The Arbor Outlook: Financial Crisis, Wage Stagnation, and Roger Miller

"Two hours of pushing broom... Buys an 8 by 12 four-bit room; I'm a man of means by no means..."
—from "King of the Road," as performed by Roger Miller

We are currently observing the 10th anniversary of the 2008 financial crisis. Meanwhile, politicians and pundits spend more time arguing about who deserves credit for the economy than they do actually trying to sustainably improve it or prepare for the next downturn. Regardless of who deserves credit, there’s no doubt the economy is in better condition than it has been in a long time. But in recent years I’ve increasingly come to think that we’re living in a two-tiered recovery.

On the one hand, those with significant investment assets, access to capital and financial expertise made the last decade a productive one. A sustained period of historically low interest rates helped revive an economy on life support and handsomely rewarded those who were lured back into capital markets. Those skilled in buying and selling businesses, public and private, have been able to borrow more cheaply than at any time in history to finance their ventures. But there were many more citizens without the means to benefit from the improving economy.

A statistic gleaned from the Federal Reserve speaks to this side of the two-tiered recovery story, one which most of the folks I deal with are intuitively familiar — the percentage of the average family’s income generated by wages has dropped 9 percent in the last 15 years, falling from 70 to 61 percent. What’s replaced those wages? Investment income.

But the problem with investment income is that you have to actually own investments to earn it. The folks who don’t own stocks or bonds or other types of financial assets therefore haven’t experienced the same recovery as those who do. The old adage “It takes money to make money” is becoming more accurate over time.

So while one part of the economy has done well in recent years, under the surface we see the economic position of the middle-class stagnating.

The average middle-class American family's net worth is $40,000 less than what it was at the economic peak before the Great Recession, according to the Fed. And real wage growth has been falling since 2015. Declining real wage growth means that people’s purchasing power is still growing, but at a slower and slower pace. Over the last year, a 2.7 percent wage growth was outpaced by a 2.9 percent cost of living increase, so folks’ wages are now buying them less gas and groceries than they did a year ago. That’s a big deal. Real wage growth is one of the best indicators for determining if the average family sees their situation as improving or declining.

Margaret R. McDowell, ChFC®, AIF®, author of the syndicated economic column “Arbor Outlook,” is the founder of Arbor Wealth Management, LLC, (850.608.6121 –, a “fee-only” registered investment advisory firm located near Sandestin.

The Arbor Outlook: Young Ideas, Old Wisdom and Sinatra

“And if you should survive to a hundred and five. Look at all you’ll derive out of bein’ alive.”
—from “Young at Heart” as performed by Frank Sinatra

Technological changes that have occurred in our lifetimes are truly remarkable, aren’t they?

Consider advances in communication. Remember the manual typewriter? Then the electric one? I thought the automatic return was an incredible invention.

We then discarded the typewriter and educated ourselves on the computer. Then we learned to utilize the iPhone and eschewed land lines in favor of mobile ones. Now we read on our iPads as print fades from our lives like ancient, dried ink on parchment.

Since most innovative ideas in technology are offered by those under 30, we tend to associate positive technological change with young people. Most of us Baby Boomers understand ageism intuitively. Who isn’t familiar with the looks of scorn and derision we receive when we ask our children and younger co-workers about tech issues?

So you would think that nearly all successful start-ups and entrepreneurial enterprises are launched by youngsters, right? Not even close. An article in the New Republic states among other things that “most successful entrepreneurs are middle-aged, not young.” Why? Because there’s more to developing a successful business than hatching an innovative idea. There’s financing, marketing, business plans, and personnel management. Our life experience and our business acumen, earned over decades, can take a great idea and then make it work in the marketplace.

Young people are good at getting into business. Boomers are skilled at getting out and more likely to enjoy a positive final outcome with commercial endeavors. Someone who creates a business at age 50 is almost twice as likely to employ a successful exit strategy as someone who starts a business at age 30. “The mean founder age of startups with a successful exit, through IPO or acquisition, is 46.7,” the article stated.

