The world of business is admitting what working people have been living: the middle class is dying:
In Manhattan, the upscale clothing retailer Barneys will replace the bankrupt discounter Loehmann’s, whose Chelsea store closes in a few weeks. Across the country, Olive Garden and Red Lobster restaurants are struggling, while fine-dining chains like Capital Grille are thriving. And at General Electric, the increase in demand for high-end dishwashers and refrigerators dwarfs sales growth of mass-market models.NY Times: The Middle Class Is Steadily Eroding. Just Ask the Business World.
As politicians and pundits in Washington continue to spar over whether economic inequality is in fact deepening, in corporate America there really is no debate at all. The post-recession reality is that the customer base for businesses that appeal to the middle class is shrinking as the top tier pulls even further away.
“As a retailer or restaurant chain, if you’re not at the really high level or the low level, that’s a tough place to be,” Mr. Maxwell said. “You don’t want to be stuck in the middle.”
Although data on consumption is less readily available than figures that show a comparable split in income gains, new research by the economists Steven Fazzari, of Washington University in St. Louis, and Barry Cynamon, of the Federal Reserve Bank of St. Louis, backs up what is already apparent in the marketplace.
In 2012, the top 5 percent of earners were responsible for 38 percent of domestic consumption, up from 28 percent in 1995, the researchers found.
What this may mean is more and more bubbles, as the wealthy chase higher returns that can not be created by an economy without middle class demand. Meanwhile, the increasing impovrishment and proletarianization of the former middle class could lead to a greater class consciousness and acts against the wealthy. It might. There's no inevitability.
The income and wealth inequality in our nation is immoral and bad for business.
Update I: From bobswern in the comments:
Elizabeth Warren Dec. 4th, 2009... (2+ / 0-)I agree with bobswern and Elizabeth Warren that this has been long in the making. The data is there. Since 1978, in the middle of the Carter administration (an administration that was often unsympathetic to the concerns of labor), and accelerating with Reagan, the imporvishment of the middle class has been happening. Killing unions was key to it.
This was in 2009...back when Democrats controlled both the House and the Senate...
America Without a Middle Class -- It's Not Far Away As You Might Think
America today has plenty of rich and super-rich. But it has far more families who did all the right things, but who still have no real security.Elizabeth Warren"I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham
December 4, 2009
Can you imagine an America without a strong middle class? If you can, would it still be America as we know it?
Today, one in five Americans is unemployed, underemployed or just plain out of work. One in nine families can't make the minimum payment on their credit cards. One in eight mortgages is in default or foreclosure. One in eight Americans is on food stamps. More than 120,000 families are filing for bankruptcy every month. The economic crisis has wiped more than $5 trillion from pensions and savings, has left family balance sheets upside down, and threatens to put ten million homeowners out on the street.
Families have survived the ups and downs of economic booms and busts for a long time, but the fall-behind during the busts has gotten worse while the surge-ahead during the booms has stalled out. In the boom of the 1960s, for example, median family income jumped by 33% (adjusted for inflation). But the boom of the 2000s resulted in an almost-imperceptible 1.6% increase for the typical family. While Wall Street executives and others who owned lots of stock celebrated how good the recovery was for them, middle class families were left empty-handed.
The crisis facing the middle class started more than a generation ago. Even as productivity rose, the wages of the average fully-employed male have been flat since the 1970s…
by bobswern on Mon Feb 03, 2014 at 10:35:43 AM CST
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