The global landscape of wealth management is changing and the emerging markets are flooded with high income shoppers. The high income consumer market is flooded with products and services that cater to an elite audience. It is important to note that high income shoppers are active consumers of luxury goods. This also makes marketers ponder over the outcome of such spending and its impact on the U.S. economy. To begin with, high income consumers are a part of the elite group of spenders that look for premium quality products and do not think twice before splurging on exclusive brands. According to research, majority of U.S workers work in industries that earn close to 10% of revenue from sales to elite households. This invariably has many consequences for the economy and U.S. workers.
The rising dependency on high net worth consumers leads to unequal gaps in consumption and it is almost synonymous with inequality. Majority of American have still not attained a major spending power while the miniscule percentage of consumers have managed to spend lavishly. According to research, the consumer spending by the top 5% of income recipients has increased at a rate of 5.2% per annum while the spending by the bottom 95% grew by a meagre 2.8% hinting at disproportionate growth among high-income consumers. This in turn hints at the fact that U.S. economy caters significantly to the elite spenders and less to the remaining majority of shoppers.
Focus on elite consumers leading to inequality- an empirical view:
There is tremendous wage inequality in the industry and it is quite dependent on the elite consumers. The difference depends totally on the degree to which the U.S industries rely on elite consumers. Tests were conducted on 252 different industries on elite consumers and the findings are as follows:
- Industries that cater to high-income consumers have displayed higher levels of wage inequality as compared to industries that are reliant on less affluent consumers.
- The impact of affluent consumers may be explained owing to some differences that are present among other industries that include education or occupation of the workers. Despite taking the help of statistical techniques, the difference continues to hold, and unequal spending is directly proportional to wage gaps in the industry.
The disproportionate growth of high-income consumers- how it impacts the U.S. economy
The disproportionate growth of high income consumers is hinting at the fact that the U.S economy is emphasising more on the preference of elite spenders. Majority of US workers are now employed in industries that earn 10% of the revenue from sales to high income households. When a significant percentage of industries target high income consumers, more businesses and more jobs would rely on the purchase decisions of elite consumers. The rising elite demand for high-end products and services may also widen the gap between workers across industries and firms.
It is up to the Americans and consumers in general to focus on all type of consumer goods- the ones that are basic and the ones that are created for the elite audiences. People from different economic strata must come together to choose basic goods and services along with the premium ones. This may, to a certain extent, reduce inequality in wages and focus on making America free of wage gaps thereby fostering a stronger economy and an even stronger society.
Written By Andrea Price
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