Chicken Little and Pollyanna analyze the latest Pew income data
There’s an old story about the corporate CEO who insisted all analysts present their findings to management with one arm tied firmly behind their backs. The boss was tired of wishy-washy reports that concluded “on the one hand … but on the other hand.”
Legendary or not, when a new Pew Research Center report proclaimed The American Middle Class Is Losing Ground, that wise CEO came to mind.
The headline grabber was that the 2015 middle class share of typical 3-person U.S. households is way down from 1971 – 50% versus 61%.
Most commentators were in two-handed analyst mode, unconsciously channeling Boomer childhood favorites Chicken Little, the sky is falling, and Pollyanna – play The Glad Game – to achieve balance. Whatever that is.
The Chicken Littles focus – with socially conscious angst – on how America’s economic pie is shared, how the down-to-earth core, the middle class, is being hollowed out aka losing ground and why the low income ranks are growing.
The Pollyanna takeaway is how much bigger the 2015 pie is for all income groups versus 1971.
Still, Chicken Littles find enough facts to claim the sky is falling:
- Economic progress masks financial setbacks since 2000
- Lower tier households grew 1971-2015, from a 25% share to 29%
- Income grew fastest among “upper” households
- Upper-income families have seven times as much wealth as middle-income families – back in 1983, the ratio was only three times.
- Americans over 65 are the most likely age group to be lower income
To Pollyannas, the data proves everyone is better off in 2015; sure, the rich more than others, but – Pew’s snappy title notwithstanding – no income tier actually “lost ground.”
- In 2014, median lower tier household income was up 28% vs. 1971; the median middle-income household jump was 34% (2014 dollars.)
- OK, for upper-income households the increase was 47%, but that also generated more taxes to support lower income folk.
- Yes, the middle class share of households shrank – but almost twice as many moved up (7%) as down (4%.)
- The 65+ age group improved their income status far more than any other demo: 26% net upward movement since 1971.
For Boomers and the American economy that last statistic is the most important.
The Wile E Coyote method: cut to the chase
Question: who out in the real world, far from the gray domain of statisticians and social trend-trackers, actually experienced the personally beneficial changes between 1971 and 2015, you know, as in “hey, I don’t know about the rich folks across town, but my family is way better off.”
Answer: why, older members of the Boomer-Plus Generation of course.
They also know older consumers today have higher incomes and spending power than back in their grandparents’ time. In fact, Pew data shows the 65+ age group is the only one whose middle and upper income brackets increased in share 1971-2015.
So, after the Chicken Littles and Pollyannas have had their say, it’s time to turn to Wile E. Coyote for actionable analysis; his relentless, hungry, cut to the chase focus on the endgame should be an inspiration to disruptive C-Suite thinkers everywhere.
Wile-style bottom line: let’s go get those juicy, plump Boomers. They’re all tasty.
The Financial Times summed up the Pew data in more erudite terms, but the bottom line is the same (hat tip: Charles Shillingburg, B+CG Senior Mentor).
“The US middle class is already being reshaped by its aging population, and older citizens are set to play a swelling role in the economy as their weight in the middle and upper income brackets mounts.”
(FT quoting projections by the McKinsey Global Institute) “Americans aged 60 and over are forecast to drive half of all U.S. spending growth between 2015 and 2030.”
Hungry brand alert: you have to work for your share
The Boomer-Plus Generation™, born 1940-1965, owns over 70% of U.S. household net worth and would be the world’s 15th most populous nation if it were a country. That’s more spending power than Germany, or the UK, or Italy or France.
But, so far, Madison Avenue has not gotten hungry enough to chase us down; the FT quotes Jaana Remes, a McKinsey Global Institute partner as “surprised she had not heard corporate leaders express more interest in this group.”
When adland is finally prodded into action by disruptive client managers, they’ll find it takes hard work – and smart work – to win a bigger share of business in the 50+ arena. Here at the 15th Nation we don’t offer Acme surefire Snag-a-Boomer kits, but we do know the territory. Meep, meep!