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American Society Has Changed, Maybe Forever. How Should We React?

Last year, we spent some time considering the “anonymous” problem and the ways in which income inequality contributes to societal issues in America.  Coming off several weeks of Supreme Court hearings, sexual assault allegations, and nasty tweets, it might seem like we have more pressing matters to tackle.  Yet this fall is the ten year anniversary of the start of the Great Recession, and it seems really important to examine the way society has evolved in that decade.  This is important to us as people, but also important to anyone who works in healthcare — and perhaps even more important to healthcare marketers, who must engage a consumer burdened by the potent cocktail of personal health, financial security, anxiety, and the desire for restoration.

How severe is the societal shift we’ve experienced over the last decade?  One of my favorite marketing experts and bloggers, Scott Galloway, said this in his latest post,

“If this feels like a nationwide strategy to serve the cohort that has captured 85% of post-recession income growth (top 1%), trust your instincts. Our economy, and its pricing, is barreling toward a society of 350 million serfs serving 3 million lords.”

When I think of 350 million serfs serving 3 million lords (or 300 for that matter) I think of modern-day Russia, not the United States.  Yet the facts are undeniable.

The New York Times, failing or not, just completed a multi-part retrospective on the Great Recession and its aftermath.  Unemployment may be at its lowest point since 1969, but even that fact needs context.  Housing markets have rebounded, yet the winners and losers are different than before.  And the consequences have filtered all the way down to the college student loan market, affecting millions of people and real decisions in their lives – when to marry, when to have children, and when (or if) to buy a home.

Here’s some great context from the NYT series:

“A decade later, things are eerily calm. The economy, by nearly any official measure, is robust. Wall Street is flirting with new highs. And the housing market, the epicenter of the crash, has recovered in many places. But… the scars of the financial crisis and the ensuing Great Recession are still with us, just below the surface. The most profound of these is that the uneven nature of the recovery compounded a long-term imbalance in the accumulation of wealth. As a consequence, what it means to be secure has changed. Wealth, real wealth, now comes from investment portfolios, not salaries. Fortunes are made through an initial public offering, a grant of stock options, a buyout or another form of what high-net-worth individuals call a liquidity event. Data from the Federal Reserve show that over the last decade and a half, the proportion of family income from wages has dropped from nearly 70% to just under 61%. It’s an extraordinary shift, driven largely by the investment profits of the very wealthy. In short, the people who possess tradable assets, especially stocks, have enjoyed a recovery that Americans dependent on savings or income from their weekly paycheck have yet to see. Ten years after the financial crisis, getting ahead by going to work every day seems quaint, akin to using the phone book to find a number or renting a video at Blockbuster.”

Now look at the differential effects of race and geography, since they play a part too:  

“Worsening the picture, the post-crisis era has been marked by an increased disparity in wealth between white, Hispanic and African-American members of the middle class. That’s according to an analysis of Fed data by the Pew Research Center, which found that families in the latter two groups were more dependent on housing as their principal form of investment. Not only were both minority groups harder hit by foreclosures, but Hispanics were also twice as likely as other Americans to be living in Sun Belt states where the housing crash was most severe. In 2016, net worth among white middle-income families was 19% below 2007 levels, adjusted for inflation. But among blacks, it was down 40%, and Hispanics saw a drop of 46%. For many, old-fashioned hard work has simply not been a viable path out of this hole. After unemployment peaked in the fall of 2009, it took years for joblessness to return to pre-recession levels. Slack in the labor market left the employed and unemployed alike with little leverage to demand raises, even as corporate profits surged.”

Sometimes data like this can be hard to visualize, so naturally the NYT followed with an article that did just that. You can see the housing crisis and the “recovery” in one market (Las Vegas) in this compelling series of visuals. Statistics tell a story, but the lingering effects of the Great Recession on American society are severe. They are real-life human problems, not just statistics. Consider how these societal changes affect consumer reaction to healthcare prices, and the tangible impact of high-deductible health plans. Imagine how a $1,500 deductible affects your family finances when you’re living paycheck to rent payment to car payment. Holy cow.

