How do you define who makes up Mexico’s growing middle class? The simple answer to the question, which has been the subject of some debate, is people who are neither rich nor poor, says Sarah Boumphrey of the market intelligence firm Euromonitor International.
But the definition is an important one, as Milenio business columnist Barbara Anderson points out, because it has become an important economic driver.
Euromonitor has gone beyond the rich-poor definition to suggest that Mexico’s middle class is made up of those whose household income is between US $15,000 and $45,000 a year. It’s enough to keep one away from poverty but not enough that you’re rich, says Boumphrey, who was speaking last week at the Mexico Business Summit in Guadalajara.
She estimates that 14.6 million Mexican households — 47% of the total — fall within that income definition, up from 9.1 million 15 years ago. The average household income of the middle-class family is $20,000, a figure that is comparable with India, Russia, China, Indonesia and Turkey.
What the middle class spends its income on is an important question as well because the sector, based on Euromonitor’s figures, is the biggest single contributor to Mexico’s Gross Domestic Product, ahead of petroleum, automotive and tourism, at 70%.
A Euromonitor survey of middle-class Mexicans found that half of household income goes toward discretionary spending on goods and services, meaning they spend more on education, eating out, communications and entertainment.
Middle-class homes are likely to have a refrigerator, a color television set and a cell phone. Only half have a vehicle, which Boumphrey found surprising because of Mexico’s burgeoning automotive sector, they live in urban areas and participate in the formal economy. To have a dishwasher is rare.
Another finding by the research firm was that for six of 10 middle-class Mexicans financial security is important. In spite of that, however, more than half those surveyed said they preferred spending time with their families over making more money.
Indeed, one of four said they would turn down an employment offer if it meant giving up time dedicated to their personal lives.
Five of 10 respondents said planning their purchases is something they do as a habit. When buying consumer goods most view quality and design as more important than price.
What do they want from government? A social security net, health care, education, law and order and stable economic growth.
Growth in Mexico’s middle class is not expected to slow. Boumphrey forecasts that another 3.8 million households will join their ranks by 2030.