From Juliet Schor, The Overspent American
(1998)
For millions of Americans . . [what]
they acquire and own is tightly bound to their personal identity. Driving a certain type
of car, wearing particular designer labels, living in a certain kind of home,
and ordering the right bottle of wine create and support a particular image of
themselves to present to the world.
This is not to say that most Americans make
consumer purchases solely to fool others about who they really are. It is not
to say that we are a nation of crass status-seekers. Or that people who
purchase more than they need are simply demonstrating a base materialism, in
the sense of valuing material possessions above all else. But it is to say
that. . . .many of us are continually comparing our own lifestyle and
possessions to those of a select group of people we respect and want to be
like, people whose sense of what's important in life seems close to our own.
This aspect of our spending is not new.
Competitive acquisition has long been an American institution. At the turn of
the century, the rich consumed conspicuously. In the early post-World War II
decades, Americans spent to keep up with the Joneses, using their possessions
to make the statement that they were not failing in their careers. But in
recent decades, the culture of spending has changed and intensified. In the old
days, our neighbors set the standard for what we had to have. They may have
earned a little more, or a little less, but their incomes and ours were in the
same ballpark. Their house down the block, worth roughly the same as ours,
confirmed this. Today the neighbors are no longer the focus of comparison. How
could they be? We may not even know them, much less which restaurants they
patronize, where they vacation, and how much they spent for their living room
couch.
For reasons that will become clear, the
comparisons we make are no longer restricted to those in our own general
earnings category, or even to those one rung above us on the ladder. Today a
person is more likely to be making comparisons with, or choose as a
"reference group," people whose incomes are three, four, or five
times his or her own. The result is that millions of us have become
participants in a national culture of upscale spending. I call it the new
consumerism.
Part of what's new is that lifestyle
aspirations are now formed by different points of reference. For many of us,
the neighborhood has been replaced by a community of coworkers, people we work
alongside and colleagues in our own and related professions. And while our
real-life friends still matter, they have been joined by our media
"friends.' (This is true both figuratively and literally-the television
show Friends is a good example of an influential Media referent.) We
watch the way television families live, we read about the lifestyles of
celebrities and other public figures we admire, and we consciously and
unconsciously assimilate this information. It affects us.
So far so good. We are in a wider world,
so we like to know that we are stacking up well against a wider population
group than the people on the block. No harm in that. But as new reference
groups form, they are less likely to comprise people who all earn approximately
the same amount of money. And therein lies the problem. When a person who earns
$75,000 a year compares herself to someone earning $90,000, the comparison is
sustainable. It creates some
tension, even a striving to do a bit better, to be more successful in a
career. But when a reference group includes people who pull down six or even
seven-figure incomes, that's trouble. When poet-waiters earning $18,000 a year,
teachers earning $30,000, and editors and publishers earning six-figure incomes
all aspire to be part of one urban literary referent group, which exerts
pressure to drink the same brand of bottled water and wine, wear similar urban
literary clothes, and appoint apartments with urban literary furniture, those
at the lower economic end of the reference group find themselves in an
untenable situation. Even if we choose not to emulate those who spend
ostentatiously, consumer aspirations can be a serious reach.
Advertising and the media have played
an important part in stretching out reference groups vertically. When twenty-somethings
can't afford much more than a utilitarian studio but think they should have a
New York apartment to match the ones they see on Friends, they are
setting unattainable consumption goals for themselves, with dissatisfaction as
a predictable result. When the children of affluent suburban and impoverished
inner-city households both want the same Tommy Hilfiger logo emblazoned on
their chests and the top-of-the-line Swoosh on their feet, it's a potential
disaster. One solution to these problems emerged on the talk-show circuit
recently, championed by a pair of young urban "entry-level' earners: live
the faux life, consuming as if you had a big bank balance. Their
strategies? Use your expense account for private entertainment, date bankers,
and sneak into snazzy parties without an invitation. Haven't got the wardrobe
for it? No matter. Charge expensive clothes, wear them with the tags on, and
return them the morning after. Apparently the upscale life is now so worth
living that deception, cheating, and theft are a small price to pay for it.
