There’s something very unsettling about the recovery our political leaders continue to promote. A former retail manager of a Georgetown boutique, I began to notice something very eerie about the shopping climate in one of DC’s most well-known shopping corridors-it was beginning to vanish. Over a year period, month after month, I began to notice traffic slowing down and purchases becoming smaller and smaller. While politicians and political analysts continue to debate the effects of immense inequality, corporate America has already come to terms with the erosion of the middle class. The reality is that middle tier retailers have seen their entire customer base shrink since the great recession, while bottom and top tier retailers thrive. John G. Maxwell, head of global retail and consumer practice at PricewaterhouseCoopers states that “As a retailer or restaurant chain, if you’re not at the really high level or the low level, that’s a tough place to be,” Mr. Maxwell said. “You don’t want to be stuck in the middle.” This erosion of mid-level retailers speaks volumes to the erosion of the mid-level consumer, and the enormous impact that income inequality has had on our society.
New research by the economists Steven Fazzari, of Washington University in St. Louis, and Barry Cynamon, of the Federal Reserve Bank of St. Louis, confirms what we already see in the marketplace. 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. This is especially dangerous for two reasons: 1) economic growth cannot be sustained if such a large percentage of the population is not involved and 2) since markets rely on the population to determine what works and what doesn’t, having only a small portion of the population participating in markets could make for very volatile results. Mr. Maxwell also stated that “Those consumers who have capital like real estate and stocks and are in the top 20 percent are feeling pretty good.”
This is why homeownership can be so important to keep families afloat and moving forward. The single biggest aspect missing from the inequality debate is the growing asset gap. In addition to raising the minimum wage and other income/job skills related issues, we also need to talk about access to assets. Predatory lending eroded the assets of many, but with good, fixed-rate loans, a home is often the largest and most important asset that low and moderate income families have. In order to sustainably grow our economy, the entire population must be able to have access to the wealth investments that assets bring, not just a select few. Supported by Manna, Inc. and lead by CNHED, the Housing for All Campaign believes that housing across the entire spectrum should be available at an affordable price, allowing for upward mobility and a path to building stability and assets-rebuilding the middle class.