorry state of affairs (although that might help)?

No! I’m just trying to let you know what you’re up against, and to underline for you that it will take more than doing what everyone else is doing to get to your little house with the white picket fence, or however you define material success. Fortunately, Pew’s otherwise depressing work in this area comes with something of a silver lining: a list of characteristics and behaviors that helped people who managed to “move on up”.

1. Save like your life depends on it because it does: Having money in the bank makes it easier for you to move up the ladder. For instance, having $10,000 in liquid cash makes you 6.5 times more likely than someone with $1,000 in liquid savings to move off the bottom rung of the ladder, and 5.5 times more likely to make it to the middle rung.

2. Go to college: Of those who grow up on the bottom rung and managed to go to college [7], 86 percent are able to leave the bottom rung for good, compared to 55 percent who don’t. Furthermore, college graduates are 2.5 times more likely to reach the middle rung of the ladder than others.

3. Marry someone with the ability and desire to work: Couples where both people work have an 84 percent chance of leaving the bottom rung of the ladder, compared to just 49 percent where one doesn’t. Overall, dual income couples were 2.8 times more likely to reach the middle rung than others.

4. Get and keep a job yourself: Those who are “continuously employed” make it off the bottom rung 64 percent of the time, versus 34 percent of those who experience prolonged unemployment.

You’ll note that none of these pretty substantial tasks guarantee you’ll be able to make it in the U.S.; gone are the days when you could graduate high school, get a middle-class manufacturing job and ride that puppy into a comfortable retirement. But they do seem to give you your best possible chance to succeed.

What do you think? What do people have to do these days to get ahead? Do you think it’s gotten harder or easier to make it?

(Photo: flickr user FutureAtlas.com)