COLUMN: Raise the minimum wage … for the middle class

Published: Thursday, February 28, 2013 at 04:16 PM.

“This erosion between growth and the prosperity of average Americans is still vexing economists,” he writes, “and a lot of lawmakers have yet to even acknowledge the problem. But repairing this link is arguably the most critical policy challenge for anyone who wants to lift the middle class.”

Tankersley offers some salient points. Everyone from Camp Creek to Miramar Beach knows that the recovery following the Great Recession and the huge downturn of 2008 has been painfully slow. But what few economists and politicians confront is the reality that the jobs that are being created are simply not the same kind of middle class jobs that we as a country once enjoyed.

“The growth that has occurred hasn’t produced anywhere close to a historically ‘normal’ level of job creation of income gains,” says Tankersley.  “Nearly four years after the Great Recession ended, 12 million Americans are actively looking for work but can’t find a job; another 11 million are stuck working part-time when they’d like to be full-time, or they’d like to work but are too discouraged to job-hunt. Meanwhile, workers’ median wages were lower at the end of 2012, adjusting for inflation, than they were at the end of 2003. Real household income was lower in 2011 than it was in 1989.”

The takeaway for investors is that our economic recovery, while encouraging, is not of the same quality as historical recoveries from previous recessions.  Once the Fed discontinues quantitative easing and bond buying and stops sitting on interest rates, the economy may have a very difficult time standing on its own. 

This is one of the reasons that we favor defensive investments, which protect clients on the market downside, primarily consumer staples, utilities and essential service bonds. It is also one of the reasons we favor a global approach when choosing investments. We tend toward American companies, which attempt to increase market share in the emerging and frontier market countries of the world. Many of these countries not only offer large population pools, but also have median ages that are considerably lower than those of developed nations.

Margaret R. McDowell, a chartered financial consultant and accredited investment fiduciary, is the founder of Arbor Wealth Management, LLC, a fee-only registered investment advisory firm located near Sandestin.

 



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