Key takeaways
The mid-sized Weet-Bix boxes in the cereal aisle are disappearing, and this is a metaphor for the hollowing out of Australia’s middle workforce, which is reshaping the way we work, earn, invest, and plan for the future.
Australia used to have a balanced workforce with mid-tier jobs at the top, lower and middle. But that’s changing, with technological advancement, globalisation and shifts in consumer preferences being some of the main culprits.
Automation has squeezed out middle-income jobs, and those who can adapt, retrain, and move into high-skilled roles can command higher wages. Meanwhile, those who can’t make the jump often find themselves in lower-skilled, lower-paid work, similar to the bottom-shelf budget cereals.
Globalisation has shifted many mid-level jobs offshore, leaving the middle segment struggling to find its place. High-skilled jobs that require local expertise or innovative thinking are still in demand, while lower-skilled jobs remain steady.
Strategic property investors can leverage the hollowing out of the middle workforce by focusing on affluent demographic areas. These areas attract renters who choose to rent for lifestyle reasons rather than out of necessity, making them capable of paying higher rents.
Strategic property investors should focus on areas with more affluent residents to secure a more stable rental income and tap into long-term capital growth potential.
If you’ve wandered down the cereal aisle recently, you might have noticed something peculiar.
Between the giant, value-packed boxes of Home Brand Cereals and the small, premium gourmet granolas, there’s a glaring gap where Weet-Bix, the staple breakfast of middle-class Australia, once took pride of place.
Those mid-sized boxes, the ones we grew up with, seem to be disappearing.
Believe it or not, this simple observation offers an uncanny insight into the changes happening within Australia’s job market and housing markets.
Yes, you heard that right – the cereal aisle is a metaphor coined by leading demographer Simon Kuestenmacher, co host of the Demographics Decoded Podcast
for the hollowing out of Australia’s middle workforce.
Just like the shrinking number of mid-sized cereal boxes, middle-income jobs are vanishing from our economy, and it’s a trend that’s quietly but profoundly reshaping the way we work, earn, invest, and plan for the future.
So let’s dive into why this is happening and what it means, not only for workers but also for savvy property investors who can turn these shifts into opportunities.
The hollowing out of the middle: what’s going on?
For years, Australia enjoyed a healthy, balanced workforce that resembled a three-tiered pyramid.
At the top were the high-skilled, high-income jobs – think of them as the gourmet granola.
At the bottom, you had the entry-level, lower-paid jobs – similar to those massive budget packs of cereal.
And right in the middle were the mid-range, mid-income jobs – the reliable mid-sized boxes of Weet-Bix that catered to the average Aussie household.
But things are changing.
Over the last decade or so, we’ve seen a significant decline in the number of mid-tier jobs.
This “hollowing out” is the result of several factors, with technological advancement, globalisation, and shifts in consumer preferences being some of the main culprits.
Automation and technology – the cereal box compactor
One of the biggest reasons the middle workforce is getting squeezed out is automation.
Advances in technology mean that many of the routine, repetitive tasks that once provided stable, middle-income employment are now being done by machines.
We’ve seen this in manufacturing, where assembly line jobs have been replaced by robots, and in offices, where administrative roles have been streamlined by software.
Take, for example, the role of a bookkeeper.
Once considered a stable mid-income job, much of the work can now be done by accounting software that’s faster, more accurate, and available 24/7.
The same can be said for countless other jobs, from retail to customer service to even some skilled trades.
This shift has pushed workers into two extremes.
Those who adapt, retrain, and move into high-skilled roles (the gourmet granola jobs) can command higher wages.
Meanwhile, those who can’t make the jump often find themselves in lower-skilled, lower-paid work, similar to the bottom-shelf budget cereals.
Globalisation – importing and exporting our job market
Globalisation has also played a massive role in this shift.
Many mid-level jobs that were once performed in Australia are now being outsourced to countries where labour costs are lower.
From manufacturing to customer support to even some aspects of finance and accounting, companies have found it more cost-effective to offshore these roles, effectively squeezing out the middle of our job market.
At the same time, high-skilled jobs that require local expertise or innovative thinking —like technology, engineering, and finance — are still in demand in Australia, while lower-skilled jobs that can’t be outsourced (think hospitality, aged care, and retail) remain steady.