These are the more dramatic
examples. Millions of us face less stark but problematic comparisons every day.
People in one-earner families find themselves trying to live the lifestyle of
their two-paycheck friends. Parents of modest means struggle to pay for the
private schooling that others in their reference group have established as the
right thing to do for their children.
Additional problems are created by
the accelerating pace of product innovation. To gain broader distribution for
the plethora of new products, manufacturers have gone to lifestyle marketing,
targeting their pitches of upscale items at rich and nonrich alike. Gourmet
cereal, a luxurious latte, or bathroom fixtures that make a statement, the
right statement, are offered to people almost everywhere on the economic
spectrum. In fact, through the magic of plastic, anyone can buy designer
anything, at the trendiest retail shop. Or at outlet prices. That's the new
consumerism. And its siren call is hard to resist.
The new consumerism is also built on a
relentless ratcheting up of standards. If you move into a house with a fifties
kitchen, the presumption is that you will eventually have it redone, because
that's a standard that has now been established. If you didn't have
air-conditioning in your old car, the presumption is that when you replace it,
the new one will have it. If you haven't been to Europe, the presumption is
that you will get there, because you deserve to get there. And so on. In
addition to the proliferation of new products (computers, cell phones, faxes,
and other microelectronics), there is a continual upgrading of old ones-autos
and appliances-and a shift to customized, more expensive versions, all leading
to a general expansion of the list of things we have to have. The 1929 home I
just moved into has a closet too shallow to fit a hanger. So the clothes face
forward. The real estate agents suggested I solve the "problem" by
turning the study off the bedroom into a walk-in. (Why read when you could be
buying clothes?) What we want grows into what we need, at a sometimes
dizzying rate. While politicians continue to tout the middle class as the heart
and soul of American society, for far too many of us being solidly middle-class
is no longer good enough. Oddly, it doesn't seem as if we're spending
wastefully, or even lavishly. Rather, many of us feel we're just making it,
barely able to stay even. But what's remarkable is that this feeling is not
restricted to families of limited income. It's a generalized feeling, one that
exists at all levels. Twenty-seven percent of all households making more than $
100,000 a year say they cannot afford to buy everything they really need.
Nearly 20 percent say they "spend nearly all their income on the basic
necessities of life." In the $50,000 range, 39 percent and one-third feel
this way, respectively. Overall, half the population of the richest country in
the world say they cannot afford everything they really need. And it's not just
the poorer half.
This book is about why: About why so
many middle-class Americans feel materially dissatisfied. Why they walk around
with ever-present mental 'wish lists" of things to buy or get. How even a
six-figure income can seem inadequate, and why this country saves less than
virtually any other nation in the world. It is about the ways in which, for
America's middle classes, "spending becomes you," about how it
flatters, enhances, and defines people in often wonderful ways, but also about
how it takes over their lives. My analysis is based on new research showing
that the need to spend whatever it takes to keep current within a chosen
reference group-which may include members of widely disparate resources-drives
much purchasing behavior.
Table 1.1 How much is enough?
Statement
<10,000 10,001-25,000 25,001-35,000
35,001-50,000 50,000-75,000 75,001-100,000 >100,000
I cannot afford 64
62 50 43 42 39 27
to buy everything
I really need
I spend nearly 69 64
62 46 35 33 19
all
my money
on the basic
necessities of life
Source: Author’s calculations from the Merck
Family Fund poll (Feb. 1995)
It
analyzes how standards of belonging socially have changed in recent decades,
and how this change has introduced Americans to highly intensified spending pressures.
And finally, it is about a growing
backlash to the consumption culture, a movement of people who are
downshifting--by working less, earning less, and living their consumer lives
much more deliberately.
