Changing demographics: the shrinking middle-class, mom’s & dads

middleclassIn 1971, the middle class included 61 percent of Americans. Today we see only 51 percent in the middle income tiers.  In short, the middle class has changed.  If I had to sum up what separates the middle class from those classes above and below, I’d have to say it’s about lifestyle and a word marketers love and fear: discretion. The middle class has the economic flexibility to make choices, but its members understand that trade-offs must be made and are forced to consider the impacts. 

The middle class is struggling because they’ve been impacted on all sides of the financial equation: income, net worth, and debt. Now try selling them something they want, rather than something they need.

middle class

Between 2000 and 2010 the number of families earning $ 50,000 to $ 150,000 (a rough approximation of the middle and upper middle class) declined by 2.6 million households, according to my analysis of census data. 5 During that time, average household income in constant dollars for all U.S. households fell about $ 2,500— a 4 percent drop. Added up, that’s a $ 292 billion drop in total consumer income. The middle-class loss was responsible for about half (53 percent) of that.

Middle-class incomes are even down slightly from 1988 in inflation-adjusted dollars. More importantly, the median household income in the U.S. has been fairly stagnant for the last half century.

So these key consumers are earning less and spending less. That presents a challenge for brands. But it’s not an insurmountable one.

Some leading marketers like Procter & Gamble, Target Corporation, and PepsiCo’s Frito-Lay are evolving strategies that address the shrinking middle class. Despite Tide’s dominance in the liquid laundry detergent world, P& G introduced a less expensive line of products geared toward a lower-income and more diverse audience.

Home Economics

Married couples with children now make up fewer than one in five households. Married couples as a whole make up just 48 percent of households.

The bottom line is that there is no “typical” any longer.  The average Fortune 500 CEO, it is more difficult to see shifts, and the data is so overwhelming that it is hard to digest and react to.  The bottom line is that the world that these men (and they’re still roughly 95 percent men) grew up in doesn’t exist anymore.

couple

Demographics might solve many of the problems for business in coming years. The Millennials aren’t getting any younger. Now reaching their thirties, they will be increasingly looking at moving into the next life stages. Whether they’ll do so in traditional ways (get married, buy a house, have kids) or not is certainly open to debate. As the largest generation in history, if even a reasonable percentage of them follow that pattern, it will lead to a big uptick in demand for housing and all the new spending that goes with having kids.

The majority of women over age fifteen in this country are unmarried. Part of that is due to the increasing number of women getting a higher education. They are staying in school longer and putting off marriage at least until they graduate or further, until they have established their careers.

Economically, the scales are tipping toward the females for the first time in history.

One area of growth between 2008 and 2010 was the number of households that had an “additional adult” living in them. In 2011 roughly one in five households had an “extra” adult. All told, that adds up to more than 41 million “extra” adults.

The much more important trend for media and brands is not the small number of people now living in larger households. It’s the enormous number of people now living in very, very small households. A whopping 28 percent of Americans now live alone.

A little over 40 percent of those living alone are under the age of thirty-four, which you would probably expect. But a greater and more overlooked proportion are over the age of sixty-five. One good thing about the rise of single-person households is that they’re a group who are actually spending more than they used to. In the last ten years dual-income households have cut their average household expenditures more than 2 percent in 2011 dollars.  Single-earning single households (in other words, someone with an income living alone) raised their spending a little over 1 percent.

living-alone-and-loving-it

For brands, these situations provide all kinds of opportunities for new products and markets. It’s just a matter of reaching them. Between 2003 and 2012, the amount of time Americans reported spending on shopping activities dropped nearly 33 hours annually to 263 hours. Women saw their share drop faster than men did.

Fatherhood is changing.

It’s becoming much more of a partnership. Roughly one in five dads with kids under five identifies himself as the primary caretaker of his kids. Among fathers with a wife who works, a third took care of their kids at least one day a week in 2010, according to the U.S. Census Bureau. That’s up from 26 percent in 2002.

Moms, meanwhile, have cut their housekeeping hours by 44 percent, increased their parenting time by roughly the same amount, and nearly tripled the time spent doing paid work.

working-mom

Nearly six in ten married couples with children have both parents in the labor force.  That’s almost a twenty-percentage-point increase from 2000. In 15 percent of those households, mom is the primary provider.  But having both parents working often comes with a price. Child-care costs eat up a lot of a family’s budget. Families with a working mom and children under the age of fifteen paid an average of $ 138 per week for child care in 2010, up 70 percent from 1985, the first year that this data was collected.

Working moms outnumber stay-at-home moms nearly three to one although stay-at-home moms have actually been a growing share, increasing from 20 percent in 1994 to 24 percent in 2012.

A Yahoo survey found that  half of men identified themselves as the primary grocery shopper. 

There are many ways to reach out to women and moms. They are increasingly balancing work and home-life demands. Demonstrating ways your brand can make their lives easier would seem to be a good strategy.

workingmoms

To put some data behind that, the Families and Work Institute’s National Study of the Changing Workforce found that fathers in dual-earner couples feel significantly greater work-life conflict than mothers do, and this level of conflict has risen steadily and relatively rapidly.  This is exacerbated by public and corporate policy in the U.S. Nearly 178 nations offer paid maternity leave, and more than 60 have paid paternity leave. In the U.S., parents have no such guarantees.

So…

Marketers have to become more responsive to changing demographics to cut through the clutter and make marketing relevant to them.  Selling Bumble Bee frozen entrees, for example, may not be about the product, but rather how easy it is making them at home.  A new dessert may not be about the calories or flavor as much as it’s about an easy treat to reward hard working moms.

For those people who live alone marketers are going to have think more about how they live and what’s important to them.  More and more it could be less about the brand and more about “what’s in it for me?”.