A sobering NY Times piece by Nelson Schwartz details just how bad it's been for the American middle class since the 2008 financial meltdown. It's gotten to the point that in 2014, the business world as all but given up on us.
In Manhattan, the upscale clothing retailer Barneys will replace the bankrupt discounter Loehmann’s, whose Chelsea store closes in a few weeks. Across the country, Olive Garden and Red Lobster restaurants are struggling, while fine-dining chains like Capital Grille are thriving. And at General Electric, the increase in demand for high-end dishwashers and refrigerators dwarfs sales growth of mass-market models.
As politicians and pundits in Washington continue to spar over whether economic inequality is in fact deepening, in corporate America there really is no debate at all. The post-recession reality is that the customer base for businesses that appeal to the middle class is shrinking as the top tier pulls even further away.
America is a consumer driven economy, and nearly all the growth in consumption is at the top.
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.
Even more striking, the current recovery has been driven almost entirely by the upper crust, according to Mr. Fazzari and Mr. Cynamon. 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.
More broadly, about 90 percent of the overall increase in inflation-adjusted consumption between 2009 and 2012 was generated by the top 20 percent of households in terms of income, according to the study, which was sponsored by the Institute for New Economic Thinking, a research group in New York.
The effects of this phenomenon are now rippling through one sector after another in the American economy, from retailers and restaurants to hotels, casinos and even appliance makers.
After a generation of stagnant middle-class wages, the money in the last five years has gone to the richest Americans, and life is very, very good for them.
For the rest of us, not so much. And so the American business model has now given up on the American middle class. The real growth industries are goods and services for the moneyed elite. And the divide between rich and poor is only going to get worse.
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8 comments:
The spouse & I like Olive Garden. It's no surprise that Red Lobster is struggling, though. RL has, in the main, pretty good food, but if you're really hungry, you're not going to be satisfied there at any reasonable price. If you're hungry hungry, go to Olive Garden.
Having grown up in an Italian family, I have to say that, in my opinion, Olive Garden is the Taco Bell of Italian food: low quality imitations of better, more authentic dishes that you can get for comparable prices at "mom and pop" Italian restaurants. (Okay, I'll give you the soup, salad, and bread sticks, all of which are pretty decent at OG. But the entrees? Meh.)
The problem is, in my area at least, finding Mom & Pop Italian places is difficult. We did find one Greek Mom&Pop place that serves pasta, but the marinara is slightly on the sweet side, and I can't stand that in my pasta. Also, despite the fact that many of the OG entrees come with mass-prepared elements, quality does vary between outlets. The OG on Broad St. near Glenside in Richmond, Va., is pretty decent, and the waitstaff is, unless you get a newby, friendly and competent.
Hmmm... okay, I'll grant you that. The advantages of living in the Detroit suburbs, I guess, where you can't swing a dead cat without hitting a restaurant. :-) I'm fortunate enough to be near several Carrabba's restaurants, where the food is top notch, and there's a place in Detroit's Eastern Market area (the Roma Cafe) that's so authentic you'd swear you were in Sicily.
You mean they offered you an entree you couldn't refuse? ;)
BTW, do you know what the deal is between sweet and non-sweet pasta sauce? Seems like some places serve sweet, others not. Does it come from a regional thing back in Italy?
And what did the Italians use to top their pasta before tomatoes were imported from the New World? Olive oil and spices, I'd guess.
I feel the need to watch my "Godfather" Blu-rays when I get home.:-)
I wish I had the answers to your questions, but I'm afraid that the people in my family who would know (my mom's grandparents and their siblings) passed away years ago. But, as far as tomato-based sauce goes, I figure you're probably right, judging by the amount of olive oil my family used to cook with!
I just e-mailed Lidia of Lidia's Italy (a cooking show on PBS). If she answers, I'll try to find a place here to post the answers.
Thanks for your thoughts. Zandar: Maybe you need to open up a food category on this site! (Just kidding. Sorta.)
I clearly need to make more foodie posts. :)
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