I am
hardly the first person to have argued that consumption has a comparative, or
even competitive character. Ideas of this sort have a long history within
economics, sociology, and other disciplines. In The Wealth of Nations, Adam
Smith observed that even a "creditable day- laborer would be ashamed to
appear in publick without a linen shirt" and that leather shoes had become
a "necessary of life" in eighteenth- century England. The most
influential work on the subject, however, has been Thorstein Veblen's Tbeory
of the Leisure Class. Veblen argued that in affluent societies, spending
becomes the vehicle through which people establish social position. The
conspicuous display of wealth and leisure is the marker that reveals a man's
income to the outside world. (Wives, by the way, were seen by Veblen as largely
ornamental, useful to display a man's finest purchases --- clothes, furs, and
jewels.) The rich spent conspicuously as a kind of personal advertisement, to
secure a place in the social hierarchy. Everyone below stood watching and, to
the extent possible, emulating those one notch higher. Consumption was a
trickle-down process. The phenomenon that Veblen identified and described,
conspicuous consumption by the rich and the nouveaux riches, was not new even in
his own time. Spending to establish a social position has a long history.
Seventeenth- and eighteenth-century Italian nobles built opulent palaces with
beautiful facades and, within those facades, placed tiles engraved with the
words Pro Invidia (To Be Envied). For centuries, aristocrats passed laws
to forbid the nouveaux riches from copying their clothing styles. At the turn
of the century, the wealthy published the menus of their dinner parties in the
newspapers. And fifty years ago, American social climbers bought fake
"ancestor portraits" to hang in their libraries.
Veblen's story made a lot of sense for
the upper-crust, turn-of-the- century urban world of his day. But by the 1920s
new developments were afoot. Because productivity and output 'were growing so
rapidly, more and more people had entered the comfortable middle classes and
begun to enjoy substantial discretionary spending. And this mass prosperity
eventually engendered a new socioeconomic phenomenon—a mass keeping-up process
that led to convergence among consumers' acquisition goals and purchasing
patterns.
The advent of mass production in the
1920s made possible an outpouring of identical consumer goods that
nearly everybody, wanted-and were better able to afford, thanks to declining
prices. By the fifties, the Smiths had to have the Joneses' fully automatic
washing machine, vacuum cleaner, and, most of all, the shiny new Chevrolet
parked in the driveway. The story of this period was that people looked to
their own neighborhoods for their spending cues, and the neighbors grew more
and more alike in what they had. Like compared with like and strove to become
even more alike.
This phenomenon was chronicled by James
Duesenberry, a Harvard economist writing just after the Second World War.
Duesenberry updated Veblen's trickle-down perspective in his classic discussion
of "keeping up with the joneses." In contrast to Veblen's
Vanderbilts, Duesenberry's 1950s Joneses were middle-class and they lived next
door, in suburban USA. Rather than seeking to best their neighbors,
Duesenberry's Smiths mainly wanted to be like them. Although the ad writers
urged people to be the first on the block to own a product, the greater fear in
most consumers' minds during this period was that if they didn't get cracking,
they might be the last to get on board.
In
addition to Veblen and Duesenberry, a number of distinguished economists have
emphasized these social and comparative processes in their classic accounts of
consumer culture-among them, John Kenneth Galbraith, Fred Hirsch, Tibor
Scitovsky, Richard Easterlin, Amartya Sen, Clair Brown, and Robert Frank. Among
the most important of their messages is that consumer satisfaction, and
dissatisfaction, depend less on what a person has in an absolute sense than on
socially formed aspirations and expectations. Indeed, the very term
"standard of living" suggests the point: the standard is a social
norm.
By the
1970s, social trends were once again altering the nature of comparative
consumption. Most obvious was the entrance of large numbers of married women
into the labor force. As the workplace replaced the coffee klatch and the
backyard barbecue as locations of social contact, workplace conversation became
a source for information on who went where for vacation, who was having a deck
put on the house, and whether the kids were going to dance class, summer camp,
or karate lessons. But in the workplace, most employees are exposed to the
spending habits of people across a wider economic spectrum, particularly those
employees who work in white-collar settings. They have meetings with people who
wear expensive suits or "real' Swiss watches. They may work with their
boss, or their boss's boss, every day and find out a lot about what they and
their families have.
