Hol­i­day splurg­ing not an op­tion for many work­ers scrap­ing by

Lux­ury stores pro­mote ‘feel-good’ gifts

Kuwait Times - - BUSINESS -

At the brightly lit mall, cloth­ing stores high­light hol­i­day sweaters and big signs tout the sales, while Duquan Allen keeps his ex­pec­ta­tions in check.

Allen, who works full-time clean­ing planes at Ne­wark Air­port, says his mother doesn’t ex­pect any­thing big, and he usu­ally gets a hooded sweat­shirt. He plans to spend about $150 on presents for his grand­mother, mother and 21year-old sis­ter. “I’m good at bud­get­ing,” says Allen, who makes $10.10 an hour.

Head­ing into this hol­i­day sea­son, with gas and food costs down, un­em­ploy­ment at its low­est point since 2007 and cloth­ing prices on the de­cline, econ­o­mists and re­tail ex­ec­u­tives de­clared it a great time to be a con­sumer. But seven years into the re­cov­ery, there’s a stubborn di­vide that hourly work­ers see more starkly dur­ing the hol­i­days, be­tween them­selves and bet­ter-off con­sumers who have ben­e­fited more as the economy im­proved.

“I see peo­ple trav­el­ing. I wish I could af­ford it,” said Allen. Many work­ers are in­deed earn­ing more. Av­er­age hourly earn­ings have picked up 2.5 per­cent over the past year, and ma­jor retailers have raised wages as com­pe­ti­tion for work­ers has in­creased.

Thanks­giv­ing week­end fea­tured crowds of shop­pers at stores and malls, snap­ping up new TVs and cloth­ing. Lux­ury stores have pro­moted “feel-good” gifts like $1,000 silk pa­ja­mas. Amer­i­cans spent $3.45 bil­lion on­line on Cy­ber Mon­day, ac­cord­ing to Adobe Dig­i­tal In­sights, and nearly that much on Black Fri­day, the day af­ter Thanks­giv­ing. The Na­tional Re­tail Fed­er­a­tion trade group ex­pects hol­i­day sales for the Novem­ber and De­cem­ber pe­riod to rise 3.6 per­cent to $655.8 bil­lion.

From the data, peo­ple seem very able to buy. Over­all, peo­ple plan to spend about $935 per per­son this hol­i­day sea­son, ac­cord­ing to an NRF sur­vey. Be­hind that fig­ure, though, there’s a split.

Con­sumers with in­come un­der $50,000 plan to spend a lit­tle over $362 on gifts for their fam­ily and friends, while for those with in­come of $50,000 and higher, that num­ber is about $768. Throw­ing in dec­o­ra­tions, greet­ing cards, flow­ers and food, the dif­fer­ence is even larger - around $512, com­pared to about $1,020. That di­vide also hasn’t budged since the re­ces­sion.

“The U.S. economy is not cre­at­ing high-wage jobs for lower- and middle-in­come con­sumers,” said Ken Perkins, pres­i­dent of re­search firm Re­tail Met­rics LLC. “This is mak­ing it ex­tremely dif­fi­cult for lower-in­come con­sumers to make a liv­ing. There’s re­ally not a lot left for Santa Claus.”

About half of Amer­i­can work­ers have seen their share of over­all in­come growth shrink since 1980, ac­cord­ing to a re­cent study by econ­o­mists Thomas Piketty, Em­manuel Saez and Gabriel Zuc­man. In 1980, the top 1 per­cent of adults earned on av­er­age 27 times more than the bot­tom 50 per­cent adults; now, they earn 81 times more.

Work­ers at Wal-Mart Stores Inc., the na­tion’s largest pri­vate em­ployer, now earn an av­er­age of $13.38 an hour, while the av­er­age hourly pay for cashiers and low-level re­tail sales staff across the in­dus­try is $9.26, ac­cord­ing to a Hay Group sur­vey. But some groups say hourly em­ploy­ees across the board still don’t make enough to live on. Their fight will face hur­dles with Pres­i­den­t­elect Don­ald Trump’s pick for la­bor sec­re­tary: fast-food CEO An­drew Puzder, who has been crit­i­cal of min­i­mum wage in­creases.

“It’s a scary-look­ing ad­min­is­tra­tion,” said Scott Court­ney, ex­ec­u­tive vice pres­i­dent of the Ser­vice Em­ploy­ees In­ter­na­tional Union. But he said the “Fight for $15” cam­paign that be­gan with re­tail and restau­rant work­ers is not giv­ing up. “You are go­ing to see a lot more op­po­si­tion and a lot more peo­ple tak­ing part.”

Be­sides the hourly wage, some work­ers say an is­sue is they can’t get enough hours. The share of peo­ple work­ing part-time be­cause that’s all they can get re­mains at re­ces­sion­ary low lev­els, ac­cord­ing to re­search by Penn State pro­fes­sor and the Univer­sity of Illi­nois’ Project for Middle Class Re­newal se­nior re­search an­a­lyst Lon­nie Golden, pub­lished by the Eco­nomic Pol­icy In­sti­tute. That level is nearly 45 per­cent higher than it was in 2008, fu­eled by a few in­dus­tries like the re­tail sec­tor.

Maria Coates, 20, of Elizabeth, New Jer­sey, works about 35 hours a week at a mall-based cloth­ing store, but would like more hours to make more money. “I wish I could shop for my mother, my grand­mother and my sis­ter,” said Coates, who plans to spend $50 for the whole fam­ily. More than that, she’d like to be able to af­ford to study ac­count­ing. “What I re­ally want is to go to school so I can get a bet­ter job.”

Af­ter rent and ris­ing health care costs, some work­ers find there’s not much left. Allen says of the $1,260 per month he takes home, more than half goes to­ward rent. Af­ter food, Wi-Fi, phone and util­i­ties, he has about $310 per month for any other needs. He doesn’t have health in­sur­ance and re­cently paid $100 to fix an ab­scessed tooth - the equiv­a­lent of about ten hours of work.

“The real story for the eco­nomic pinch seems to be the rise in health in­sur­ance costs,” said econ­o­mist Michael P. Niemira, who ex­am­ined 2015 data from the Bureau of La­bor Statis­tics and fo­cused on the sec­ond-low­est in­come strata, which had an av­er­age pre­tax in­come of $28,343 about $13.63 an hour for full-time work. — AP

Re­tail sec­tor

A shop­per at the Brea Mall in Brea, Cal­i­for­nia, car­ries bags full of pack­ages. Amid the hol­i­day dec­o­ra­tions and cheer­ful ads, splurg­ing is not an op­tion for many Amer­i­cans strug­gling to get by. — AP

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