It is no secret that something is going on. The American middle class (MC) has never seen the landslide of increasing costs of living like what is happening in today’s economy. MC life is being attacked from all angles. Whether it is the increased cost of food, housing, or the price of an automobile, the MC is being squeezed at unprecedented levels.
The term unremarkable middle comes from the perceived notion that the MC has been shrinking since the early 1970s. And with less and less MC, it will mean less for everyone and everything. Back in the 1970s, the average family of four could thrive, yes thrive, on only one income in a suburban community where mom stayed home, and dad worked.
The middle class is shrinking. A report from the Pew Research Center last week found that for the first time since the 1970s, families defined as “middle income” are in a minority in the US – squeezed from both ends by an enlarged poverty-stricken group below them, and an enriched group above them.
The graphs showing the shrinkage read like a textbook example of the future that French economist Thomas Piketty predicts for the world. In 1971, there were eighty million households in the US defined as middle income – compared with a combined fifty-two million in the groups above and below. Now, there are 120 million middle-class families, but 121 million rich and poor – “A demographic shift that could signal a tipping point,” says Pew.
There has also been a big shift in who gets the wealth generated by America: “Fully 49% of US aggregate income went to upper-income households in 2014, up from 29% in 1970. The share accruing to middle-income households was 43% in 2014, down substantially from 62% in 1970.”
There was no cable, internet bill, or streaming services to consider. There was no home alarm system to pay for either. The family only needed one income for the mortgage, gas, electricity, and car payment. Food costs were in alignment with the income of that time. The family was safe and secure.
Today, the average family must have a dual income to live the same lifestyle. There are exceptions to the rule, but by and in large the ability to afford a half-million-dollar home, two cars and everything that comes with a suburban lifestyle is getting harder and harder to maintain. The harder it is for the MC family, the harder it is for the MC business.
STORES CLOSING
People might say the pandemic caused a ton of stores to close. But after taking a closer look, the shrinking MC is partly to blame for the store closures. More than 2100 stores are expected to close in 2023 and it is expected to be even higher in 2024. Here are a few of the companies that plan to close or reduce the number of stores open in 2023.
Walmart – 22 closing
Bed, Bath & Beyond – 896 closing
Foot Locker – 545 closing
Buy Buy Baby – 120 closing.
Champs – 125 closing
Tuesday Morning – 487 closing
Bath & Body Works – 50 closing
Gap and Banana Republic – 46 closing
Party City – 31 closing
Best Buy – 20 closing
Each company sites varied reasons for shuttering locations. Come site a shift in focus away from shopping malls, some indicated theft as a problem, but the overwhelming reason stores are closing is due to a lack of MC shoppers. That along with a growing number of people who choose to shop online is cause for concern in the retail landscape.
Some retailers are shifting away from urban centers to more rural areas where crime is less, and the stores can thrive with less worry about employee safety.
“We are seeing a drastic drop in how busy we are lately,” Cindy said, who manages a large retailer in the Midwest. “We used to be busy all week, day, and night. But now we are starting to see that change to weekends and holidays. It’s not going to make us close, but I can tell something is going on.”
THE RISING COST OF EVERYTHING
Affordable housing is a vanishing term in America in 2023. The average rent/mortgage has hit an all-time high of $2,000 a month and continues to rise every year. The ability of a family to afford a home and the things that come with it has never been lower.
“Everything is increasing in price at the same time,” John from Houston said. “We are starting to have to make decisions on how we shop. I used to come out of the grocery store with a cart full of items, now I might have five bags for the same $100.”
America has drastically changed over the last three years. Drug use, crime, and inflation are all up in 2023 and it is causing people to make tough decisions. The MC was once considered the bedrock of America. With this population shrinking and feeling more pressure than ever, one can only wonder how this new reality will impact society.
“On the surface, everyone on social media seems happy and unaffected by what is going on,” Lance from Nashville said. “But we are all wondering how much more we can take. I know I am starting to wonder if I will ever be able to afford to retire.”
There are no short-term solutions for protecting the MC way of life. And there is not much hope of seeing prices come back down to respectable levels. But the power of the consumer has never been stronger. If Bud Light and Target can lose market share for a marketing decision, the MC had the power to effect change somewhere.