There
were also ripple effects on women who didn't have jobs. When many people lived
in one-earner households, incomes throughout the neighborhood tended to be
close to each other. As many families earned two paychecks, however, mothers
who stayed at home or worked part-time found themselves competing with
neighbors who could much more easily afford pricey restaurants, piano lessons,
and two new cars. Finally, as Robert Frank and Philip Cook have argued, there
has been a shift to a "winner-take-all" society: rewards within
occupations have become more unequally distributed. As a group of extremely
high earners emerged within occupation after occupation, they provided a
visible, and very elevated, point of comparison for those who weren't capturing
a disproportionate share of the earnings of the group.
Daily
exposure to an economically diverse set of people is one reason Americans began
engaging in more upward comparison. A shift in advertising patterns is another.
Traditionally advertisers had targeted their market by earnings, using one
medium or another depending on the income group they were trying to reach. They
still do this. But now the huge audiences delivered by television make it the
best medium for reaching just about every financial group. While Forbes readers
have a much higher median income than television viewers, it's possible to
reach more wealthy people on television than in the pages of any magazine, no
matter how targeted its readership. A major sports event or an ER episode is
likely to deliver more millionaires and more laborers than a medium aimed
solely at either group. That's why you'll find ads for Lincoln town cars,
Mercedes-Benz sports cars, and $50,000 all-terrain vehicles on the Super Bowl
telecast. In the process, painters who earn $15,000 a year are being exposed to
buying pressures never intended for them, and middle-class housewives look at
products once found only in the homes of the wealthy.
Beginning in the 1970s, expert observers were declaring the death of the
'belonging' process that had driven much competitive consumption and arguing
that the establishment of an individual identity- rather than staying current
with the Joneses-was becoming the name of the game. The new trend was to
consume in a personal style, with products that signaled your individuality,
your personal sense of taste and distinction. But, of course, you had to be
different in the right way. The trick was to create a unique image through what
you had and wore-and what you did not have and would not be seen dead in.
While
the observers had identified a new stage in consumer culture, they were right
only to a point. People may no longer have wanted to be just like all others in
their socioeconomic class, but their need to measure up within some idealized
group survived. What emerged as the new standards of comparison, however, were
groups that had no direct counterparts in previous times. Marketers call them
clusters-groups of people who share values, orientations, and most important, lifestyles.
Clusters are much smaller than traditional horizontal economic strata or
classes and can thereby satisfy the need for greater individuality in
consumption patterns. "Yuppie" was only the most notorious of these
lifestyle cluster groups. There are also middle Americans, twenty-somethings,
upscale urban Asians, top one-percenters, and senior sun-seekers. We have
radical feminists, comfortable capitalists, young market lions,
environmentalists. Whatever.
Ironically, the shift to individuality
produced its own brand of localized conformity. . . Apparently lots of people
began wanting the same "individual identity- creating" products. But
this predictability, while perhaps a bit absurd, brought with it no particular
financial problem. Seventies consumerism was manageable. The real problems
started in the 1980s as an economic shift sent seismic shocks through the
nation's consumer mentality. Competitive spending intensified. In a very big
way.
Throughout
the 1980s and 1990s, most middle-class Americans were acquiring at a
greater rate than any previous generation of the middle class. And their buying
was more upscale. By the end of the 1990s, the familiar elements of the
American dream (a little suburban house with a white picket fence, two cars,
and an annual vacation) have expanded greatly. The size of houses has doubled
in less than fifty years, there are more second homes, automobiles have become
increasingly option-packed, middle-income Americans are doing more pleasure and
vacation travel, and expenditures on recreation have more than doubled since
1980. Over time new items have entered the middle-class lifestyle: a
personal computer, education for the children at a private college, maybe even
a private school, designer clothes, a microwave, restaurant meals, home and
automobile air conditioning, and, of course, Michael Jordan's ubiquitous
athletic shoes, about which children and adults both display near-obsession . .
.
Yet, by
the mid-nineties, America was decidedly anxious. Many households felt
pessimistic, deprived, or stuck, apparently more concerned with what they could
not afford than with what they already had. Definitions of the "good life"
and even of "the necessities of life" continued to expand, even as
people worried about how they could pay for them. What was going on? The
economic trend was a diverging income distribution. The sociological trend was
the upward shift in consumer aspirations and the vertical stretching out of
reference groups. They collided to produce a period of consumer anxiety,
frustration, and dissatisfaction.
