The decline and fall of the American middle class

[LongTomH]

A couple of decades ago, someone told me about an article in Forbes magazine delineating a new 'two-tier' marketing strategy: Market to upper-income and lower income groups; forget about the middle class. Naive optimist that I was, I dismissed the idea. Now, the two-tier model is being promoted by Citibank as: "The Consumer Hourglass Theory." Paul Harris describes it in an article in the Guardian UK. the article is from 2011; but, even more relevant today:

No one can accuse the candidates on stage at Monday's Republican debate of not discussing a broad range of topics. They talked about big issues like social security, the wars in Iraq and Afghanistan, energy independence, repealing healthcare reform and the need for job creation. And they talked about small issues for political point-scoring: like HPV vaccines for girls.

But missing from the debate – and, in fact, much current discussion of America's politics – is the single biggest issue facing the country: the destruction of the American middle class. For stories on how America is bifurcating into haves and have-nots, with precious little in between, you have to dive behind the headlines of the latest Washington political bun-fight and find the devil in the details.

Take a story that appeared in the Wall Street Journal Monday. The tale is nominally one about marketing strategy and it looks at how giant firm Procter & Gamble sells its household goods to its customers. But the picture that emerges is terrifying. P&G, it transpires, is cutting back on marketing to the disappearing middle classes, instead selling more and more to either high-income or low-income customers and abandoning the middle. Other big firms, like Heinz, are following suit. The piece reveals there is even a word for this strategy, helpfully coined by Citibank: the Consumer Hourglass Theory – because it denotes a society that bulges at the top and bottom and is squeezed in the middle.

Harris' article repeats the usual grim statistics about the loss in net worth of middle income people, new workers being paid half of what older, "grandfather" employees are getting, etc.

The black-and-white facts of the case should stun Americans on both sides of the political divide. At the start of this week, Vermont Senator Bernie Sanders published a report on poverty called "Is Poverty a Death Sentence?" It showed that in 313 counties in America, life expectancy for women has actually declined over the last 20 years. It showed six million more people have fallen into poverty since 2004.

Remember, a Citibank analyst also coined the word plutonomy, to describe the theory that a healthy economy could be maintained by catering to the luxury needs of the upper 0.01% and above.

[Octafish]

1. Plutonomy

Where the rich have rights and the rest of us have duties.

Thank you for the heads-up, LongTomH. Most important information and outstanding analysis.

[redqueen]

2. But the middle class is growing in China and India.

It's not unintentional, this stuff.

[winter is coming]

3. Hourglass is a misnomer.

The reality is that everyone, excepting a small bubble at the top, is getting squeezed.

[LongTomH]

4. Everyone, except the very rich ARE getting squeezed; but, this is a marketing strategy.

Market, mostly to the very rich; then aim some of your products at the lower classes, the people who shop at Wal-Mart or Dollar Stores. Forget about the middle class; they're disappearing.

[MichiganVote]

5. They, they being those in power, don't want the mc anymore.

Not when it comes to wages, income, job descriptions, housing, education, taxes, services, pensions, medical care, you name it, they want a bigger cut every single year.

[Junkdrawer]

6. Paris in the years just prior to The Revolution...

catering to the luxury needs of the aristocracy. And the unemployment that the fall of the aristocracy caused was one of the contributers to the later excesses of The Revolution.

[galileoreloaded]

7. there never was a middle class, but there was an illusion.

resources are a zero sum game. American decadence from the 50's on has been at the cost of brown peoples everywhere. some boomers won, and the rest of the world suffered.

what we see now is reversion to the mean.

[leftstreet]

8. DURec

Interesting article