Income Inequality and Business Planning

People are asking about measures of income inequality, so I left my camp in Occupy Lake Oswego to gather some information for you. A good summary of what we know is in this article from the Wall Street Journal, The Income Ladder's Sticky Steps. (May be gated.)

One thing we hear is that the "one percent" are getting richer. A key point to remember is that the people who comprise the one percent in a given year are not the same people who comprise it the next year.  Here's a great chart that illustrates mobility from the top 20% and the bottom 20%:


What should business planning be concerned with regarding income distribution? First, don't think of it as fixed. People move from group to group. Second, ignore the stereotypes. At the upper end, the super rich don't always behave as popular images would have them behave. I rode to lunch with a client on the Forbes 400 list. His mid-quality car had a minor dent that wasn't worth fixing. At the lower end, the poor have higher levels of actual consumption than we would expect given their income.