The
growth of inequality dates back to the 1970s, the beginning of a phenomenal
rise in the earnings of the rich and very rich. Between 1979 and 1989, the top
1 percent of households increased their incomes from an average of about
$280,00 a year to $525,000- (They got a big tax break from Reagan, benefited
from trends in financial markets, and wrote themselves bigger paychecks.) In
terms of wealth, they did even better comparatively, boosting their share of
the nation's financial wealth to just under one-half.
The
so-called decade of greed was off and running. The rich and super-rich took
conspicuous consumption to new levels, buying Lexuses, Rolexes, Montbianc pens,
designer outfits, and art collections. These visible public excesses
reverberated through the upper part of the upper-middle class, which calibrates
its success by the Newport set. To compensate for the growing chasm between
their lifestyles and those of the rich and famous, these upper-middles also
began conspicuously acquiring the luxury symbols of the 1980s--buying the
high-prestige watches and pens, looking for 'puro lino" labels, and leasing
luxury vehicles they often couldn't afford. "Feeling poor on $100,000 a
year" articles began appearing in the press.
That
might have been that. But the upper-middle group is special. It became the new
focal point. The new consumerism made it so, by orienting aspirations upward in
ways I have already described.
By upper-middle-class I mean roughly the
top 20 percent of house- holds, with the exclusion of the top few percent. In
1994 the lower- income cutoff for this group was about $72,000 a year, and its
midpoint
$91,000. The top 5 percent of this group-which includes the super-rich--earned
on average $254,000. The standard of living of this upper-middle is now widely
watched and emulated. It is the group that defines material success, luxury,
and comfort for nearly every category below it. It is the visible lifestyle to
which most aspiring Americans aspire. Even people earning far less now look up
to the lifestyle of the brother-in-law who's a VP and lives in a gated
community, the friends with a center entrance colonial or, if their tastes run
to the urban, a luxury apartment in a prewar doorman building in Manhattan or
in Boston's Back Bay. The average American is now more likely to compare his or
her income to the six-figure benchmark in the office down the corridor or
displayed in Tuesday evening prime time. (Even in a relatively affordable town
like Seattle, Frasier's apartment-and view-must cost a bundle.)
And these aspirations play themselves out
in the retail sector: the furnishings, attire, and lifestyle accessories of the
upper 2.o percent are the prototypes for the less expensive versions found at
Macy's, Sears, WalMart, and K-Mart. (That's what K-Mart's partnership with
Martha Stewart is all about.) Pottery Barn is similar to Williams-Sonoma. Pier 1
looks a lot like Bloomingdale's. Ditto Land's End and Brooks Brothers.
Designers create lower-priced lines that are still far more expensive than the
no-names.
By 1991
almost everybody was gazing at the top of the pyramid. According to a study
by marketing professor Susan Fournier, now of Harvard Business School, and her
former colleague at the University of Florida, Michael Guiry, more than
one-third (3 5 percent) of their sample of consumers reported that they would
someday like to be a member of the "really made it" group, a category
they identified as representing the top 6 percent of American society. (Average
income for this top group is about $250,000 a year.) Half the sample (49
percent) identified the "doing very well" group as their aspirational
standard, a designation that referred to the next 12 percent of
households. Taken together, 85 percent aspired to be in the top 15 percent
of American households. Only 15 percent would be satisfied by "living a
comfortable life" or something less. Only 15 percent would be satisfied
ending up as middle-class.
