Place, purpose, and the path to economic mobility

What does a better life actually look like to Americans? The McKinsey Institute for Economic Mobility surveyed 30,000 of them and found that, despite today’s polarized discourse, two-thirds share the same top goal: financial security, regardless of race, income, or geography. On this episode of The McKinsey Podcast, Senior Partner Diana Ellsworth and Partner JP Julien join Editorial Director Roberta Fusaro to explore findings from the survey—offering employers, educators, and policymakers a clearer picture of what would move the needle for many Americans.

What most Americans want

Roberta Fusaro: Americans have more in common than today’s public discourse would suggest. Here’s what Miguel, 35, from Michigan, says would matter most for improving his quality of life.

Miguel: A better life for me and my family would look like being able to buy a home, being able to afford all the basic necessities: rent, utilities, car, food, healthcare, as well as being able to have enough left over to save for the future, for retirement and vacations.

Roberta Fusaro: Would you say that Miguel’s comments capture the common goals that all Americans share, regardless of race, income, or geography?

JP Julien: It really does. What was fascinating is that while Miguel’s story is deeply personal, many of the themes he shared resonated widely. One of the things we did was ask 30,000 Americans to describe, in their own words, what a better life would look like for them and their family over the next three to five years. Some people wrote paragraphs, some wrote sentences, and we coded every single response. What you find is that for two-thirds of Americans, greater financial security is the top aspiration they’re striving for. That held across income, race, and place in a way I think was really interesting.

Roberta Fusaro: Another interesting point from the research is that the stage of life plays a role in these priorities. In what ways?

Diana Ellsworth: Our research found that how Americans experience economic mobility is really shaped by life stage. We focused on three key life stages: young adults entering the workforce, parents raising a family, and those preparing for retirement.

Young adults were much more likely to be career and income focused and worried about the uncertainty in today’s labor market. They were also more likely to cite mental health as a real barrier to their progress—about twice as likely as other respondents.

Parents, on the other hand—and I’ll admit this one hits close to home—were particularly focused on creating better opportunities for their children. As they thought about that, the cost of living was the top concern, and that was true across income levels. For lower-income parents, physical and mental health challenges, unemployment, and job security were real potential barriers. For higher-income parents, time was the biggest barrier to progress. Within each life stage, we saw some variance, but the biggest driver really was the life stage itself.

For those nearing retirement, prioritizing saving for the future was, not surprisingly, what they saw as most important and most front of mind as they thought about their own economic mobility.

Economic pressure points

Roberta Fusaro: One of the other things we saw in the research is that the high cost of living is weighing on many Americans. Here’s Joan. She’s 48 and lives in Florida.

Joan: I don’t know if I can afford healthcare. That’s the big unknown right now. I mean, with the ACA [Affordable Care Act] subsidies right now, it’s like $1,300 a month for myself and my husband, and that’s so expensive. It’s a huge barrier.

Roberta Fusaro: After listening to Joan’s comments, who—or which parts of the population—are most concerned about healthcare?

JP Julien: What was interesting was that it came up on both ends of the spectrum. It was things like, “Yes, I want to be able to afford my healthcare,” as Joan mentioned, but then also, “I want to be healthy enough to not be a burden to my family as I retire. I want to be healthy enough and active that I can age in the home I’ve spent my life building.”

A lot of what people were striving for was a sense of well-being—to be able to live their life, particularly at the end of it, with dignity, and to remain in the communities they’ve built. What I loved about that undertone is that we often think of health as separate from economic mobility.

What’s clear from this research, and from what we’re hearing from people, is that health is the fundamental infrastructure for everything we do. There is no economic mobility without health and well-being. Just seeing how clearly people tethered those two concepts was helpful as we think about potential solutions to move this work forward.

Roberta Fusaro: Drilling down a bit further—because you had so much great data and detail in the report—which specific household expenses did Americans identify as creating the greatest financial strain?

JP Julien: We asked people two questions. The first was, what is the greatest barrier to your progress? By far, the rising cost of living was the number one thing people cited—60 percent of Americans said that’s the thing getting in the way of them achieving their dreams.

