Wednesday, August 29, 2012

The Evolution Of The Middle Class

It seems to have become the mantra of the press. 

“The rich are getting richer and the poor are getting poorer” and “The middle-class is shrinking.”

And let there be no question about it, if you tune into MSNBC, the finger pointing is all at the filthy rich and the Bush years. 

I don’t know about you, but the broadcast news media is more motivated by the ratings than the truth. 

And the politicians use the new media to “engineer the facts.”

I am fortunate.  The last couple of years, my clients have been good to EXPERIENCE and me.

Fact… my income has grown. 

Fact… I shop more today at Walmart, Target, and Old Navy and dine more at QSRs and mom & pops. I shop less at Bloomingdale, Macy’s, and Banana Republic and dine at less at four course restaurants.

Though, I must admit that I do grocery shop more at Whole Foods.

This weekend, the Wall Street Journal ran an editorial titled, “Negative $4,019.”

As it kicks off… “The presidential race is boiling down to one dominant issue: which political party will do more to help the financially stressed American Middle Class.”

Well… what are the stats of the U.S. middle class?

The article notes that “in June 2009, the median income was $53,508 and by June 2012, it stumbled to $50,964.“

If that’s the mean (note not the “average”), then let’s say for blog-sake, that the middle class then runs the spectrum from Household incomes of $35K up to $74.9K. 

In 2009, the percentage of households in the U.S. making an income in that range was 35.4% according to the U.S. Census. 

This year, the percentage of households making an income in that same range is 34.8% according to the U.S. Census.

The WSJ article notes…

“Real median household income is down about 8% from $55,470 in 2000 before the dot-com bubble burst.”

Is that the result of just economic down-turn?


Some of this decline is due to the continuation of a trend of smaller size families, lower fertility rates, postponed baby-making, increasing empty nesters and more singles… not households making less income-wise.

Remember that many Baby Boomers are now empty nesters and their Millennial kids are more single than hitched… the two biggest generational groups in the U.S.

More individual households have disposable income today than they did 10 years ago because the individual households in America are shrinking.

I often will say that business leadership today makes more crazy decisions that I remember back when I started in the biz. 

And then I remind myself that the parameters of the marketplace are in constant flux and what might have been the market of the past is no longer the market of today.

The U.S. is indeed in constant flux and change. 

The middle class of America today has changed.
·      It is more diverse
·      It is less middle-aged
·      It is more educated
·      It is comprised of more childless households
·      It is continues to be fueled by households emerging from lower income levels

There is no question that the U.S. has experienced the worst of economic times since the Great Depression. 

But before I would jump on the political bandwagon and declare that the middle class is shrinking because the rich are getting richer and the poor are getting poorer, I would ask that simple mathematical question… 

“How is that possible?”

Maybe the banning of sugared colas by the NYC mayor will help New York kids grow taller without the bellies to match… but you cannot statistically grow on the ends without also growing proportionately in the middle.

Is the American middle class changing? YES.

Do the changes suggest adjustments in marketing strategy?  YES.

Are the changes necessarily ones around economic constraint?  NO.

Perhaps my best advice to marketers out there is starting at the end of next week when the politicians are out in their campaign bandwagons… get out from behind your iPod, television set and texting screen…

And go travel over to the nearest Walmart, Target and Old Navy and take a stroll through the retail racks and watch the shoppers do their shopping.

You just might be surprised by their brand choices and how full those shopping carts get!

Remember that politicians are out to win…not necessarily to win based on proven facts!