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Behind the Mayhem, the Black Friday Phenomenon Is a Symptom of our Dismal Economy

Pepper-spray, shootings and people camped out for 12 hours to buy a cheap waffle iron --
 
 
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LEVITTOWN, PA: Amarilis Aponte arrived at Wal-Mart at 6pm on Thanksgiving Day to stake out a spot in line for a discounted PlayStation 3 for her four kids. After losing her job last week as an assistant at a brokerage firm in the area, Aponte was determined to get the best price for the special Christmas present she had promised them. 

Besides the gaming console, she was in search of bargains on necessities—underwear, T-shirts and socks. “They’ll be getting less than they did last year,” she said. 

Two-and-a-half years since the official end of the recession, American families are still suffering from unrelenting unemployment, the disappearance of their home equity, and stagnating wages. As a result, their spending—which drives 70 percent of our economy—has failed to recover to the levels needed to fuel business growth and rehiring.  

Surveys show that consumer confidence plummeted last quarter to the levels of despair experienced during the financial crisis. While spending picked up over the same period, it was driven by a draw-down in savings, as income stagnated. As a result, consumers still are not in a position to provide the purchasing power the economy needs to rebuild. 

“Until the U.S. begins to see robust improvement in jobs and signs of recovery in the housing market, we believe consumer spending will likely continue to be soft and uneven,” said Target Chief Financial Officer Doug Scovanner on a Nov. 16 call with investors. 

With her Christmas list in hand, Donna Wermuth of Levittown maneuvered her cart through the jammed Wal-Mart aisles on a quest to find a Dora the Explorer t-shirt, a Bissell vacuum cleaner and other gifts that her four children and seven grandchildren have asked for this year. “This is so nerve-wracking,” she said as she made a quick right turn during a break in traffic.  

Wermuth, a Black Friday veteran, budgets all year long to stretch her paychecks so she can provide a nice Christmas for her family. This year, saving got tougher as her wages at a local manufacturing plant were cut by a third, and her husband, a plant manager, took a 20 percent reduction in pay. Neither are in a union. 

According to an analysis by the Economic Policy Institute, inflation-adjusted wages have fallen across the entire wage distribution in the last year, following widespread declines in 2009. The median wage has fallen from $16.22 an hour in 2009 to $15.67 an hour in the last twelve months through September.    

This drop in wages not only creates extreme stress for families like the Wermuths, it also imperils economic recovery. “With slow wage and salary growth, consumer spending will be on a sluggish trajectory,” Michelle Meyer, a Bank of America economist, told Bloomberg News.  

Wermuth feels the impact of anemic consumer demand at work every day where she makes springs for products ranging from light bulbs to pogo sticks. She has seen her workplace shrink from 62 people to just 5 in two years as their job orders declined from a couple hundred a month to 10 or 15. Wermuth has had to take off more than a week from work in the last few months because the plant couldn’t afford to keep the electricity and water running.  

“I just hope at the first of each month when the bills are due that we have enough to pay for it all,” said Wermuth, who will make about $35,000 this year.  

Since January, she and her husband put aside a portion of their paychecks so they would have $1,000 to spend on holiday presents for the family over the coming weeks. “There’s no exception. We put it away whether we have it or not.” 

While wages are falling and 25 million Americans unable to find the full time work they are seeking, economic stress continues to torment families four years after the Great Recession began. With the payroll tax cut and unemployment insurance set to expire at the end of the year unless Congress takes action, the prospect of even greater hardship is right around the corner. Yet there are still some families that are feeling a little economic relief this holiday season. 

At the checkout counter, Patricia Flagg of Fairless Hills stood by her mostly-empty cart holding only a container of coffee grounds and some pajamas for her kids who are 12 and 15. Even though other shoppers had beaten her to the sales, she was hopeful for a better Christmas than last year when her husband, a construction worker, was unemployed and she had only part-time work.  

Now, Flagg is working full time in administration at the local school district and her husband is back to work as well. “So we’re anticipating a better year for us,” she said. “I remember when things were tough and we didn’t spend so much. Last year was horrible.” 
 

Anne L. Thompson is a policy analyst with the National Employment Law Project (NELP).
 
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