The headline of yesterday’s Wall Street Journal article was casually chilling: “As middle class shrinks, P&G aims high and low” (subscription required). The article talks about how Proctor & Gamble, along with other companies, are adjusting their business strategies to target a consumer market “is bifurcating into high and low ends and eroding in the middle.”
Even scarier were two paragraphs deep within the story:
To monitor the evolving American consumer market, P&G executives study the Gini index, a widely accepted measure of income inequality that ranges from zero, when everyone earns the same amount, to one, when all income goes to only one person. In 2009, the most recent calculation available, the Gini coefficient totaled 0.468, a 20% rise in income disparity over the past 40 years, according to the U.S. Census Bureau.
“We now have a Gini index similar to the Philippines and Mexico—you’d never have imagined that,” says Phyllis Jackson, P&G’s vice president of consumer market knowledge for North America. “I don’t think we’ve typically thought about America as a country with big income gaps to this extent.”
Not that many years ago, it was controversial to even mention the growing wealth and income disparities in the U.S., even though all manner of economists and politicians–including then-President George W. Bush–were on the record as being concerned about it.
Today, the erosion of the middle class–and the supposition that it will continue to shrink–is no longer a controversial notion. It’s the basis of corporate marketing strategies.
It’s well worth reading this thoughtful piece from the Atlantic Monthly, “Can the middle class be saved?” The author’s answer: maybe, but it will require more sensible economic, tax and education policies.