I’m not one that has a problem with the rich getting richer. For one, it’s inevitable: Having more money invested means making more money over time. More importantly, jealousy is a cancer worth avoiding. And lastly, I don’t think that someone getting rich means that someone else is getting poor.
But the poor not getting richer? The middle class going in reverse? Those are devastating problems. Perhaps you’re wondering just how wide of a gap is growing between the haves and have-nots. Here’s a provocative article in the NYT which argues that a shrinking middle class has become a foregone conclusion in the business world. An excerpt:
In 2012, the top 5 percent of earners were responsible for 38 percent of domestic consumption, up from 28 percent in 1995, the researchers found….Since 2009, the year the recession ended, inflation-adjusted spending by this top echelon has risen 17 percent, compared with just 1 percent among the bottom 95 percent.
And another:
Sears and J. C. Penney, retailers whose wares are aimed squarely at middle-class Americans, are both in dire straits. Last month, Sears said it would shutter its flagship store on State Street in downtown Chicago, and J. C. Penney announced the closings of 33 stores and 2,000 layoffs….Investors have taken notice of the shrinking middle. Shares of Sears and J. C. Penney have fallen more than 50 percent since the end of 2009, even as upper-end stores like Nordstrom and bargain-basement chains like Dollar Tree and Family Dollar Stores have more than doubled in value over the same period.
And one more:
A shift at Darden, which calls itself the world’s largest full-service restaurant owner, encapsulates the trend. Foot traffic at midtier, casual dining properties like Red Lobster and Olive Garden has dropped in every quarter but one since 2005, according to John Glass, a restaurant industry analyst at Morgan Stanley.
With diners paying an average tab of $16.50 a person at Olive Garden, Mr. Glass said, “The customers are middle class. They’re not rich. They’re not poor.” With income growth stagnant and prices for necessities like health care and education on the rise, he said, “They are cutting back.” On the other hand, at the Capital Grille, an upscale Darden chain where the average check per person is about $71, spending is up by an average of 5 percent annually over the last three years.
Read the whole thing. For a book-length treatment of this theme, see Average Is Over: Powering America Beyond the Age of the Great Stagnation