I’ve been catching up today on a few things that I wasn’t able to get to last week. (The week was spent focusing on internal company business.)
I was particularly struck by the juxtaposition of the following chart. The topic: Household income and consumer values.
The first chart shows conventional wisdom: Household incomes have stagnated for the better part of the last 15 years.
There’s an important trend buried in the numbers: Households are getting smaller. Since household income tracks income for the entire household, the data understates the median income per household member.
Both trend lines capture the downward wage pressure experiences during the last decade. And, the household size series has certainly increased during the Recession, as more households are forced to combine because of economic pressure.
But the consumer experience of the past decade was that households had more purchasing power relative to the size of the household. The long-term demographic trend suggests that the household size number is going to continue to decline. The result is that more American’s need to earn enough to support themselves, not a broader support group.
Framing that observation is the values that people have in relationship to wealth, career and class. Pew Research Center has done interesting work on quantifying the way the people want to spend time and how they think about wealth and money. People who are in the broad middle generally value their career, have mixed feelings about the importance of wealth and know that the rich are not much different than them, just luckier.
When asked what is most important to them, people in the middle say that they highly value their free time to pursue their passions and interests — their family, a hobby, a vocation.
Work is a path to being able to experience life, not the path to life itself, for most people. As the demographic trend creates more, smaller households, we’ll see a continued emphasis on life as experience. This, incidentally, is a key characteristic of Generation Y. That cohort is only going to get older and more influential.
