The Democratization of Wealth Work

The Brookings Institute's Who’s employed by the lifestyles of the rich and famous? covers the growth of the personal care and services jobs, which has been one of the fastest growing job segments over the past decade.

They refer to this type of work as "wealth work", a term coined by MIT Economist David Autor which he defined as personal service jobs created by rising incomes.

As the Brookings's chart below shows (click to enlarge), this includes a wide range of occupations.

A key driver of wealth work, not surprisingly, is the the growth of high income earners. Key quote from the Associated Press article Richer US households fueling a hot job sector: ‘wealth work’:

The main driver of growth in these jobs is the expansion of the upper-middle class. Nearly 8% of U.S. households earned $200,000 a year or more in 2017, according to the Census Bureau. That figure is up from just below 6% in 2007, adjusted for inflation, when the recession began.

And we certainly agree that wealthier consumers have been driving this trend.

But we believe there are 4 other drivers: 

1. A Lack of Time: Most Americans with full-time jobs report working more and having a lack of time.  This means outsourcing personal tasks makes a lot of sense.
2. Life's Growing Complexity:  Many tasks have become so complex or specialized that outside help by professionals is simply required.
3. Fear of Falling Behind:  People are increasingly concerned about falling behind, or their children falling behind. This has led to coaching of all kinds. Think sports, academics, arts and music coaching for kids and things like life coaches, career coaches, wealth managers, etc. for adults. 
4. Wealth workers don't just cater to the wealthy. People with even modest incomes increasingly are utilizing personal services.

The last point is very important.

Much of what is called "the on-demand economy" and "sharing economy" falls into the personal services sector. Everything from dog walking to food delivery to running errands can now easily and cheaply be outsourced to personal services companies.

Also, a wide variety of personal services have been productized and/or digitized, which has reduced their cost and made them in reach of middle class consumers - and even low income consumers.

A good example is portfolio management, which not long ago was only available to high wealth individuals. But today firms like Schwab, Vanguard and others provides a variety of personalized portfolio management services to middle class investors. 

A broader example is food delivery, which is being utilized by people up and down the income scale. 

This democratization of personal services means it's not just the rich driving demand. The middle class and even low to moderate income Americans are increasingly turning to these services. 

The growth of personal services and wealth work is not a new trend. We first wrote about this trend in 2008. But it's reached the size and scale where it's starting to get much more attention.

We'll have more on this topic - with a focus on wealth work jobs - in the near future. But a quick summary of our thoughts on wealth work jobs is we are more positive on them than Brookings is.