Did
you know that Family Dollar is closing 370
stores?
When I learned of this, I was quite stunned. I knew that retailers
that serve the middle class were really struggling right now, but I
had no idea that things had gotten so bad for low end stores like
Family Dollar. In the post-2008 era, dollar stores had generally been
one of the few bright spots in the retail industry. As millions of
Americans fell out of the middle class, they were looking to stretch
their family budgets as far as possible, and dollar stores helped
them do that. It would be great if we could say that the reason why
Family Dollar is doing so poorly is because average Americans have
more money now and have resumed shopping at retailers that target the
middle class, but that is not happening. Rather, as you will see
later in this article, things just continue to get even worse for
Americans at the low end of the income scale.
Women’s
clothing retailer Coldwater Creek Inc. on Friday filed for
Chapter 11 bankruptcy after
failing to find a buyer said it plans to close its stores by early
summer.
Coldwater Creek joins other retailers to seek
protection from creditors in recent months as consumers keep a lid on
spending.
The company said it plans to wind down its
operations over the coming months and begin going-out-of-business
sales in early May, before the traditionally busy Mother’s Day
weekend.
Coldwater
Creek, which has 365
stores and employs about 6,000 people,
has five stores in Maryland.
I remember browsing through a Coldwater Creek
with my wife and mother-in-law just last year. At the time, my
mother-in-law was excited about getting one of their catalogs. But
now Coldwater Creek is going out of business, and all that will be
left of that store is a big, ugly, empty space.
Of course the fact that a couple of major
retailers are closing stores is nothing new. This kind of thing
happens year after year.
But
what we are witnessing right now is really quite startling. So many
retailers are closing so many stores that it is being called a
“retail apocalypse”. In a previous article entitled “This
Is What Employment In America Really Looks Like…“,
I detailed how major U.S. retailers have already announced the
closing of thousands
of stores so
far this year. If the economy really was “getting better”,
this should not be happening.
So why are so many stores closing?
Well,
the truth is that it is because the middle class is dying. With each
passing day, more Americans lose their place in the middle class and
fall into poverty. The following is an excerpt from the story of one
man that this has happened to. His recent piece in the Huffington
Post was entitled “Next
Friday, I’ll Be Living In My Car“…
For the
past 13 years, I’ve mostly been doing facility management in
several locations across the state. After the position turned into
more of a sales role, they laid me off. Since then, I’ve been
looking to find any type of work. I’ve applied for food stamps, and
I’m waiting for that. I’m
mostly eating soup from a food pantry.
I’ve been on several interviews — second,
third, fourth interviews — and just haven’t been able to land a
job for whatever reason. I definitely have the qualifications and the
experience. Last week, I had a job offer that I thought was secure,
and we were talking my work schedule. They decided to call me back
and go with an assistant rather than a manager.
For a
number of applications, I’ve
dumbed down my resume.
I don’t even go with a resume sometimes, just because I don’t
want them to know that I’m educated and have a master’s degree.
It shoots me in the foot. They don’t want me because they don’t
think I’m going to stay. I don’t blame them. I
was making six figures at $60-70 an hour. Now, I’m looking for a
$10 an hour job.
There are millions upon millions of Americans
that can identify with what that man is going through.
Once upon a time, they were living comfortable
middle class lifestyles, but now they will take any jobs that they
can get.
Just
today I came across a statistic that shows the massive shift that is
happening in this country. A decade ago, the number of women working
outnumbered the number of women on food stamps by more than a 2 to 1
margin. But now the number of women on food stamps actually
exceedsthe
number of women that have jobs.
Wow.
How could things have changed so rapidly over
the course of just one decade?
And
sadly, things continue to go downhill. Every day in America, more
good jobs are being sent out of the country or are being replaced by
technology. I really like how James
Altucher described
this trend the other day…
Technology, outsourcing, a growing temp
staffing industry, productivity efficiencies, have all replaced the
middle class.
The working class. Most jobs that existed 20
years ago aren’t needed now. Maybe they never were needed. The
entire first decade of this century was spent with CEOs in their Park
Avenue clubs crying through their cigars, “how are we going to fire
all this dead weight?”. 2008 finally gave them the chance. “It
was the economy!” they said. The country has been out of a
recession since 2009. Four years now. But the jobs have not come
back. I asked many of these CEOs: did you just use that as an excuse
to fire people, and they would wink and say, “let’s just leave it
at that.”
I’m on
the board of directors of a temp staffing company with one billion
dollars in revenues. I can see it happening across every sector of
the economy. Everyone is getting fired. Everyone
is toilet paper now.
Flush.
There is so little loyalty in corporate America
these days. If you work for a major corporation, you could literally
lose your job at any moment. And you can be sure that there is
someone above you that is trying to figure out a way to accomplish
the tasks that you currently perform much more cheaply and much more
efficiently.
Most big corporations don’t care if you are
personally successful or if you are able to take care of your family.
What they want is to get as much out of you as possible for as little
money as possible.
This
is a big reason why 62
percent of
all Americans make $20 or less an hour at this point.
As
the middle class slowly dies, less people are able to afford to buy
homes. Mortgage originations at major U.S. banks have fallen to a
record low,
and the percentage of Americans that live in “high-poverty
neighborhoods” is
rising rapidly…
An estimated 12.4 million Americans live in
economically devastated neighborhoods, according to American
Community Survey data collected from 2008 to 2012. That’s an 11
percent jump from the previous survey, conducted from 2007 to 2011.
Even more startling, it’s a 72 percent increase in the population
of high-poverty neighborhoods since the 2000 Census.
If nothing is done about the long-term trends
that are slowly strangling the middle class to death, all of this
will just be the beginning.
We will see millions more Americans lose their
jobs, millions more Americans lose their homes and millions more
Americans living in poverty.
The United States is being fundamentally
transformed, and very few people are doing much of anything to stand
in the way of this transformation. Decades of incredibly foolish
decisions are starting to catch up with us, and unless something
dramatic is done right away, all of these problems will soon get
much, much worse.
