Permanently Unemployed Economy

SUBHEAD: The consumer is mutating and evolving. This new fast-growing consumer underclass is an area where new product development opportunities abound. Image above: Dignity Village residents in Portland, ORegon, employ both scrap material and new products in their households. From ( By Dmitry Orlov on 12 February 2010 in Club Orlov - ( Developing and marketing products for a shrinking market poses an interesting set of challenges. Even if a company does an outstanding job and is able to steadily grow its market share, these gains are negated if the market itself continually shrinks by an ever larger amount. For instance, a company might have an outstanding electric vehicle design, but it is destined to by the wayside during a time when the number of consumers that qualify for a car loan is trending downward, the used car market is glutted by repossessions, and federal, state and municipal governments are unable to upgrade their car fleets because their budgets are far in the red.
Consumer product development caters to individuals who live in houses or condos, have jobs to which they commute by car, and generate a steady stream of disposable income. This is the group to which the business press often refers collectively as "the consumer". One often reads that the consumer is retrenching, that the consumer's credit is tapped out, that the consumer's disposable income is shrinking and so on. The consumer market is not growing. What is there left to do except design and manufacture fewer and fewer products? The answer is as simple as it is surprising. The consumer is not melting away; the consumer is mutating and evolving. In the United States alone, half a million people a month (in round numbers) is being shed from the workforce. Although this is often portrayed as a temporary condition, job creation is not expected to pick up pace any time soon, and few people are willing to forecast when it will again exceed population growth. Even a rose-tinted economic scenario has to admit that there is a high probability of new energy price spikes triggering new recessionary periods, which would drive unemployment higher. Therefore, more often than not, a job loss will set a person on a new career path - one that comes with a new set of challenges and options. Most significantly, these formerly employed people often no longer have sufficient income to afford the two items that dominate most household budgets - the house and the car, and all of the expenses that are associated with them. Medical expenses form a third category, and are highly variable, depending on a person's age and medical condition. These costs range from zero (for the healthy uninsured) to arbitrarily large (medical expenses being the largest single cause of personal bankruptcy). Does permanent job loss mean that someone is no longer a consumer? In some cases the answer is yes: some people continue to spend as if they still had a job, and the inevitable result is eventual destitution. Once they run out of unemployment benefits, savings and credit, their purchasing ability decreases to the barest minimum provided by food stamps. I don't mean to sound harsh, but this makes them rather uninteresting from a new product marketing perspective. Image above: Boomer generation facing a new challenge with 21st century technology. From ( But other people may be quick to shed their biggest categories of expense, walking away from their mortgage and their car loan, allowing their medical insurance to lapse, and developing a new lifestyle that is well within their new budgetary constraints. They may couch-surf, take advantage of house-sitting opportunities or rent a spot at a campground by the season. For the cold part of the year, they may head south and, again, camp out. They may look for seasonal employment, do odd jobs for cash, or use their skills to repair or make and sell items for cash. With their largest expenses gone, their disposable income may actually be higher. However, their needs and requirements are quite different, and since most product offerings target the settled, fully employed consumer, they are in some ways under-served. This is an area where new product development opportunities abound, and companies that gain a share of this growing market segment and build brand loyalty among this fast-growing consumer underclass will lock in a decade or more of profits and rapid growth. As a marketing strategy, it is not just recession-proof but actually recession-enhanced. In saying that the unemployed consumers are currently under-served, I do not mean to belittle the huge positive effect on their lifestyles that resulted from the recent major advances in mobile computing and communications. Laptops with wireless Internet access have made it possible for a homeless person to run an Internet business or a software company, manage an investment portfolio, or contribute to an international scientific collaboration. Any of these things can now be done from an Internet cafe or a public library, or, in fine weather, even a bench in a city park or a tent at a campground. Cell phones make it possible to give radio interviews and participate in teleconferences from just about anywhere that is within sight of a cell phone tower. Hand-held GPS units allow people to find their way around and to retrieve items stashed in the woods using their coordinates. But even here there is plenty of room for specific improvements: the umbilical cord of the laptop power supply and the cell phone charger hampers mobility. It would not be difficult to add small solar panels to the backs of cell phones and the lids of laptops, making it possible to recharge them simply by leaving them in the sun for an hour or two. Many people would be willing to trade off certain features, such a high-powered microprocessor or a brilliant display, against reduced power consumption and a reduced need to use the power cord. In addition to such incremental improvements, certain completely new types of devices can be designed to serve some of the unique needs of the permanently unemployed. For example, it is not uncommon for them to be living in places that lack public utilities such as running water, making it impossible to use flush toilets. A commonsense adaptation is to put together a composting toilet, using a 5-gallon drum and a toilet seat, and a length of dryer hose for the exhaust duct. A key component of this solution is the exhaust fan, which can be quite tiny and low-powered, but has to run continuously. A small computer fan connected to a lantern battery is adequate and lasts for many months, but an even better solution is a battery-backed exhaust fan powered by a solar panel that is designed to be installed in a partially opened window. Another example: a portable device that can detect the many environmental hazards that are likely to be present in such a less-than-ideal living environment: a combined smoke/carbon dioxide/carbon monoxide detector that can also detect toxic fumes from burning synthetic materials would be perfect. A device for testing the safety of drinking water would also be very useful. In addition to such new products, the permanently unemployed would also benefit from certain services designed to fit their unique needs. For example, a campground at which campsites are paired up with garden plots, allowing people to spend the summer months growing their own food, would suit people who have plenty of time, little money, and nowhere to live. In the cities, low-priced dormitories styled after Japanese capsule hotels, and shower and locker facilities would make their lives much easier while also helping to improve sanitation and public health and to preserve public order. We live in a time of steadily rising unemployment, and, consequently, much emphasis is being placed on stimulating job creation. To this end, the federal government has already spent a lot of economic stimulus money on a variety of infrastructure projects. An obvious question to ask is whether any of these projects have directly benefited the unemployed, beyond creating a few temporary jobs. It is a no-brainer that the jobs to create first are the ones in industries with the highest growth potential, where job creation can quickly become self-sustaining. As a matter of public policy, it would make perfect sense to provide seed money for what is bound to become a new high-growth industry segment: serving the needs of the permanently unemployed. .

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