On the Road to Riches: Those Under 35 With $100K Household Income
Think you'll be among the rich someday?
The wake of the global economic recession has shown a spotlight on the yawning divide between the richest Americans and everyone else -- inflation-adjusted incomes of most American workers have remained more or less static since the 1970s, the income of the rich (and the very rich) has grown exponentially. The top 1% alone control nearly 40% of the wealth.
And while the social and political effects of this inequality may be cause for concern, the accrual of wealth among the very few is of great consequence for marketers, since 10% of U.S. households "account for almost half of the consumer spending" and represent about one-third of total GDP, according to the American Affluence Research Council.
Simply put, a small plutocracy of wealthy elites drives a larger and larger share of total consumer spending and has outsize purchasing influence -- particularly in categories such as technology, financial services, travel, automotive, apparel and personal care.
But just who today is truly affluent? And which group is on the path to the rich life?
A study from Digitas titled "Affluence in America: The New Consumer Landscape" finds that an individual's career choice is perhaps the most important factor in determining whether he or she will ultimately land among the affluent. The study found that one's job is both a predictor and a determinant of whether his or her household income will reach $200,000 -- the minimum threshold of affluence. This Digitas study, based on Ipsos Mendelsohn data drawn from its Mendelsohn Affluent Survey and Mendelsohn Affluent Barometer, is the basis of a new Ad Age Insights white paper, "The New Wave of Affluence."
It turns out a major predictor of wealth is one's earning a high income in his or her 20s. Those below the age of 34 in households earning between $100,000 and $199,999, identified as the "Emerging" tier, have a far greater chance of eventually crossing the golden threshold of $200,000 than those who achieve household income of $100,000 later in life, identified above as "Aspiring."
Before the downturn, luxury marketers embraced the concept of "mass affluence." Buoyed by fatter stock portfolios and exploding equity in real estate -- and encouraged by easy credit -- a larger portion of the population, mainly in the Aspiring tier, considered itself wealthy enough to buy luxury goods. But in 2011, these consumers no longer "feel rich," and they are not particularly likely to graduate into affluence later on (and thus are not a particularly promising future market for luxury brands to seed). In 2011, those in the Aspiring tier firmly self-identify as middle class.
The real growth for luxury brands will come from those in the Emerging tier. These young, ambitious consumers are already involved in jobs that will likely launch them into affluence later in life. Because they have fewer household expenses (such as mortgages and children) than those in the Aspiring group, they have enough disposable income to develop an early taste for luxury goods and services that will develop further later in life.
The Emerging tier has also widely adopted interactive and social media, while more affluent groups increase their use of media filters and are therefore harder for marketers to reach. Thus the Emerging tier presents a golden opportunity for luxury brands to reach consumers who will likely be wealthy in the future -- before they begin to more actively police their interaction with advertising.