The wide impact of socio-economic change

Usually, I will use this space to share an observation culled from a news story or headline, and follow that tidbit with a potential implication—or questions—which might result from that issue. This day, I have a number of headlines competing for my attention, and it occurs to me that they’re all related. So I’m putting them together.

One in seven Americans is now living below the poverty line. According to this story from the Washington Post last month, the number of people living in poverty in the U.S. hit 44 million people in 2009. For the sake of clarity, a family of four is considered to be living in poverty if their household income is less than $22,000 per year. Click here to review that story.

Much of this fall in income is caused by unemployment, and many of the unemployed are older. During a number of Consumer DNA workshops this year, I’ve raised the issue that companies did not cut people during the great recession… they cut payrolls. Cutting headcount was not the goal, as much as cutting cost. So the more experienced and expensive workers were often the target. And now, those older workers are finding it difficult to find a job, according to this story from the New York Times last month. Click here to read it in full.

In 1976, the top 1% of earners took home 8.9% of all income. In 2007, the top 1% of earners took home 23.5% of all income. That’s according to another New York Times story, published on 10/16/10; click here to read it for yourself.

Implications: To say you should stay tuned to the changes impacting your target consumer is an understatement. These days, it’s almost like people in business should be also be students of socio-economics. Seriously, some people are starting to think very hard about how these tectonic, economic shifts could impact many aspects of society. Incomes, after all, seem to impact everything about a family... including how we define what a family is (according to this story from the NY Times).

It appears the number of wealthy folks is getting smaller.

It appears the number of poor folks is getting bigger.

It appears the chasm between wealthy and poor is getting wider (the classes have even less in common).

In my view, young people were the driving force behind electoral change in the 2008 election.

If older folks are being impacted harder by unemployment and income decline, do you think that will also be true of the 2010 mid-term elections?

If you cater to the luxury/upscale market, have you delineated your product line to serve the merely “rich,” and provided something even more remarkable that will appeal to the super-rich?

If you cater to the mainstream market, are you finding that the “regular price” of today looks a lot like the sale price of yesterday? Is that permanent, or transitional? Do you offer “bridge” products and services, which will help consumers get by until their paychecks start to gain both size and stability? Or should your target market be composed of different people than it included a few years ago?

Mike Anderson