A lot of people were probably thrilled today about Amazon’s latest announcement. The online retail giant has revealed that they are going to reduce the cost of Prime membership, which provides free shipping for more orders and unlimited streaming for many shows and movies. But it’s not just for anyone. The reduced rate will be reserved for low income households.
Customers normally pay $10.99 per month or $99 per year for Prime subscriptions, which offers free two-day shipping on many products as well as access to streaming video and music services.
Now anyone with a state-issued debit card for government benefits can get Prime for $5.99 a month.
The aim is to make “savings more accessible” to everyone, according to spokeswoman Julie Law. She adds that delivery could make life easier for customers who may not have reliable access to transportation, and that Prime gives members discounts on essentials like diapers.
Amazon(AMZN, Tech30) already has a well-heeled customer base, according to analysts. With this program, it hopes to pull in more low-income shoppers.
It sounds like good news, but it’s really not. Not when you look at the bigger picture. Consider the fact that Amazon Prime memberships were originally targeted at high income earners. In fact, 70% of households that earn more than $112,000 per year have Amazon Prime memberships, compared to just over 40% of lower middle class households. It’s less than 25% among households that take in less than $25,000 a year.
If you haven’t guessed what I’m getting at, consider what Walmart is doing. The retail giant and chief rival of Amazon, has long been considered the shopping outlet of choice for low income families. But recently, Walmart purchased another Amazon rival known as Jet.com, which markets to high income earners.
So, whatever happened to the middle class? Why aren’t these massive companies focusing on attracting middle income earners? Isn’t the middle class the perfect demographic for retail outlets? Though they aren’t rich, they still have a decent amount of disposable income, and there are so many people in the middle class that surely their collective disposable income outweighs both the rich and the poor right?
Unfortunately that’s not the case. That’s why the recent moves made by Amazon and Walmart aren’t in fact, good news. It’s a sign that the middle class just isn’t what it used to be. It’s been hollowed out by decades of economic malaise.
The two retailers’ strategies of aiming at the furthest ends of the income spectrum highlight the widening gap between wealthy and poor Americans and the disappearance of what was once the most sought-after class of income-earners in the country.
“This is absolutely symptomatic of a deteriorating middle class, or at least what we used to consider to be the middle class in America,” Stephens told Business Insider.
When Walmart was founded in 1962, the middle class in America was thriving.
“From postwar to about the late 1970s, you wanted to be in the mid-tier of retail. That is where everybody was making a fortune, including Walmart,” Stephens said. “Then from 1980 onward, you wanted to pick a side, because it started to become clear that the middle class was evaporating.”
Walmart and Amazon know the terrible truth about our economy and our standard of living. The middle class is dying. It makes more sense for big companies to cater to the rich and the poor, because there aren’t as many people in the middle class as there used to be. It’s more profitable to make a few bucks off each poor person, because their are millions of poor people, and it’s more profitable to make millions of dollars off of a handful of rich people.
But people in the middle? Sure, they have some disposable income, but they’re a dying breed.
Additional Reading:
“Completely Unsustainable”: Obamacare Destroys Middle Class, Rising As Much As 67%. Just in 2017
Gallup: If Small Businesses Keep Dying “We’ll Lose the Whole Middle Class”
Fewer Than Ever Can Afford to Buy a Home As Americas “Thriving Middle Class” Is Dead
