Roll Call: Latest News on Capitol Hill, Congress, Politics and Elections
October 2, 2014

Low Wages the Reason for Low Black Friday Numbers?

George Packer  addresses the question: “Why didn’t the new, extended Black Friday weekend achieve the desired results in consumer dollars?”

The short answer: “Americans are too poor to stimulate economic growth.”

“One obvious solution is to pay them more—more than the federal minimum wage of $7.25 an hour.”

“You would think that the major American retailers, keenly aware of the problem of ‘slow wage growth’ and still smarting from their lousy Black Friday numbers, would be leading the protests in favor of higher wages

“[But retailers] argue that higher wages would mean higher prices and fewer employees. Though there is very little evidence to support the notion that minimum-wage increases lead to layoffs and unemployment, and a great deal of evidence to refute it, the retailers are sticking to their story, which is the story of the American economy of the past generation: lower prices and lower wages—a race to the bottom.”

  • Wynstone

    Previous black friday numbers were also generated by over-extension of personal credit which has been curtailed by the tightening of credit markets. I do think low wages have had an impact though.

  • pbrower2a

    Considering that many retailers opened on Thanksgiving Day, this all portends ill for consumer spending.

    1. Underpaid workers have adjusted. People still living with parents because they have work that pays a travesty of a wage are not buying the new housewares, furniture, appliances, and consumer electronics that one associates with new households. Workers’ expectations after the worst economic meltdown since the 1930s and a recovery that has yet to result in a recover for anything other than corporate profits and executive compensation are very low.

    2. There just isn’t anything really new in the consumer economy — nothing that shakes up consumer practices. There’s just no new equivalent of the compact disc or the DVD. There’s no change in style that makes everything obsolete. But even if there were, poor people are the definitive ‘late adapters’ who buy low-end merchandise that might have been ‘new and exciting’ — eight years ago. (Early adapters are the ones who buy new, innovative, expensive objects).

    3. People earning pittances for their work just don’t buy stuff. Productivity may be up and costs may be shrinking, but that only creates overruns and overstocks that eventually depress prices and sales volumes.

    • http://foundersfollies.blogspot.com/ Chredon

      I can give you three more reasons why people with low incomes aren’t buying stuff at the mall:

      1) eBay
      2) Craigslist
      3) Freecycle

      Add to this the many, many consignment shops and thrift stores that are popping up all over America. People are buying used stuff in good condition rather than new stuff. When my teenage daughter wants Hollister jeans, she doesn’t go to Hollister, she goes to Plato’s Closet. When I wanted a tablet computer, I went to Craigslist, not Best Buy. There’s a reason why CarMax has become a Fortune 500 company.

      People will get what the want and need – but they won’t get it from first-run retail unless they either (A) have no option, or (B) have money that they can afford to burn.

      • Mitchell LeVett

        All add on another reason. I am not going out to shop on Thanksgiving, and since I am not doing that all the good deals are gone by Friday morning so why go out at all?

        That was my mindset and that of many others.

        • Hawkeye

          I refused to shop either Thanksgiving or Black Friday. Quite a number of my co-workers on both ends of the political spectrum did the same. I won’t be doing much if any Christmas shopping either. Pretty much the same goes for eating out and fast food, too.

          If I’m going to shop at all, it will be where I’m comfortable and trust the merchants, not in some hysteria. Or online where I have the variety I am looking for at my fingertips.

          BTW my preferred shipper for online purchases, if possible is USPS. My experience with the Postal Service for such things has been uniformly good, very prompt, careful and economical for every location that has shipped to me using the USPS.

        • http://foundersfollies.blogspot.com/ Chredon

          We don’t normally shop on Black Friday, though we might go to those stores before or after that time.

          But we have made a moral decision to NEVER shop at any store that was open on Thanksgiving Day. Can’t we have at least one FULL day devoted to family and comfort before the madness of conspicuous Christmas consumerism begins? Requiring people to come to work on Thanksgiving for the sole reason of getting your profits a day early is just ONE. STEP. TOO. FAR.

      • Hawkeye

        4.) Selection is much greater on line.

        • http://foundersfollies.blogspot.com/ Chredon

          And all those specials that were advertised on Thursday are sold out by 6:10 am on Friday, even if the store opens at 6:00.

      • DHFabian

        You imply that people with low incomes have a choice.

        • http://foundersfollies.blogspot.com/ Chredon

          Sadly, they often do not.

        • Vinny Gordon

          Yes, they have choices, garage sales, consignment stores, dollar stores, thrift stores, estate sales.
          I know I have gone to all of these, and gotten good deals.

          It is a new economy. Depression era economy.

    • DHFabian

      We have a tremendously confused economic discussion because it is bogged down by our decision that those who are not currently of use to employers have no human worth, and are therefore not included in the discussion about American poverty. We say that those getting by on the minimum wage are in deep poverty, and yet we also said that those who were getting by on $4k annual welfare aid were living in such lazy comfort that they lost their incentive to find jobs. We need clarification about the meaning of poverty, and to whom it applies.

  • Vinny Gordon

    http://www.ilo.org/wcmsp5/groups/public/—americas/—ro-lima/documents/article/wcms_limd3_11_en.pdf

    Brazil raised the minimum wage during their recession and got these results:

    The recovery of the minimum wage in Brazil has contributed to the reduction of poverty and inequality in the country, improving the living conditions of low-income workers, in addition to pensioners, welfare beneficiaries, and the unemployed with access to unemployment insurance. The minimum wage has also contributed to reducing gender and racial disparities in income.

    If it worked in Brazil, then why can it not work here?

    • DHFabian

      It can’t work here because we removed a vital piece of the formula. We simply ended welfare (TANF is a marginally subsidized temp job program for those who have minor children). Not everyone can work, due to health or circumstances, and there are no longer jobs for all who need one. For all those pushed out of our shrinking job market (we’ve already shipped out the bulk of our manufacturing jobs), how can anyone get a job without a home address, phone, bus fare?

      • Vinny Gordon

        We are talking about the people who have jobs, Wal Mart, fast food, big box stores. You are confused with a jobs program, raising the minimum wage is raising wages, so people can afford to buy stuff. Now, with their wages, all their money is spent on survival, gas, insurance, food, shelter, nothing else.
        Ford raised the minimum wage in his plant and his company prospered. People without homes, phone, bus fare are a different problem.

  • mathisje

    Did you miss the analysis that said Black Friday sales were up over last year when you count all the stores that opened late Thursday?

  • DHFabian

    In part. This generation has re-created the Invisible America of the past, and while we ignore the poor, the growth of poverty obviously continues to have a significant impact on the overall economy. In fact, since we began our war on the poor in the 1980s, the OVERALL quality of life in the US has fallen from #1 down to (so far) #11. While phasing out job security, we cut the rungs off the ladder back out of poverty. Millions are a single job loss from losing everything, with no way back up. The money that once went into poverty relief was immediately, by necessity, rolled into local economies via the purchases of basic consumer needs. This was brought to an end with welfare “reform.” The more poverty grows, the fewer the consumer purchases, the fewer workers are needed to make those products, the more poverty grows.

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