retail news in context, analysis with attitude

by Kevin Coupe

USA Today had a story this week about a new study from Third Way - described as “a think tank that advocates center-left ideas” - concluding that “despite an unemployment rate that has reached a 50-year low of 3.7 percent, most jobs across the U.S. don’t support a middle-class or better lifestyle, leaving many Americans struggling … Sixty-two percent of jobs fall short of that middle-class standard when factoring in both wages and the cost of living in the metro area where the job is located.”

The story also cites a Pew Research Center study with a slightly different conclusion - that “a slight majority of Americans, 52 percent, do live in middle-class households … And another 20 percent or so live in upper income households. But that’s because they’re juggling multiple jobs, for example, or relying on investments, an inheritance or other household members who may have higher-paying jobs.” (In other words, they’re still falling short, but are finding ways to make up the shortfall.)

Some of this is geographic and situational: “A factory machinist in Cedar Rapids, Iowa, earns an average $45,470 a year, more than enough to meet the $40,046 threshold for a middle-class job in that area. A similar machinist makes more – $57,220 on average – in San Francisco, but that’s far short of the $82,142 minimum for a middle-class job in that area, according to the report. It costs an average $32,440 a year to rent a one-bedroom apartment in San Francisco, compared with $7,368 in Cedar Rapids.”

Jim Kessler, Third Wave’s vice president for policy, suggests that the nation, despite an economy that has been growing for six years and has been picking up steam - in some sectors - during the last two, is suffering from what he calls “an opportunity crisis,” which he says “explains some of the economic uneasiness and, frankly, the political uneasiness” playing out across the country.

The study says that “30 percent of jobs are ‘hardship jobs,’ meaning they don’t allow a single adult to make ends meet … 32 percent are ‘living wage’ jobs, enough to get by but not to take vacations, save for retirement or live in a moderately priced home … (and) 23 percent are middle-class jobs, allowing for dining out, modest vacations and putting some money away for retirement.”

Even if these percentages are not completely accurate, I’m not sure there are many folks out there who would argue that the improved economy has been felt by everyone, everywhere. That’s clearly not the case, which is also why there is an income disparity problem, and a shrinking middle class.

All of which should be of grave concern to anyone who is in the business of marketing to these folks. If more than six out of 10 people are in either hardship jobs of living wage jobs, that doesn’t leave a lot of room for aspirational acquisitions. And yet, it is in catering to people’s aspirations that bricks-and-mortar retailers can compete most effectively with online retailers, especially since there also is increased price/value competition coming from the likes of Aldi and Dollar General.

Scary stuff, if you are a traditional retailer. And at the very least, an Eye-Opener.
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