Middle Class Blues

By A-J Aronstein - August 23, 2012 | Tickers: KO, F, GM, MCD, SHLD, BA, WMT | 0 Comments

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Here's a simple question, one that seems at the heart of a site built around the analysis of stocks: can we discern the well-being of the American middle class based on an analysis of, not individuals, but of companies?

Put a different way, if we want to know about the status of middle-class identity, might we learn more from looking at, say, Wal-Mart's (NYSE: WMT) business model than the Wal-Mart shopper? We're not used to this kind of analysis. We're used to thinking that the middle class is--for all of its evasiveness--made up of unique but easily-describable individuals. And we're concerned about how those individuals feel about themselves. For example, in the New York Times last week, the report on Wal-Mart's latest earnings asserted: "despite the increase in same-store sales, a Wal-Mart executive said that the United States consumer was by no means feeling great."

I've always been interested in the notion that the American consumer was this one giant person, who very clearly communicated his or her emotions by virtue of purchasing decisions. Those purchasing decisions, in turn, have distinct rational influences. So when Wal-Mart's CFO Charles M. Holley Jr. suggests, “If anything, our consumer’s probably being a little more stretched because of gas prices," we analysts and traders and bloggers are meant to feel reasonably assured that the condition of "not feeling great" is related to "gas prices" and the result of this feeling is: not buying as much stuff.

Where did we learn to talk about middle class consumers in this way?

In the introduction to White Collar, his now-famous 1951 book on the American middle class, C. Wright Mills suggests that his readers should look to the "white-collar world for much that is characteristic of twentieth-century existence." To Mills, this group--made up of a huge variety of skilled laborers--together reveals something "more typically 'American' than the frontier character." Forget the constitutive narratives of Founding Fathers and Manifest Destiny, he seems to argue. To understand American culture, we should look at the middle class worker. For us, this may seem a familiar, almost rote sentiment; but just sixty years ago Mills could justifiably write that the "variegated white-collar worlds" were still virtually undiscovered and unstudied, even though "the human and political importance of the white-collar people continues to loom larger and larger."

By contrast, today we're not only used to hearing that the middle class has "always" been the backbone of American society (a fiction that is deployed with frustrating regularity during election years). We're also already accustomed to hearing that the middle class is in danger of vanishing, dying, evaporating, disappearing, vaporizing, and in is general "by no means feeling great" (the irony being of course that the narrative of the decline of America's middle class has existed for almost exactly as long as the narrative about its ascendance). As inequality widens and real annual median income declines, it doesn't just seem that the middle is shrinking. Rather, the question of how to define the "middle" in purely economic terms becomes more challenging. Public sentiment against the widening gap between the wealthiest and the rest--most vocally and familiarly articulated by the Occupy Movement--has demonstrated that the rhetoric of middleness has been replaced by the notion of a vast conglomeration of educated, skilled, and unskilled workers competing together for resources (unsuccessfully) with a vastly wealthy class.

In other words, as the disparity between rich and poor has stretched, the middle no longer signifies as a viable or coherently identifiable group: in the contemporary moment, economic means of defining middle classness (let alone measuring what this middle class thinks of itself and its status in the American social order) have been stressed beyond usefulness. Inequality is perhaps so extreme that we must reduce our analyses to the very rich and the very poor. Then it might be possible to deduce something about the remainder; to observe something in the detritus of the formerly mighty middle class from the vantage points of the clearly-established margins.

What does all this mean for companies that target and sell to the middle class American consumer? And how might we articulate different and more useful ways to come up with a set of traits that qualify a group of individuals as middle class?

My contention here and in the next few posts, which will examine companies that might generally be said to define aspects of middle class life in America, is that we should approach these questions from a different direction than Mills. Rather than assuming that the middle class is a coherent group, made up of a collection of individuals doing certain kinds of skilled labor, let's assume that the middle class might better be described as a constellation of aspirations that are structured by influences outside of any one consumer's control. Mills seems to have set out in the interest of describing the individuals in the white-collar middle class. His project takes for granted the existence of a single class identity that occupies that middle ground, and he has great faith in the universal lessons of this kind of analysis:

What must be grasped is the picture of society as a great salesroom, an enormous file, an incorporated brain, a new universe of management and manipulation. By understanding these diverse white-collar worlds, one can also understand better the shape and meaning of modern society as a whole, as well as the simple hopes and complex anxieties that grip all the people who are sweating it out in the middle of the twentieth century.

This is an enormously optimistic account of what the middle class could teach mid-century readers about human identity.

I have smaller aspirations.

It seems to me that what constitutes middle classness in our own moment (and maybe has constituted it since before Mills) is related to one's feelings with respect to certain wants, goals, and aims. It has less to do with anything concrete or measurable about wealth or education or property or tax rates. Rather, to understand the middle class, we have to think about how consumer desires, expectations, hopes, and aspirations have been articulated (and, one might certainly argue, constructed) by fantasy narratives of advertising, corporate identities, and products. I'm talking about the ways that the friendly folks at countless flagship carriers of middle-class America built our collective notion of the "good life" throughout the second half of the Twentieth Century. Some of those carriers are still attempting to structure that good life.

For example, one might argue that Ford (NYSE: F) and GM (NYSE: GM) established the American desire for mobility espoused by car ownership. The development of company towns (not just Detroit) went on to extend as far as Fordlandia in Brazil. Ownership of autos became not just an expression of autonomy and Manifest Destiny, but the very conclusion of that particular American narrative. Today, when we say that GM is "too big to fail," we don't just mean that the financial implications of its bankruptcy would damage the economy (though surely we do mean this). We also mean that the failure of these constituent brands would also fundamentally alter what we think of as the American middle class.

This year, we saw some of the same concern with (NASDAQ: SHLD). Here, though recovery in the stock price this summer has allayed some of the year's earlier fears, what's at stake is the identity of the American AS consumer. The history of the middle class is wedded to certain expectations about how shopping decisions are made on a retail floor. Obviously, the failure of Sears would result in fewer economic ripples, but every time a former retail giant collapses under pressure from online sellers, we are meant to pause and think about its symbolic significance for middle class.

That is, middle class desire--so important and changing and vital a topic during any year, let alone a year during which presidential candidates make various claims to "understand" or "appreciate" or "get" that desire--was shaped by way more than it was satisfied by affiliation with brands.

Perhaps this, in itself, is a facile or equally recognizable claim. Just writing it, I don't think it sounds too outlandish. And certainly, these brands are still in many ways affiliated with our contemporary understanding of how the middle class is supposed to imagine itself driving, buying, and eating. TV commercials and pop-up ads model how the middle class should living and aspiring. In a direct way, exploding affluence in developing nations often manifests itself as an appetite for brands that are affiliated with earlier moments of American prosperity (my favorite is the high demand for Cadillacs in China). But there's a more important analysis to be done, and a more important series of claims to be made, when it comes to the task of trying to describe the contemporary middle class.

I don't want to give away everything in the first post here...but I'll be doing several posts that look at several companies the retail, travel, food, and energy spaces.

So follow along if any of this actually seems like it could make sense.

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