But that leaves the middle segment struggling to find its place.
Consumer preferences – we want more granola and more budget cereal
Interestingly, just as the cereal aisle has evolved based on what shoppers want, so too has the job market evolved based on consumer preferences.
As Australians, we’re increasingly gravitating toward two extremes – we want the premium, top-quality products (whether that’s gourmet cereal or highly skilled professionals) or the affordable, budget-friendly options.
This leaves the mid-tier products – and the mid-tier jobs – with shrinking demand.
In some ways, it’s a reflection of how society has changed.
We’re seeing more Australians invest in high-quality experiences and products where they feel they get exceptional value, while also looking for cost savings in areas where they don’t see a need to spend extra.
This “barbell economy” leaves little room for the middle ground, both in the supermarket and the job market.
The impact on society – is the hollow workforce sustainable?
So, what does this all mean for Australia?
Well, the hollowing out of the middle workforce is more than just an economic shift; it has profound implications for society as a whole.
For one, the shrinking middle class means that wealth inequality is on the rise.
With fewer people earning mid-range incomes, we’re seeing a widening gap between the top earners and those on the lower end of the pay scale.
This disparity can lead to social tension, reduced social mobility, and a society that feels more divided.
Moreover, without a strong middle workforce, we risk losing the backbone of our economy.
Mid-income earners have traditionally been the biggest contributors to consumer spending, driving growth across various sectors.
As this group diminishes, the economy could face challenges in maintaining steady, balanced growth.
Strategic property investment: tapping into affluent demographic areas
Now, what does this mean for property investors?
The hollowing out of the middle workforce might seem like bad news at first glance, but strategic investors can leverage this trend to build wealth by focusing on affluent demographic areas.
One of the smartest strategies today is to target locations where locals not only have the capacity but are also willing to pay a premium to live.
These affluent, often gentrifying areas also attract renters who choose to rent for lifestyle reasons rather than out of necessity.
They’re often professionals or high-income earners who prefer the flexibility and convenience of renting, making them capable of paying higher rents, which creates a more stable and lucrative income stream for property investors.
Think about it: as a property investor, your future rental income is directly tied to your tenants’ ability to keep paying rent – and not just any rent, but increasingly higher rents over time.
By investing in affluent areas where tenants rent by choice, you position yourself in a market with greater resilience and potential for rental growth.
These tenants aren’t typically affected by economic downturns in the same way as those in lower-income brackets.
They value the lifestyle benefits that come with living in prime locations – whether it’s proximity to the city, access to top schools, or the vibrant café culture – and they’re willing to pay a premium for it.
Furthermore, properties in these affluent areas tend to experience more consistent capital growth over time.
With demand staying strong even during challenging economic periods, you benefit from higher rental income and steady asset value appreciation.
The risks of investing in less affluent areas
In contrast, properties in areas that cater to lower-income demographics are often more sensitive to economic fluctuations.
Now this is not a judge of people, but the fact is, tenants in these areas are often only a week or two away from being broke and are more likely to feel the squeeze when the cost of living rises or if they lose their job, making it harder for them to keep up with rent increases.
This can put pressure on your rental income, capital growth in the area and overall return on investment.
The bottom line for investors
Given the hollowing out of the middle workforce and the changing demographic landscape, strategic property investors would do well to focus on areas with more affluent residents who have the means and desire to maintain their lifestyle.
By aligning your property portfolio with demographics that are less vulnerable to economic shifts, you’re not only securing a more stable rental income but also tapping into long-term capital growth potential.
Final thoughts – what’s next for our cereal aisle and property market?
Just as the cereal aisle adapts to consumer demands, so too must our workforce and property strategies adapt to the changing economic landscape.
While the hollowing out of the middle workforce is a challenge, it presents an opportunity to rethink how we approach work, investment, and employment in Australia.
The key is to be proactive, recognise the shifts happening around us, and prepare for a future where the “Weet-Bix middle” might look very different.
After all, whether it’s your cereal choice or your property investment strategy, the aim is to ensure you have the resilience, insight, and flexibility to thrive in an ever-evolving world.
And once again, I must give credit to the insightful Simon Kuestenmacher for the great WeetBix analogy.
You can read his original article here.
