ARBOR WEALTH: Canada's middle class, cell phones, and pillow sales

Margaret R. McDowell

Margaret R. McDowell

Special to The Log
Published: Wednesday, May 14, 2014 at 06:47 PM.

First in a Series on the Dying American Middle Class

The landlord wants his money…the grocery bill is due.” from“The High Cost of Living” by Tim Ausburn

If you’re an American, chances are pretty darn good that you own a cell phone. Products like cell phones have almost become staple consumer items, even for American families with lower incomes.

But cell phone plans for both mom and dad and three kids are not inexpensive. Subtract a typical family monthly cell phone bill from the net income of some “middle class” Americans, and there’s not as much left for life’s other necessities as there once was. 

For many middle class families, storing up retirement savings and contributing to college education plans for children are no longer realistic goals. Studies show that wages began to stagnate in the late 1970’s and have not kept pace with the cost of living since. Union power declined. Jobs were outsourced. Our manufacturing base was decimated. And now robotics, the new challenge to full employment in the modern American economy, is taking jobs away from willing workers.

More than at any time in our history, the U.S. is becoming a country of “haves” and “have nots,” with fewer families in the middle.  Much was made of the recent report that Canada , not the U.S. , now has the world’s wealthiest middle class. For now, we’d settle for a viable middle class. Because without one, the American economy will suffer, and we’ll all feel the financial impact. Canada hasn’t undergone a housing bubble, and our northern neighbors are also enjoying an energy boom. But there’s no denying that American middle class purchasing power is on the wane.

A fascinating current documentary features an extensive interview with a bedding manufacturer. The manufacturing plant owner makes $10 million annually. But he is concerned about the middle class. Why? As he says, rich folks only sleep on (and therefore only buy) one or two pillows at a time, just like everybody else. He depends on a more populous and prosperous middle class to purchase his products, as do so many manufacturers of goods and services. When average Americans stopped shopping and spending money in the downturn of 2008, it further escalated our national economic nightmare, because consumer spending traditionally represents 70 percent of GDP.

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