The Affordability Crisis
As the diminution of the American middle class continues, the trend was highlighted in a recent article in The Economist.1 It featured the reopening of Tiffany and Company’s flagship New York store, noting that the same day the Bureau of Economic Analysis reported consumer spending in the United States barely grew in March. This lack of growth was attributed to high inflation and a slowing job market. Regardless of the economic slowdown, the article stated that crowds of upper-class consumers were literally lined up to get into Tiffany.
This is an example of how the combination of COVID-19 and the misadventures of national economic policy have exacerbated the difference between the haves and the have nots. While the wealthy may be lining up for luxury brands, more and more middle-class citizens are being forced to find less expensive alternatives for products and services of all descriptions.
The extra household savings that consumers amassed during the COVID years dwindled significantly in the spending spree seen after lifting of restrictions and the reduction of governmental largesse associated with the pandemic.
Corporations that target consumers of modest means have continued to see respectable sales. In the last quarter Walmart increased sales by 4.9% while Kroger, a chain more embraced by the middle class, is estimated to see a sales increase of only 1.3%.1
This trend in consumer spending has caused multiple firms to reposition themselves. Those on the upper tier are becoming increasingly more expensive and exclusive while those on the opposite end are featuring more store brands to reduce prices. These less advantaged consumers are reducing discretionary spending for cars, clothes, and other nonessentials to favor necessities like rent and groceries.
Dentists are also feeling pressure from inflation. Data from the American Dental Association found that eight out of 10 dentists felt the need to increase salaries for dental hygienists and dental assistants within the last year, reflecting a competitive job market.2 The cost of personal protective equipment, including gloves and masks, has increased nearly 50% recently, adding to the expense of running a practice.
These trends resulted in the cost of dental services increasing 1.9% in June of 2022 — the largest monthly change for those services ever recorded.2 This was attributed to rising inflation. Prices for dental services in the fiscal year ending in 2022 were up 9.1% — the largest 12-month increase since 1981 — according to the Consumer Price Index.
The same inflationary pressures that made it necessary to raise dental fees will mean fewer middle-class individuals will be able to afford dental services. This will result in fewer dental visits as well as patients seeking practices with lower fees. These trends will accelerate the number of dentists who find it necessary to practice under the auspices of third parties — continuing the profession’s evolution.
References
- The Missing Middle. The Economist. Available at: economist.com/business/떗/葑/葎/the-business-trend-that-unites-walmart-and-tiffany-and-co. Accessed June 19, 2023.
- Garvin J. Dental services affected by country’s high inflation. American Dental Association News. Available at: adanews.ada.org/ada-news/떖/july/dental-services-affected-by-countrys-high-inflation. Accessed June 19, 2023.
From Decisions in Dentistry. July/August 2023;9(7/8):6.