The message? It’s never too late, and we’re never too old, to put our experience to work. Henry Ford was 50 years old in 1913 when he developed the assembly line to mass produce his cars. Ray Kroc was 52 when he opened his first McDonald’s in Des Plaines, Illinois, and older than that when he finally figured out how to profit from franchising.

To someone who is 30, the future is always infinite. But many Americans who amass small fortunes do so through selling a business. It takes years of experience and skill to build an enterprise that others see value in; then it takes marketing and negotiating ability to consummate the transfer of ownership and reap the profits.

Margaret R. McDowell, ChFC®, AIF®, author of the syndicated economic column “Arbor Outlook,” is the founder of Arbor Wealth Management, LLC, (850.608.6121 –, a “fee-only” registered investment advisory firm located near Sandestin.

The Arbor Outlook: Oscar, Felix and the Sound of Laughter

Felix Ungar: "I think I'm crazy."
Oscar Madison: "If it makes you feel any better, I think so too."
—from "The Odd Couple"

The sound of audiences laughing at his material provided the affirmation that his own childhood denied him. My favorite film adaptation is "The Odd Couple," released in 1968 and starring Walter Matthau and Jack Lemmon. Characters Oscar Madison and Felix Unger cohabit Madison's New York apartment while Unger and his wife endure a separation. Madison is a total slob who is driven insane by Felix and his obsessive neatness.

Mike Nichols won his second Tony Award for directing the Broadway version of the play. "Barefoot in the Park" made Robert Redford a star. And Burt Bacharach scored his musicals. His plays enjoyed 9,000 performances on Broadway in a 15-year period (1965 to 1980), with four running simultaneously in 1966. He wrote "Brighton Beach Memoirs," "Biloxi Blues," "Lost in Yonkers," "The Prisoner of Second Avenue," "Plaza Suite" and many more.

Neil Simon was born in the Bronx on July 4, 1927. His salesman father left and returned repeatedly. Eventually the family dissolved and Neil was shuffled off to live with relatives. Several of his plays, including "Lost in Yonkers," draw from his early life experiences. Simon was awarded a Tony and a Pulitzer Prize for that play.

After his discharge from the Air Force, he began writing comedy sketches for Phil Silvers and Sid Caesar. His first play, "Come Blow Your Horn," was written in 1961 and enjoyed 677 performances.

Simon wrote about middle class people, their foibles and funny mannerisms, and the struggles of families, marriage, and everyday living. After his first wife died of cancer in 1973, he married actress Marsha Mason and wrote what he considered his favorite play, "Chapter Two," based on their marital strife. "Biloxi Blues" was developed from Simon's own military experiences in Denver.

Simon died recently at age 91. From a relatively impoverished and dysfunctional upbringing, Neil Simon rose to the top of his profession as a playwright. He took the everyday agony and unhappiness surrounding him, and turned it into professional success through good humor, hard work and immense natural talent. Perhaps it is hyperbole, but one critic called him the most prolific playwright since Shakespeare.

There is a common misconception that rich, successful Americans inherit their place in society from their similarly wealthy parents. While exposure to handling financial issues can provide a leg up, a person must develop his or her own financial and career success, regardless of background. Many times, the desire to escape and deal with dysfunctionality or poverty can provide remarkable financial motivation to achieve.

Margaret R. McDowell, ChFC®, AIF®, author of the syndicated economic column “Arbor Outlook,” is the founder of Arbor Wealth Management, LLC, (850.608.6121 –, a “fee-only” registered investment advisory firm located near Sandestin.

The Arbor Outlook: First Downs, Autumn Saturdays and Steve Earle

“We got a pretty good team, good boys, strong boys; District champs the last three years.”
—from “No. 29,” as performed by Steve Earle

Two years ago on an autumn Saturday I lowered my home decorating magazine and said across the room, "What's a first down?" My husband stared in wonder and surprise. In 37 years, it was the first football-related question I had ever initiated.

We talked about basic strategies and rules. Things evolved from there, and last year we purchased tickets and attended my first major college game in decades. I actually loved it.