But keeping up with that top quintile is
not easy, because they keep getting richer --- considerably richer than the
four-fifths of the country that watches them. Between 1979 and 1994, families
in the top zo per- cent increased their share of income from 42- percent to 46
percent. Excluding the top 5 percent of that group (in other words, looking
only at families in the 8o-95 percent range) the rise was from z6 per- cent to
27 percent. And the share of income for every group beneath them fell. So
four-fifths of Americans were relegated to earning even less than the
people they looked up to, who were now earning and spending more. And something
similar happened within the bottom 8o percent. The top half did much better
than the bottom half, whose comparative (and absolute) position went to hell in
a handbasket. As the ordinary middle class got farther from that four-bedroom
colonial or the designer loft in San Francisco, the lower-middle and working
classes fell even farther behind, their dream of owning any kind of home fading
into the far-distant future. As the middle classes started keeping their cars a
bit longer, the working class started having theirs repossessed. All down the
line, the gaps between the groups got larger and larger. And the hopes of many
to participate in the new consumer economy were replaced by a daily struggle to
survive.
By 1996 only one in four believed that
the standard of living would rise in the next five years. Nearly half the
population felt that their children's generation would not enjoy a higher
standard of living than their own. The middle class was shrinking, companies
were downsizing at a manic rate, economic pessimism and job anxiety abounded.
Per capita consumption was rising. But consumers' expectations were
rising even faster.
Unfortunately the government doesn't collect systematic data on 'the
American dream and its upscaling.' But there is evidence of a sharp escalation over
this period. In 1986 the Roper polling organization asked Americans how much
income they would need to fulfill all their dreams. The answer was $5o,ooo. By 1994
the "dreams- fulfilling" level of income bad doubled, from $50,000 to
$102,000. Upscaling had definitely taken hold. Of course, $102,000 is not
everyone's dream. In a consumption system premised on differences, dreams will
also differ. And predictably, the higher one's income, the more one must have
to feel fulfilled. Those making more than $50,000 said they would need $200,000
for total fulfillment, while lower-income people calculated that they would
need only $88,000 a year.
TABLE
1.2 Making Americans' Dreams
Come
Question: How much income per year would you say you (and your family) need
to fulfill all of your dreams?
MEDIAN RESPONSE
1987
$50,000
1989 $73,000
1991
$83,000
1994 $102,000
1996 $ 90,000
Source:
Roper Center, University of Connecticut;
1987-1991 figures reported in American Enterprisee (May@june
1993), P-86; 1994 figures from Crispell (1994); 1996 figure is directly from Roper
Other surveys also indicate an expansion
of desire and expectation. Asked what constitutes "the good life,"
people in 1991 focused far more on material goods and luxuries than they
did 1975. Items more likely to be part of good life now than then include a
vacation home, a swimming pool, a color TV, a second color TV, travel abroad,
nice clothes, a car, a second car, a home of one's own, a job that pays
much more than the average, and a lot of money. Less likely, or no more likely,
to yield the good life, according to respondents, were a happy marriage, one or more
children
an
interesting job, and a job that contributes to the welfare of society. Not
surprisingly, by 1991 far fewer Americans thought they had a "very
good' chance of achieving the good life.
Americans' concept of need has also
clearly changed. Data from 1973, 1991, and 1996 reveal that a variety of
consumer items are seen as necessities by an increasing number of people. About
one-quarter of Americans consider home computers and answering machines to be
necessities, one-third feel the same way about microwaves, more than 40 percent
can't do without auto air conditioning, and just over half say home air
conditioning is essential. VCRs and basic cable, which weren't included in the
1975 survey, are necessities to 13 and 1 7 percent of the nation's consumers.
The list of things we absolutely have to have is growing. (Interestingly, one
product Americans are less likely to see as necessary in the 1990s is
television, perhaps because substitutes have emerged.)
Throughout the nineties, the moving target of the top 20 percent has
continued to move. A mere car now carries a slightly downscale image, as people
shift to sport utility vehicles. The trend includes urban spas, personal
trainers, limousine rides, fancy computer equipment,
"professional-quality" everything-from cookware to sports
equipment-and, perhaps most strikingly of all, the "trophy" house, or
McMansion. These showy dwellings, which range from four thousand to
twenty-five thousand square feet, are proliferating around the country. In
older suburbs, an existing house will be razed to make way for a larger one.
Oustide Boston, in affluent Wellesley, the median size of a new home rose from
2900 to 3500 square feet between 1986 and 1996, and the number of really
big houses (more than four thousand square feet) quadrupled. Inside McMansion?
