The Association for Public Policy and Management (APPAM) recently held an international conference in Segovia, Spain around the theme “The Decline of the Middle Class?” The question mark at the end was intentional. Originally, the conference was titled “The Decline of the Middle Class in the Developed World” but it had changed by the time the conference took place, presumably because of the research presenters were bringing to the table.
In western nations, especially in the United States, the position of middle class households has deteriorated significantly through the recession and there is little sign of improvement. However, from a global perspective, the middle class is expanding, serving as a spur to economic growth, especially in India, Indonesia and China. The result was a different type of conversation around prospects for economic development, one driven by increasing global trade and ties. Yes, the middle class is declining in the U.S., but from a global perspective, the middle class is on an up-swing. How can local CED professionals make sense of this mixed message?
Attendees at the conference included academics, think tank analysts and government employees who track widely used economic data. The information presented about the middle class in the United States was discouraging. The proportion of total income obtained by the middle class has shrunk, with wealth becoming more concentrated in the highest income earners. There was significant emphasis on the negative impacts of growing economic inequality on a variety of social economic indicators within western countries, especially education.
Yet the dismal ‘home country’ discussions were countered by evidence of positive economic stories from countries with relatively rapid growth in the purchasing power of middle-income families. Education, diet, travel, and consumption patterns reflect growing wealth and a desire for goods and services provided in and by western nations. The key take-away from the conference for local CED professionals is to understand both the constraints inherent in building economic development plans around growth in our traditional US middle class and the opportunities that a developing middle class in our trading partners present for businesses in our own backyard.