# A barbell economy

Good morning!

Just read the expression "barbell economy" in USA Today. As a non-native speaker I wonder what that might mean?

You should not need to be a native speaker of English to understand the term, but a native speaker of Statistics.

A barbell phenomenon is when occurrences are heavy on both sides of a distribution with nothing in between.

Let's plot a graph of the number people by their income. In a barbell economy, you would see a whole bunch of people on the low income side of the graph and another whole bunch of people on the high income side, with scantly anyone in between. The barbell shape of the graph of an income frequency plot, therefore suggests the disappearance of the middle-class.

A barbell investment strategy, is when the investor chooses to have a lot of investments of short-term returns and also a lot of investments with long-term returns, without any spread of investments across the mid-term range.

Statistics conventionally names statistical behaviours due to the similarity of shapes of the graphs/charts with physical items familiar to the lay public.

For example the bathtub curve, which is a time-line plot of the frequency of failures of a product. Most products conform to the bathtub curve behaviour. Most items of a product would either fail early, or last a long time, with few failures in between. Therefore, quality engineering requires a product to have accelerated-stress before being sold, so that the early-bird or infant failures would be caught and prevented from landing on customers' hands.

Addendum: Just a finer point of clarification - the barbell graph is not so much from the frequency plot but from the occurrence distribution plot. This is because there is no negative frequency, unless the theory behind the data calls for charting imaginary/abstract frequencies.

William Frey, a demographer with the Milken Institute, coined the term barbell economy in a lecture he gave in 2002 to describe what is happening to wealth in the US.

As classes, the very rich and the very poor are growing at either end of the spectrum, with an ever-diminishing middle class between these extremes. As a long-time demographer dealing with class, he warns that for economic stability, we need a growing, not a shrinking, middle class.

It has been used to describe the job market (increasingly polarizing into a low income jobs and high income jobs, with a loss of middle-income jobs), the retail market (where the high-end retailers perform well, the low-end retailers perform well, and the middle market struggles) and other polarities.