Then we asked, within the cost of living, which costs specifically? Nine out of ten people said the cost of food and groceries is pressuring their household right now—more than housing costs, more than gas, more than healthcare, more than education.

What’s interesting—and the research supports this—is that we’re much more aware of prices we interact with frequently: The cost of groceries is increasing week to week, even relative to some of these bigger household items. As the father of two boys, I spend a lot of time at the grocery store, so I know the price of oat milk, apples, and oatmeal—those are staples at my house.

Roberta Fusaro: Diana, you mentioned mental health. The research notes that the rising cost of living isn’t just a financial issue; it’s a social and psychological one as well. In what ways is this affecting how people think about the future?

Diana Ellsworth: The reality is that affordability pressures change how people imagine their future, and that was repeated often in the stories we heard. When the basic cost of living is rising faster than people’s own sense of security, they get nervous about the future.

Instead of feeling excited and planning for it, they feel like they have to defend against what could go wrong. That psychological consequence is real, and it translates into major decisions about how people live their lives—like delaying having children. It makes them nervous about changing jobs. It makes them nervous about pursuing education and other longer-term investments they might want to make; they become afraid to because of their monthly budget and the here-and-now pressure of affordability.

That means people feel like they lose agency. If they’re one medical bill, one rent increase, one job disruption away from feeling like everything could be destabilized, they’re much less likely to take the steps that could help them create upward mobility for themselves and their families.

What educators and employers can do

Roberta Fusaro: What steps can employers, educators, and policymakers take if career pathways become less predictable than they have been for previous generations?

Diana Ellsworth: If we think about educators first, that means finding the right combination of strengthening real foundational skills and building durable human skills that will be needed now and in the future. And then, how do they think about what we call “earn and learn” pathways that connect classroom learning to real career opportunities over time?

Roberta Fusaro: How should business leaders think differently about how they design their policies and programs?

Diana Ellsworth: For business leaders or employers, a lot of it is about making career pathways more transparent, flexible, and supportive for the broader set of their employees or potential employees. That means things like clear promotion criteria—helping people understand how they’re going to move up. You’re seeing a big movement toward skills-based hiring, to broaden who we can bring into the workforce and into what roles. Things like paid training and apprenticeships can help people take on opportunities that might not otherwise seem available to them.

In our research and from the stories we collected, we heard about the real benefits employers can provide to address the realities of workers’ lives—things like childcare, healthcare, scheduling flexibility, and mental health supports.

JP Julien: When we talked to people about what else their employer offers them, there was a real sense that there’s value in the community of coworkers, in getting mentorship at their job, in feeling like their life has purpose and waking up excited to go do something. These are nonfinancial benefits that people really value, and I think employers uniquely offer them—it’s important to highlight that.

Why a sense of community fuels a sense of agency

Roberta Fusaro: The people McKinsey interviewed who say they feel connected to their community also say they feel like they have more agency over their lives and their future. Here’s one of them—Jasmine, who’s 40 and from Texas.

Jasmine: Because I work for the schools, I feel like I know a lot of the community. I know parents, I know kids. I go to the grocery store, and little kids run up to me and give me a hug.

Roberta Fusaro: But only a third of survey respondents say they feel this way. Diana, why is feeling part of a community so important?

Diana Ellsworth: Jasmine’s quote resonates with me so much. Twenty-five years ago this month, I started as a public school teacher in Atlanta, and my experience of community connection in that role was overwhelming—it’s been central to me ever since.

The research found that people who feel strongly connected to their communities are twice as likely to feel that they have a say in the direction of their lives. They’re three times as likely to say they feel in control of their future, and four times as likely to feel that their life has momentum, even after controlling for demographic characteristics.

It puts them in a different position to access information, find support, and express agency in taking steps toward whatever they’re aspiring to.

Roberta Fusaro: JP, what steps can community leaders and other stakeholders take to increase that sense of community?