A range of amenities now considered de rigeur for affluent families—granite
countertops in the kitchen, Jacuzzi, media room or fitness center, enlarged
kitchen and family room areas, a three-or four-car garage, sometimes even a
home office and au pair suite. And, of course, bathrooms. Lots of bathrooms.
It seems that "needs" have been
upscaled disproportionately among those with more money. In my survey at
"Telecom," among those who reported dissatisfaction with their
incomes, the more they made, the greater the additional amount needed to reach
satisfaction. In the $75,000+ household income category, nearly two-thirds said
they'd need an increase of 50 to 100 percent in their annual incomes to reach
satisfaction, while fewer than 20 percent of those making $30,000 or less would need that much.
Focus groups and interviews with
consumers also reveal the upscaling process. Here's downshifter Jennifer
Lawson: "In the fifties, growing up in upstate New York, my parents were
considered middle-class pillars of the community. My father was an accountant.
It's a fairly poor rural area, and most people worked in a factory or
waitressed or something. My dad was actually a professional person with a sign
out in front. My parents had one car, and they drove it until it fell apart,
and then they bought a new one, usually a station wagon. They had a fairly
modest house. We took a vacation as a family for two weeks and rented a little
cabin in Maine. And drove-nobody flew anywhere. I can't remember anyone who had
a second car. Everyone walked every where; children certainly didn't have $ 100
sneakers. It amazes me now that my younger brother, who still lives there and
who has a job that's roughly equal to the job my dad had when I was growing up
... He has three teenage daughters. And since they were about nine, they've
each had their own color TV, and they have their own CD players, they all have
their own telephone fines, because they complain about calls not being able to
get through."
A Merck
Family Fund focus-group participant seems less judgmental: "I used to
think of the American dream as the house with the little picket fence and the
two-car garage, two kids, and a dog and a cat. If you look at the old Beaver
or the old movies, the family movies, they didn't show these huge mansions."
What's different now? "Just the whole thing of 'more.' I'm not saying
that's bad, and I'm not saying I'm not in that category. I'm just saying that
the American dream has ... I think it's expanding."
Thus, the competitive upscale consumption
that began in the 1980s, with the attendant expansion of the American dream,
wasn't invented by Nancy Reagan and it wasn't a cultural accident. It was
created by the escalating lifestyles of the most affluent and the need that
many others felt to meet that standard, irrespective of their financial ability
to maintain such a lifestyle. If you missed the upscaling in your own
neighborhood and workplace or at the mail, you could watch it on TV. Dallas,
L.A. Law, and Beverly Hills 90210 ascended to the television norm, while
the appeal of Roseanne's working-class life came out of its uniqueness on
television. The story of the eighties and nineties is that millions of
Americans ended the period having more but feeling poorer. Nearly all the
pundits missed this dynamic, recognizing only the income trends or the spending
increases.
But is consumption really a
competitive process? If you're like many, you don't necessarily experience it
in this way. (On the other hand, if you've organized a birthday party for middle-
or upper- middle-class children lately, you probably do.) A full answer to this
question awaits in chapters 1 through 4, but one point is worth making here.
American consumers are often not conscious of being motivated by social status
and are far more likely to attribute such motives to others than to themselves.
'We live with high levels of psychological denial about the connection between
our buying habits and the social statements they make.
Most Americans would deny that, by their
spending, they are seeking status, in the usual meaning of the word--looking to
position themselves in a higher economic stratum. They might point out that
they don't want everything in sight, that purchases are often highly selective.
Indeed, what stands out about much of the recent spate of spending is its defensive
character. Parents worry that their children need computers and degrees
from good colleges to avoid being left behind in the global economy. Children,
concerned being left out in the here and now, demand shoes, clothes, and video
games. (As Jennifer Lawson said of her teenage nieces, without the right
sweatshirts and jeans they will be "ruined in school.") Increasingly
overworked, adults need stress-busting weekends, microwaves, restaurant meals,
and takeout to keep up with their daily lives. But the cost of each of these
conveniences adds up.
