How Reliance on High-Income Consumers Increases Wage Inequality in the U.S. Economy

Source: Nathan Wilmers, Scholars Strategy Network, Key Findings, July 2014

As American incomes become more unequal, gaps in consumption are growing too – almost as much as income inequality. The spending power of the majority of Americans has barely edged up, while a small number of high-income consumers can spend lavishly. According to one study, since 1989 consumer spending by the top five percent of income recipients has grown at a rate of 5.2% per year, while consumer spending by the bottom 95% grew by only 2.8% a year. The disproportionate growth of high-income consumers means that the U.S. economy caters increasingly to the preferences of elite spenders. In turn, as my research shows, the majority of U.S. workers are now employed in industries that earn at least ten percent of their revenues from sales to households earning incomes over $150,000 per year. What does that mean for workers’ wages? Too little is known about the consequences for the economy and U.S. workers of growing reliance on high-end consumers. My research sets out to improve our knowledge of these consequences….