Our Fading Middle-Class, More Proof!

Our hourglass economy, not much middle!

I recently wrote about the shrinking Shrinking American middle-class and since that piece appeared the word on the street hasn’t gotten better. According to the Wall Street Journal and Salon.com major manufacturers of consumer products are “bifurcating” their product lines. In simple terms, they are restructuring their marketing in ways to appeal to two different markets separated by income. In this case, the true middle and upper classes and the growing lower middle-class and poor.

For generations Proctor and Gamble marketed its consumer product line to the growing middle-class in America. Today, however, P&G is an example of a company becoming more aware of the divide in incomes and that yesterday’s middle-class are seeking more affordable alternatives. Accordingly, the company is developing product lines to appeal to this shift in the market. While Tide may continue being focused on its traditional market, P&G may emerge with a more affordable alternative labeled Low-Tide.

Manufacturers of consumer products have for years relied on the Gini index to decide just where America’s consumer dollars reside. Gini reported in 2009 that income disparity in America grew by 20 percent over the past 40 years. To make this figure real consider that Phyllis Jackson, a marketing VP at P&G, said, “We now have a Gini index similar to the Philippines and Mexico — you’d never have imagined that… I don’t think we’ve typically thought about America as a country with big income gaps to this extent.”

This income disparity is further supported by the Census Bureau’s recent disclosure showing more Americans are living in poverty today than since 1993 with some claiming, since the bureau began keeping such records in the 1960s.

The WSJ and Salon.com concur that the middle-class is shrinking under the pressure of globalization and technological innovation while the rich, “benefit disproportionately from gains in trade and excessively accommodative tax policy.”

Meanwhile, it seems the GOP and its squeaking wheel, the Tea Party, are more focused on labeling efforts to lessen the fall of the middle-class as “class warfare” than on keeping the average American lifestyle less like that of Bangladesh or Guatemala.

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