Yet I think most of us — and I would include myself in this category — assume that near-full employment (the lowest unemployment rate in 50 years) means the vast majority of people are better off. This challenges our long-held assumptions about work, work ethic, and the fraying safety net. Here we see the awesome power of “anonymous” more than anywhere, perhaps more than extreme poverty or homelessness.  The NYT explores this link in a powerful editorial by the author of Evicted, Matthew Desmond, which is a must-read.  The author writes:

“In recent decades, the nation’s tremendous economic growth has not led to broad social uplift. Economists call it the ‘productivity-pay gap’ — the fact that over the last 40 years, the economy has expanded and corporate profits have risen, but real wages have remained flat for workers without a college education. Since 1973, American productivity has increased by 77%, while hourly pay has grown by only 12%. If the federal minimum wage tracked productivity, it would be more than $20 an hour, not today’s poverty wage of $7.25….This imbalanced economy explains why America’s poverty rate has remained consistent over the past several decades, even as per capita welfare spending has increased. It’s not that safety-net programs don’t help; on the contrary, they lift millions of families above the poverty line each year. But one of the most effective antipoverty solutions is a decent-paying job, and those have become scarce. Today, 41.7 million laborers — nearly a third of the American work force — earn less than $12 an hour, and almost none of their employers offer health insurance.

The Bureau of Labor Statistics defines a “working poor” person as someone below the poverty line who spent at least half the year either working or looking for employment. In 2016, there were roughly 7.6 million Americans who fell into this category. Most working poor people are over 35, while fewer than five in 100 are between the ages of 16 and 19. In other words, the working poor
are not primarily teenagers bagging groceries or scooping ice cream in paper hats. They are adults — and often parents — wiping down hotel showers and toilets, taking food orders and bussing tables, eviscerating chickens at meat-processing plants, minding children at 24-hour day care centers, picking berries, emptying trash cans, stacking grocery shelves at midnight, driving taxis and Ubers, answering customer-service hotlines, smoothing hot asphalt on freeways, teaching community-college students as adjunct professors and, yes, bagging groceries and scooping ice cream in paper hats.

America prides itself on being the country of economic mobility, a place where your station in life is limited only by your ambition and grit. But changes in the labor market have shrunk the already slim odds of launching yourself from the mailroom to the boardroom. For one, the job market has bifurcated, increasing the distance between good and bad jobs. Working harder and longer will not translate into a promotion if employers pull up the ladders and offer supervisory positions exclusively to people with college degrees. Because large companies now farm out many positions to independent contractors, those who buff the floors at Microsoft or wash the sheets at the Sheraton typically are not employed by Microsoft or Sheraton, thwarting any hope of advancing within the company. Plus, working harder and longer often isn’t even an option for those at the mercy of an unpredictable schedule. Nearly 40% of full-time hourly workers know their work schedules just a week or less in advance. And if you give it your all in a job you can land with a high-school diploma (or less), that job might not exist for very long: Half of all new positions are eliminated within the first year.”

The real “anonymous” in America might be the permanent underclass, the working poor who grind away at jobs that don’t pay enough to progress and barely enough to tread water.  They grind away at jobs that do not provide health insurance, and they live an illness or an injury away from financial ruin. Desmond continues:

“Americans often assume that the poor do not work. According to a 2016 survey conducted by the American Enterprise Institute, nearly two-thirds of respondents did not think most poor people held a steady job; in reality, that year a majority of nondisabled working-age adults were part of the labor force. Slightly over one-third of respondents in the survey believed that most welfare recipients would prefer to stay on welfare rather than earn a living. These sorts of assumptions about the poor are an American phenomenon. A 2013 study by the sociologist Ofer Sharone found that unemployed workers in the United States blame themselves, while unemployed workers in Israel blame the hiring system. When Americans see a homeless man cocooned in blankets, we often wonder how he failed. When the French see the same man, they wonder how the state failed him.”

