The J.C. Penney closing of 33 stores is a reflection of the decline of the middle class. Comments by readers of this Huffington Post article, I believe, accurately appraises this situation. There is nothing being said about how Penney’s will recover.
Sears Holdings Corp. (SHLD:US) plunged the most in more than a year after forecasting a fourth-quarter loss and saying sales during the holiday period dropped. The loss in the quarter ending Feb. 1 will narrow to $250 million to $360 million, or $2.35 to $3.39 a share, the Hoffman Estates, Illinois-based company said yesterday in a statement. The net loss a year earlier was $489 million, or $4.61 a share.
If these stalwarts cannot survive the message is clear. The middle class, that was the bread and butter for those retail stores, is shrinking away.
It is not an overnight event. As those middle incomes and retired middle class families die the replacements come in just two categories. They are the poor and the well to do. Evidence of this situation is the age of McDonald’s employees. The average age of a fast-food worker in 2013 was almost 30. That is data published by Bloomberg Businessweek. The Bureau of Labor Statistics says that more than 35% of the unemployed have been in that predicament for more than 27 weeks. Most of them had well paying middle class jobs.
Meanwhile the median annual compensation for the CEOs of S&P 500 firms is now reported to be above $10 Million. Carol Meyrowitz, the CEO of TJX, earned over $20 Million in 2013. TJX owns Marshall’s, TJ Max, and Homegoods stores. Anthony Petrello was the highest paid CEO earning more than $68 Million last year.
Of course the board of directors of every company is free to pay whatever they deem a fair salary. Government does not set salaries in a free society. Those CEOs must be worth the pay they receive. Or is it the rich protecting the rich? Does the CEO work harder than the clerk?
So what is to become of most Americans? Look for more food stamps, more housing subsidies, and more broken homes.
Private enterprise does not care about its employees. They are interested in maximizing their profits. Don’t like it? Open your own business. That is the way capitalism works.
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