The finer points and nuances of the game itself are still beyond me, though I cheer for our team. The winning and losing isn't nearly as important to me as the quality of the evening. A spectacle under the lights on a college campus feels like autumn should. Maybe it reminds me of my own collegiate years. Regardless, it's an exhilarating and powerful experience: the sounds of pre-game and halftime band performances; the passion of the students and fans; the color and pageantry of the scene. It’s all captivating. And football means fall is around the corner.

It is typical of my timing that just when college football attendance is experiencing its first serious decline in decades I have jumped on the bandwagon. Perhaps my long association with investing has created a contrarian's approach to fandom. Investing is an activity that, by definition, rewards those who avoid following the crowd. If you buy a security when everyone else is doing the same, frequently it has been bid up and it's likely that you're paying too high a price for it. This is not always the case; sometimes large numbers of investors purchase a security and it continues to increase in value. But, as the late financial journalist Louis Rukeyser once said, “Trees don’t grow to the sky.”

The trick is to locate a good company, and then buy it during a downturn, or when other investors are selling it. In this sense, a good investor must understand the value of a company, and then trust that a decline in share price is temporary.

Market dynamics are changing, but many basic investing principles still apply. Simply stated, buy a good company, one which you’ll be glad to own three to five years from now as well as today. And buy it at a fair or advantageous price. To do so, you often must have the confidence to go against the grain and buy when others are selling. Then, during the next downturn, you must have the tenacity to hold when others are bailing.

Margaret R. McDowell, ChFC®, AIF®, author of the syndicated economic column “Arbor Outlook,” is the founder of Arbor Wealth Management, LLC, (850.608.6121 –, a “fee-only” registered investment advisory firm located near Sandestin.

The Arbor Outlook: Retirement Fears, Longevity and Old Friends

"Can you imagine us years from today? Sharing a park bench quietly ... How terribly strange to be 70. Old friends, memory brushes the same years; Silently sharing the same fears."
—from “Old Friends,” as performed by Simon and Garfunkel

A major annual retirement survey was released this summer. Among its findings are the nine biggest fears that Americans have regarding retirement.

The greatest fear, shared by over half of the respondents, is outliving one’s savings and investments. A larger number of those surveyed now see themselves living to age 90. A smaller but respectable percentage envisions themselves as future centenarians. Bottom line? Our money must last longer as life expectancy increases. If Paul Simon was writing “Old Friends” today, he’d change the age in the lyrics.

This is the overriding financial concern we all share in retirement. Of course, we need to begin addressing this issue decades prior to our actual retirement years. The survey did note that the average age that most Americans begin contributing to retirement accounts is 27. That’s not bad.

Almost half of those surveyed fear the demise of Social Security. My own opinion is that Social Security will be there for us, with some potential changes, throughout our lifetimes. The voting bloc represented by Boomers is awfully strong. The collapse of Social Security has been predicted annually since I began my practice over two decades ago. Nothing to be gained by worrying about this issue, anyway, since it’s beyond our control.

Three of the next four fears involve health related issues: declining health that requires long term care; lack of access to adequate and affordable health care; and fear of cognitive decline, dementia, and Alzheimer’s disease. Health issues are the financial wild card in retirement planning. People rightfully fear the price tag of escalating health problems. We are also scared of living at less than our best, living in pain, or becoming a shell of our former physical selves. In fact, according to many surveys, most of us fear being incapacitated or impaired more than we fear dying.

Folks often fear not one but a combination of these factors, even if they have amassed a significant nest egg and are enjoying a nice annual income. One of the biggest challenges in retirement is accepting that we are never going to be as financially secure as we’d like to be. Retirement means crossing the Rubicon from full-time employment to part-time work or none at all. Once we are there, things happen that we can’t control. But planning well and taking care of our health can lead us in the right direction.

Margaret R. McDowell, ChFC®, AIF®, author of the syndicated economic column “Arbor Outlook,” is the founder of Arbor Wealth Management, LLC, (850.608.6121 –, a “fee-only” registered investment advisory firm located near Sandestin.