The US middle class is losing ground reports the Pew Research Center citing its latest report that finds less than half of all Americans identify as middle class.
A fading middle class is bad news for companies basing their businesses on increasing consumer spending such as old school retailers, big box stores and fast food chains. The affluent youth culture of the 1960s consumerist model is particularly under threat as the falls in income have fallen disproportionately on the young, as this New York Times examination of American social trends shows.
The end of the 20th Century miracle
It’s hard to see this trend being reversed as the bulk of the Twentieth Century middle class miracle was the surge in well paid manufacturing jobs during and after World War II. After thirty years of seeing those roles going offshore, the next wave of technology threatens to do away with them altogether.
That next wave of technology doesn’t promise to be good for middle class professionals and managerial workers either as automation and artificial intelligence promise to do away with many of their well paid jobs as well.
A large middle class is historically an aberration, when the term was first formally used in Britain just on a hundred years ago only 20% of the population fitted the criteria – incredibly the US only started studying the nation’s middle classes in the 1950s – and prior to the industrial revolution only a tiny group of merchants and professionals could fit the description.
A wartime boom
It was the economic boom after the Second World War that saw the assumption of everybody except the most chronically disadvantaged becoming middle class.
That idea really started to pass in the early 1970s but as a myth it’s continued to hold on, partly due to easy credit that’s allowed workers on declining real incomes to keep up the charade of an ever increasingly prosperous middle class lifestyle.
However that charade is increasingly becoming harder as the Pell survey shows and that is bad news for those retailers, fast food companies and other businesses based on the 1960s consumer model.
All is not lost though, the vast majority of those falling out of the middle classes in 21st Century America – or Australia, the UK, Canada and New Zealand – will still have lives far richer and healthier than those of the middle classes a hundred years ago.