Not
surprisingly, as upscale competitive consumption intensified, family finances
deteriorated. One indicator is the rise of consumer borrowing and credit card
spending: through the 1990s, households have been taking on debt at record
levels. And the largest increases have been not among low-income households,
but among those earning $50,000 to $100,000 a year. (Sixty-three percent of these
households are now in credit card debt.) Debt service as a percentage of
disposable income now stands at 18 percent, even higher than during the
early 1990s recession. Another indicator is the rise in worktime:
average hours of work have risen about 19 percent in the last twenty-five years.
To finance their lifestyles, millions of families also sent a second earner
into the workplace, but this created a squeeze on household work and family
time. Despite working all these hours, somewhere between a quarter and 30
percent of house- holds live paycheck to paycheck. With the margin of error so
thin, it, is not surprising that personal bankruptcies are at historic levels.
The
national savings rate has also plummeted. The average American household is
currently saving only 3.5 percent of its disposable income, about half the rate
of a decade and a half ago, before spending pressures began to intensify. In
:1995 only 55 percent of all American households indicated they had done any
saving at all in the previous year. (This figure has fallen, despite the
expansion of the economy.) The French, Germans, Japanese, and Italians save
roughly three times what Americans do, and the British and Dutch more than
twice. Even Indian and Chinese households, most of which are dirt poor, manage
to save about a quarter of their paltry yearly incomes.
As a result of low household savings, a
substantial fraction of Americans live without an adequate financial cushion.
In 1995 the median value of household financial assets was a mere $9,950. BY
1997, well into the stock market boom, nearly 40 percent of all baby boomers
had less than $10,000 saved for retirement. Indeed, 60 percent of families have
so little in the way of financial reserve that they can only sustain their
lifestyles for about a month if they lose their jobs. The next richest 20
percent can only hold out for three and a half months. What is perhaps most
striking is the extent to which upscaling has undermined savings among the
nation's better-off households. In 1995 one-third of families whose heads were
college-educated did no saving. The vast majority of Americans say they could
save more but report themselves unwilling to cut back on what one study calls
'the new essentials." (This unwillingness also appears to be increasing
over time.)
Thus, the new consumerism has led to a
kind of mass "over- spending" within the middle class. By this I mean
that large numbers of Americans spend more than they say they would like to,
and more than they have. That they spend more than they realize they, are
spending, and more than is fiscally prudent. And that they spend in ways that
are collectively, if not individually, self-defeating. Overspending is how
ordinary Americans cope with the everyday pressures of the new
consumerism.
The
intensification of competitive spending has affected more than family finances.
There is also a boomerang effect on the public purse and collective
consumption. As the pressures on private spending have escalated, support for public
goods, and for paying taxes, has eroded. Education, social services, public
safety, recreation, and culture are being squeezed. The deterioration of public
goods then adds even more pressure to spend privately. People respond to
inadequate public services by enrolling their children in private schools,
buying security systems, and spending time at Discovery Zone rather than the
local playground. These personal financial pressures have also reduced many
Americans' willingness to support transfer programs to the poor and near-poor.
Coupled with dramatic declines in the earning power of these latter groups, the
result has been a substantial increase in poverty, the deterioration of poor
neighborhoods, and alarming levels of crime and drug use. People with money try
to spend their way around these problems. But that is no solution for these
social ills.
One problem with the national discourse
is its focus on market exchanges, not quality of life, or social health. Gross
domestic product is the god to which we pray. But GDP is an increasingly poor
measure of well-being: it fails to factor in pollution, parental time with
children, the strength of the nation's social fabric, or the chance of being
mugged while walking down the street. The genuine progress indicator, an
admittedly crude but relatively comprehensive measure of the quality of life,
has increasingly diverged from GDP since 3:973, and negatively. The index of
social health, another alter- native measure, has also declined dramatically
since 1976, remaining at record lows through the 1990s. When we count
not only our incomes but also trends in free time, public safety, environmental
quality, income distribution, teen suicides, and child abuse, we find that
things have been getting worse for more than twenty years, even though
consumption has been rising. . . .