JP Julien: It takes three things to build community: place, purpose, and proximity. There’s good research around this. People need places to go—both to live in their community, so housing is a big topic there, but also spaces to congregate: parks, community centers, bowling alleys.

They then need a purpose—a reason to congregate and be in community together, whether that’s to play a game, play a sport, or worship. And the best version of that is when you’re able to put people who are different from each other in proximity—across racial lines, across lines of income, across different parts of a geography. That’s where you get the secret sauce of people feeling a deep sense of community within the place where they live.

There are very tactical things that policymakers, governments, and private sector leaders can do. You can support civic spaces—make real commitments to libraries, museums, and parks that give people opportunities to be in community with one another. You can support community organizations like bowling leagues, recreational sports, and houses of worship to ensure people have a purpose to get together. And then you can find ways to ensure those interactions happen across lines of difference.

Place is fundamental to economic opportunity

Roberta Fusaro: We’ve established that many factors contribute to how people experience economic opportunity. Place is foundational—but it’s not the whole story. Here’s Reg. He’s 49 and lives in Philadelphia, and he has a whole other issue on his mind.

Reg: I think money, knowing how to manage your money and handle it, is a big deal. It’s something they don’t teach you a lot in school, especially in the inner city, and it’s a downfall, especially for people like me. I wish I would’ve known about how to plan with money.

Roberta Fusaro: Reg is talking about understanding more about finances and his lack of education on the topic. JP, how does place affect educational opportunity?

JP Julien: I think Reg’s point is spot on. What he learned in school was a distillation of his local school district and local government decisions—what was taught, to what extent his school had the resources to teach things like financial education, what exposure he had to financial markets, whether through private or social sector organizations.

In a lot of ways, what he’s expressing is that he experienced something deeply shaped by place. This is one of the ways place, through direct and indirect ways, really does shape people’s experiences. Educational opportunity is one example, but we also know that place shapes where Reg is able to work, because the employers in his local economy are relatively fixed. It shapes the extent to which he has access to clean water and green space, and to what extent he can access food and financial services. Place really does shape whether people have the environment and conditions needed to succeed, and Reg’s example is a prime one where that comes to the fore.

If economic mobility is fundamentally about people having more income and wealth to support themselves, but also about a sense of control and autonomy about what happens in their lives, and a sense of dignity and belonging in the place where they live—if all three of those things are what we define as economic mobility, place plays a role across each of them.

The American dream, perceived

Roberta Fusaro: Has the American dream fundamentally changed, given everything happening in our world right now?

Diana Ellsworth: I don’t think, at its core, the American dream has fundamentally changed. People want to build a better life. They want to support their families. They want to work with dignity, own a home, and save for the future. People are much more concerned about whether that’s a reality—whether it ever has been, but certainly whether it’s real in this moment.

JP Julien: That’s exactly right, Diana. I feel like it’s the context that’s shifting. People are reasonable and rational to be worried about whether the conditions we’re currently facing enable more people to experience economic mobility.

The one action that would move the needle most

Roberta Fusaro: If you could recommend just one action, based on this report, that an educator, policymaker, or business leader could take, what would have the greatest impact on economic mobility over the next decade?

JP Julien: I’ve got one and a half, Roberta, if that’s all right.

Roberta Fusaro: Sure, please.

JP Julien: First and foremost is finding ways to make life more affordable. That means both reducing the cost of housing, food, and childcare—things people fundamentally need—and ensuring families earn more income so they can support themselves. For far too long, the productivity of the average worker hasn’t translated into increased wages, and I think that’s a real challenge we need to solve.

The half action is this: We did this research by listening to people in real time. I’d love to find ways for leaders—whether in the private sector, elected office, or philanthropy—to do more real-time listening to what people are actually asking for.

Roberta Fusaro: I love that. Diana, what would you recommend?

Diana Ellsworth: I’d say—and maybe it’s the former educator in me—there’s really something to how we build more reliable pathways for people to get into good jobs and then progress through those jobs. That’s especially important as we think about these key life stages, particularly for young adults who are so focused and committed to entering the labor force effectively and setting themselves up to advance.