Perhaps the reason that the working poor, and the poor, are “anonymous” is because we believe, deep down, their situation is really their fault. If only they would work harder, try harder, be smarter, whatever is missing in our view.  Maybe what’s missing is our compassion, our willingness to see people who may be doing everything right but were just born in the wrong place, to the wrong people, or in the wrong economy.  I know that compassion has often been missing for me, and it affects how we see people, treat people, and even market to people.

One last note for the future.  As bad as the Great Recession was in 2008 and the following years, and the lasting effects on the housing market and long-term wealth building for everyone other than the “lords,’ there are other negative effects that ripple over time. The Great Recession and associated housing crisis has created a lasting effect on college student loans, and that matters whether you have one or not ( a college student or a student loan).

“The amount of American student debt — roughly $1.5 trillion — has more than doubled since the financial crisis. It is now the second-largest category of consumer debt outstanding, after mortgages.  Public colleges and universities, hurt by state budget cuts, increased tuition. The drop in house values also made it harder for families to tap into their home equity to pay for tuition. As a result, the financial burden shifted to students, who took on heavier debt loads to pay for school.  Many borrowers are already falling behind. During the second quarter of 2018, more than 10% of student loans were at least 90 days past due. That was down slightly from a couple of years ago, but higher than the peak for mortgage delinquencies during the last crisis.  Could this spark a new crisis, with student loans playing the role that mortgages played a decade ago? Probably not.  The student loan market is much smaller than the mortgage market. And the main lender is the federal government, so even a surge of defaults would barely touch the banking system, unlike the mortgage meltdown.  The bigger issue is whether growing amounts of student debt may be a drag on consumers. Some think it could be playing a role in the decline of homeownership over the last decade, an important driver of spending in the consumption-led American economy.” (The Next Financial Calamity Is Coming. Here’s What to Watch., NYT, September 12, 2018)

By now, it should be clear that the healthcare system labors under the constraints of an increasingly divided society, perhaps 350 million serfs and 3 million lords. Yet recognizing the problem also means we can do something about it, or at least have a positive influence on our little corner of the world. If anonymous is the enemy of engagement, widening income inequality and the gulf between the classes is exacerbating the problem. I worry about this for my kids, as I know many of us do. I worry about this for our communities, too, which are often divided in ways that affect culture but also access to healthcare. And I worry about this for the future of healthcare, which is so sensitive to the policy and regulatory environment in an increasingly divided America and a federal government that defies understanding. Our healthcare system is fragile, and millions feel it when the system cracks.

I also consider what income inequality and “anonymous” people mean for our clients and the marketing strategies we design for them. Healthcare marketing is responsible for connecting with the entire community — rich and poor (and super-rich), business owners and homeless, sick and healthy, every group of people. And hospital marketing in particular can appeal to the “angels of our better nature,” helping people to see how they can live better, more productive, healthier lives. Healthcare organizations are uniquely positioned to engage with people — individuals at moments of great joy and sadness, but also all the moments that matter in between. We can be leaders in moving past anonymous to engagement. We can look past class and wealth and engage people as people, even when those factors are key in segmentation and targeting. 

That doesn’t mean marketing is a “public service” or we ignore the business realities that keep the doors open and quality care possible at hospitals, clinics, and physician offices. Marketing has the same role in healthcare as every other industry — attracting customers to meet business goals. Marketing is responsible for driving profitable business, which is even more critical as payments for Medicare, Medicaid, and the uninsured fall shorter and shorter of covering costs. In healthcare, the right marketing means the right payor mix, the right insurance coverage, the ability to cover personal financial responsibility. That’s a reality. 

Yet how we engage with people, how we treat them, is always important. The truth we all know, deep in our hearts and souls, is that we treat people differently when we know them — what they like and don’t like, what they care about and how to connect with them. Anonymous is the enemy of engagement, yet we can decide to engage. We can decide to break the antiquated rules of healthcare marketing communication to really engage with people, to know them, to connect with them on a personal level. And that will benefit your organization and the healthcare system as a whole.

February 8, 2018
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