5. The New Consumerism

Juliet Schor

In the following selection from her 1999 essay in the Boston Review, “The New Politics of Consumption,” Juliet Schor discusses consumer culture in the United States.

A new politics of consumption should begin with daily life, and recent developments in the sphere of consumption. I describe these developments as “the new consumerism,” by which I mean an upscaling of lifestyle norms; the pervasiveness of conspicuous, status goods and of competition for acquiring them; and the growing disconnect between consumer desires and incomes.

Social comparison and its dynamic manifestation—the need to “keep up”—have long been part of American culture. My term is “competitive consumption,” the idea that spending is in large part driven by a comparative or competitive process in which individuals try to keep up with the norms of the social group with which they identify—a “reference group.” Although the term is new, the idea is not. Thorstein Veblen, James Duesenberry, Fred Hirsch, and Robert Frank have all written about the importance of relative position as a dominant spending motive. What’s new is the redefinition of reference groups: today’s comparisons are less likely to take place between or among households of similar means. Instead, the lifestyles of the upper middle class and the rich have become a more salient point of reference for people throughout the income distribution. Luxury, rather than mere comfort, is a widespread aspiration.

One reason for this shift to “upscale emulation” is the decline of the neighborhood as a focus of comparison. Economically speaking, neighborhoods are relatively homogeneous groupings. In the 1950s and ’60s, when Americans were keeping up with the Joneses down the street, they typically compared themselves to other households of similar incomes. Because of this focus on neighbors, the gap between aspirations and means tended to be moderate.

But as married women entered the workforce in larger numbers—particularly in white collar jobs—they were exposed to a more economically diverse group of people, and became more likely to gaze upward. Neighborhood contacts correspondingly declined, and the workplace became a more prominent point of reference. Moreover, as people spent less time with neighbors and friends, and more time on the family-room couch, television became more important as a source of consumer cues and information. Because television shows are so heavily skewed to the “lifestyle of the rich and upper middle class,” they inflate the viewer’s perceptions of what others have, and by extension what is worth acquiring—what one must have in order to avoid being “out of it.”

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Trends in inequality also helped to create the new consumerism. Since the 1970s, the distribution of income and wealth have shifted decisively in the direction of the top 20 percent. The share of after-tax family income going to the top 20 percent rose from 41.4 percent in 1979 to 46.8 percent in 1996. The share of wealth controlled by the top 20 percent rose from 81.3 percent in 1983 to 84.3 percent in 1997. This windfall resulted in a surge in conspicuous spending at the top. Remember the 1980s—the decade of greed and excess? Beginning with the super-rich, whose gains have been disproportionately higher, and trickling down to the merely affluent, visible status spending was the order of the day. Slowed down temporarily by the recession during the early 1990s, conspicuous luxury consumption has intensified during the current boom. Trophy homes, diamonds of a carat or more, granite countertops, and sport utility vehicles are the primary consumer symbols of the late 1990s. Television, as well as films, magazines, and newspapers, ensures that the remaining 80 percent of the nation is aware of the status purchasing that has swept the upper echelons.

In the meantime, upscale emulation had become well established. Researchers Susan Fournier and Michael Guiry found that 35 percent of their sample aspired to reach the top 6 percent of the income distribution, and another 49 percent aspired to the next 12 percent. Only 15 percent reported that they would be satisfied with “living a comfortable life”—that is, being middle class. But 85 percent of the population cannot earn the six-figure incomes necessary to support upper-middle-class lifestyles. The result is a growing aspirational gap: with desires persistently outrunning incomes, many consumers find themselves frustrated. One survey of U.S. households found that the level of income needed to fulfill one’s dreams doubled between 1986 and 1994, and is currently more than twice the median household income.

The rapid escalation of desire and need, relative to income, also may help to explain the precipitous decline in the savings rate—from roughly 8 percent in 1980, to 4 percent in the early 1990s, to the current level of zero. (The stock market boom may also be inducing households not to save; but financial assets are still highly concentrated, with half of all households at net worths of $10,000 or less, including the value of their homes.) About two-thirds of American households do not save in a typical year. Credit card debt has skyrocketed, with unpaid balances now averaging about $7,000 and the typical household paying $1,000 each year in interest and penalties. These are not just low-income households. Bankruptcy rates continue to set new records, rising from 200,000 a year in 1980 to 1.4 million in 1998.

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The new consumerism, with its growing aspirational gap, has begun to jeopardize the quality of American life. Within the middle class—and even the upper middle class—many families experience an almost threatening pressure to keep up, both for themselves and their children. They are deeply concerned about the rigors of the global economy, and the need to have their children attend “good” schools. This means living in a community with relatively high housing costs. For some households this also means providing their children with advantages purchased on the private market (computers, lessons, extra-curriculars, private schooling). Keeping two adults in the labor market—as so many families do, to earn the incomes to stay middle class—is expensive, not only because of the second car, child-care costs, and career wardrobe. It also creates the need for time-saving, but costly, commodities and services, such as take-out food and dry cleaning, as well as stress-relieving experiences. Finally, the financial tightrope that so many households walk—high expenses, low savings—is a constant source of stress and worry. While precise estimates are difficult to come by, one can argue that somewhere between a quarter and half of all households live paycheck-to-paycheck.

These problems are magnified for low-income households. Their sources of income have become increasingly erratic and inadequate, on account of employment instability, the proliferation of part-time jobs, and restrictions on welfare payments. Yet most low-income households remain firmly integrated within consumerism. They are targets for credit card companies, who find them an easy mark. They watch more television, and are more exposed to its desire-creating properties. Low-income children are more likely to be exposed to commercials at school, as well as home. The growing prominence of the values of the market, materialism, and economic success make financial failure more consequential and painful.

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These are the effects at the household level. The new consumerism has also set in motion another dynamic: it siphons off resources that could be used for alternatives to private consumption. We use our income in four basic ways: private consumption, public consumption, private savings, and leisure. When consumption standards can be met easily out of current income, there is greater willingness to support public goods, save privately, and cut back on time spent at work (in other words, to “buy leisure”). Conversely, when lifestyle norms are upscaled more rapidly than income, private consumption “crowds out” alternative uses of income. That is arguably what happened in the 1980s and 1990s: resources shifting into private consumption, and away from free time, the public sector, and saving. Hours of work have risen dramatically, saving rates have plummeted, public funds for education, recreation, and the arts have fallen in the wake of a grass-roots tax revolt. The timing suggests a strong coincidence between these developments and the intensification of competitive consumption—though I would have to do more systematic research before arguing causality. Indeed, this scenario makes good sense of an otherwise surprising finding: that indicators of “social health” or “genuine progress” (i.e., basic quality-of-life measures) began to diverge from Gross Domestic Product in the mid-1970s, after moving in tandem for decades. Can it be that consuming and prospering are no longer compatible states?