The Wealth Gap has been expanding for decades. According to the World Bank, Covid has made the United States less equal than ever. Our advanced economy, with its emphasis on consumption and, increasingly, financial transactions, is set up such that the rich tend to get richer. Consider, for example, a recent Wall Street Journal report that more Americans made money from the equity in their houses in 2021 than from their jobs. Wealth is increasingly a function of how much wealth you already have; not how hard you work.
However, Jay Jung, founder of strategic finance advisory Embarc Advisors, says that the American Dream remains alive and well. “I believe there is still ample opportunity for upward mobility,” he says. “The wealthy will stay wealthy but that does not mean that the unwealthy cannot become wealthy. Economics is not a zero-sum game.”
According to Jung, whose firm focuses on providing corporate finance advisory for small and medium-sized enterprises (SMEs), the United States is uniquely set up for creating wealth. We have, he points out, one of the most robust capital markets for funding entrepreneurship, from the largest pool of venture capital to Small Business Administration (SBA)-backed loans. In June alone, the SBA announced that nearly $390 billion had been approved to help 4 million small businesses recover from the COVID-19 pandemic.
The US is also the engine of the global economy, thanks to its unrivaled level of consumption. “All of this drives a very vibrant entrepreneurial scene,” says Jung.
Further, he believes that as software and technology companies make up a larger portion of the economy, the barriers to entrepreneurship wil be lowered even further. Innovators like Steve Jobs and Steve Wozniak of Apple, or Sergey Brin and Larry Page of Google, would not even need a garage today, he notes. All that software entrepreneurs must have is a laptop, an Internet connection and, as Angela Duckworth of The University of Pennsylvania has noted, some grit. The environment exists; but individuals still need to bring perseverance.
Jung points to a 2020 report from the non-partisan Pew Research Center, showing that the incomes of American households overall have trended up since 1970 as proof that a rising tide can lift all boats. Further, as noted by tech website Crunchbase, the US has by far the highest rate of startup investment relative to population — averaging out to around $800 for every person in the country. The site also noted that immigrants not only founded the four most valuable unicorns in the US (SpaceX, Stripe, Instacart, and Databricks), but are well-represented as leaders of large VC-backed companies. “The fact that immigrants comprise a large portion of successful startups is another testament to the American Dream,” Jung says.
While acknowledging the obstacles that many groups, including immigrants, face, Jung notes that Ivy League educations, “old boy” networks,” and Ph.D.s are no longer needed to succeed in business or to raise capital. He points to a 2019 study showing that the most reliable path to riches is starting “unsexy” regional businesses like gas stations and business equipment contractors.
“We like to celebrate young geniuses who create important companies like Facebook and WordPress in their teens, and rightly so. But the truth is that you don’t need to invent whatever will come after the Metaverse,” Jung says. “You can achieve plenty with down-to-earth goals, hard work, grit, and a business plan.”
Moreover, Jung observes that many people are now starting companies later in life, some in their forties and fifties — and beyond. Covid shut down the American economy for a time, he notes, but it also created The Great Resignation and a record number of small business registrations. His advice: “Instead of getting distracted by the noise, follow your own inspiration and create your own success. That’s the American Dream.”
