Living Economics

The Rise of Dogs
Rising affluence and other social factors have led to the emergence of the dog care industry.

If you think child care is a big problem for working parents, wait till you see the big business of dog care for busy owners. Pet Chauffeur in New York City has a fleet of 7 specially equipped mini-vans with dog seat belts to ferry dogs around for its 10,000 clients. A ride could cost from $30 to $200 depending on distance. Pet Chauffer could be delivering food and medicine from vets to their clients, or delivering ailing pets to the vets. Besides simple transportation, Pet Chauffeur also arranges dog birthday parties, social networking with other dogs and sundry dog care services (Economist).

Meanwhile, China is also witnessing a healthy growth in the dog care industry. Since 2003, the number of registered dogs in Beijing more than tripled to 534,000 with many times as many unregistered dogs. A recently opened dog hotel in eastern Beijing offers 30 private air-conditioned TV-equipped rooms. A swimming pool and outdoor play areas are on the drawing board. To cater to the expanding canine wardrobes, a new profession known as "pet fashion designer" has emerged. Dog beauty parlors, of course, are proliferating.

The rise of the dog care industry tells an interesting story about the health of the economy, income distribution, and job creation.

First, as a normal good or even a luxury good, demand for dog care naturally expands with rising affluence. The health of the dog care industry could thus be regarded as an indicator of the health of the economy as a whole.

Second, dog ownership tends to be concentrated on higher-income groups. In Beijing, the initial dog registration fee is $120 with $62 annual renewal fee while the average national wage is still only $120. Purebred dogs costing up $12,000 are favorite status symbols of the rising middle and upper income earners (Atlanta Journal-Constitution).

Third, urbanization, prolonged single status of men and women, the demise of the extended families, long retirement, and other factors have combined to generate a need for pet companionship. In China, dog ownership is also a response to greater personal freedom and changing family structure due to the one-child policy. Many of these social factors could be considered as "loose ends" resulting from economic growth. The dog care industry is only one of the new businesses that have emerged to close these loose ends.

Fourth, the rise of the dog care industry shows that job growth often occur in unexpected areas. As long as the economy is dynamically efficient, the loss of old jobs will be replaced with new jobs. There is no doubt that dog care is a growth industry, especially in newly developing countries. Between 1999 and 2004, dog ownership expanded from 5% to 15% in China. Dog and cat food sales grew by 13% in 2004 over the previous year (Business Line). In the U.S., dog ownership also increased from 1988, 56% in 1988 to 63% in 2002. In 2002, the U.S. had 360,000 paid employees working in industries devoted to pet care and maintenance and generated $38 billion in sales. Many of these jobs are particularly suitable for small businesses. The 50 largest firms only comprised 1.2% of all the businesses in the pet care industry, indicating a lot of small players in the market. However, revenue is more concentrated with 15% of sales coming from the 50 largest firms (Incontext).

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