Last year homelessness in Los Angeles County rose by an astounding 23% last year.
The average rent for a 1 bedroom apartment in LA county, not the just the nice parts is around $1800/month.
My best friend is an engineer for Universal makes around $100k a year and is perpetually broke because he spends 50% of his income on housing.
And it’s not like he’s living in a mansion. He lives in a 1 bedroom in a downtown mid-rise.
Back east in NYC all of my friends have been forced out of the city to Weehawken or Hoboken because they simply could not afford the rising rents in the city.
Contrast this with an anecdote my ex fiancee recently shared with me about how the 6th floor of her luxury building in midtown has been rented out by “some sort of Saudi prince” who uses it to store around 100 motorcycles.
Stories like these highlight how bad the asymmetry is between the haves and the have nots as well if not better than any sort of statistics but I prepared some anyway:
Some quick wealth inequality stats:
The Richest 1% hold 40% of all wealth in the USA
Over the past 25 years only America’s most affluent families have added to their networth.
The richest 1% own 50% of all stocks and mutual funds held in the USA
The billionaire’s on the Forbes 400 list have more wealth than all black households and 1/3rd of Latino households combined.
As Drew Magary once wrote “If you’re not rich in America, you are fucked.”
I am VERY passionate about wealth inequality in America because it directly affects our freedom.
In 2014 This study done by Cornell revealed that America is not a democracy but rather an oligarchy where only the richest among us voices are heard.
The incredible book Dark Money by Jane Mayer goes over the myriad of ways that rich families like the Kochs and The Mercers have subverted our political system for their own ends.
Suffice to say I was not surprised when Donald Trump became president.
At some point I would love to write a detailed passionate plea for wealth re-distribution similar to The Case For Reparations by The GAWD Ta-nehisi Coates. But for now I want to be a little more self centered (shocking I know) and talk about what this rising tide of wealth inequality means for marketers like me.
And possibly you.
What does that mean for those of us who make a living creating content designed to sell stuff?
Here’s a few of my thoughts on the subject:
- Sell either expensive or cheap stuff nothing in the middle. When the big financial crisis of 2008 hit I was unexpectedly in a good place because I was selling expensive $5000 year long dating coaching services. In a recession counterintuitively luxury goods sales rise because the rich still have their money even if they have less. If you had $20 million and lost half of it in a crash you still have $10 million which makes you a luxury consumer. The flip side of this is that if you have a cheap product like one of my clients who also launched his $11.99 male hygiene product in 2008 you can see the same success as well. As less people have money , products need to be able to justify a luxury price tag or be around $10.
- A crash is coming, prepare accordingly. We are in a big bull market and inevitably when prices of assets climb for this long we are due for a crash. Whether it will be as big as the crash of 2008 remains to be seen, but only idiots think that the market can continue to go up forever. Anyone marketing should be preparing for the next financial crisis and how it will affect your business.
- Luxury purchases are about to come back in a big way. Luxury items tend to boom when a financial crisis hits. Expect coaching especially for businesses that guarantee more income to explode again. I also wouldn’t be surprised to see a variety of expensive crypto scams as those who have a base understanding of blockchain will find a ravenous audience in those trying to move their money out of a bottoming stock market. In any event I would imagine that the market for luxury purchases and the marketers who sell them will be booming soon.
- Price is everything for poor people and nothing for rich people. This is something I have already noticed from consulting. While smaller companies with lower budgets have to stress and agonize over every penny, companies and individuals that have money might not even check the price. Price is everything for those who don’t have money and nothing for those who have all the money. Keep that in mind and watch this video of 30 Rock’s Jack Donaghy thinking Potatoes are $100 a bag.
5. SMBs are going to be in TROUBLE! Small and medium businesses or SMBs are the lifeblood of the economy. They also are the businesses hit hardest by economic declines and most affected by wealth inequality. Not to go all Nassim Taleb here on you but SMBs tend to be affected most by the fat tails of probabolistic outcomes. If they don’t get that lucky black swan to become a larger 10M+ business they often end up going the other way. If you are a marketer who sells mostly to SMBs you may need to start setting your sights higher or lower.
That was basically just a coffee fueled braindump on wealth inequality and how it affects marketers feel free to leave other thoughts concerns or comments in the comment section below.