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Comments by YACCS
Wednesday, December 24, 2003

When Paycheck Is Low, Discount Retailers Have Pull

December 23, 2003

It's Christmastime, and Dawn Murphy of Long Beach, N.Y., is
pushing a cart loaded with presents, coats and her two
small daughters up and down the aisles of a Wal-Mart in
nearby Valley Stream, thinking about how she will pay for
everything she wants to give.

"We literally live by a budget, so we don't have any extra
spending money," she said, selecting an angel ornament from
a shelf. "Right now I'm taking money out of my food budget
to cover Christmas." That food budget is $100 a week ''and
a lot of coupons." She gravitates to Wal-Mart because of
the store's layaway plan, which requires 10 percent down
and grants 60 days to pay the rest before the purchases can
be taken home. Her husband's year-end bonus from his job as
an office manager will help with the other 90 percent.

"That's the only way I can do it," she said. "Other stores,
like Kohl's, don't have that, and it makes shopping that
much more difficult." Living from paycheck to paycheck is
the norm in the United States, economists say, and
Wal-Mart's cash registers offer some proof of that. For
more than a year, the retailer says, it has detected spikes
in sales twice a month, around the 1st and the 15th, which
is about the time that many people are paid. Visits to
Wal-Marts around the country last week, at the height of
the holiday shopping season, found many shoppers feeling
squeezed - the Murphys on Long Island, the Dukes family in
Georgia, the Lawrences and the Olsons near Seattle, and
others as well.

''For many Americans, especially those with children who
are living paycheck to paycheck, Christmas is seen as a
time of financial crisis," said Stephen Brobeck, executive
director of the Consumer Federation of America, an advocacy
and education organization in Washington. "The group has
grown as the result of rising unemployment and increasing
consumer debt."

Though there are some signs that the economy is healing -
in the form of bigger Wall Street bonuses, for example, and
increasing corporate profits - income has remained mostly
flat for many workers, leading to a discrepancy between
gift-giving ambitions and what people can actually afford
to give.

"Even though you can point to improving economic
indicators, one conspicuous omission from that list is wage
growth," said Jared Bernstein, senior economist for the
Economic Policy Institute, a research group in Washington.
"And that's where most working families meet the economy."

Mrs. Murphy said her husband used to work in Manhattan,
where the pay is better. His job was across from the World
Trade Center. On Sept. 11, 2001, Mrs. Murphy said, he saw
the first plane hit, walked out of his building and never
went back.

Mrs. Murphy dresses in hand-me-downs and uses her birthday
money from relatives to buy Christmas gifts. The Murphys'
lone credit card always has an outstanding balance. Life
has been that way since they married, five years ago, she
said, and there are no signs that it will change anytime

Kimsey Dukes, 44, a factory worker at the Southwire
Company, a cable maker in Carrollton, Ga., is paid every
Thursday. Even so, he said he often felt that he had "to
rob Peter to pay Paul" to keep his household, which
includes five children and his disabled wife, running

"I try to put in overtime whenever they let me," Mr. Dukes
said. Still, "some things you let go," he added. "I
sometimes have to put paying bills off until the next pay
period." For four years, ever since his wife, Sharon, had
to stop working because of a degenerative bone disease and
carpal tunnel syndrome, the family has lived on a tight
budget. Christmas lists from the children, who range in age
from 10 to 21, can mean difficult decisions. This year, the
youngest yearns for a PlayStation 2, while two of the girls
have asked for drawing paper for their art projects.

Dallas Sumbles, a 22-year-old Navy aircraft mechanic who
shops at a Wal-Mart in Jacksonville, Fla., is paid every
other week, and that can be hard, even with military
subsidies. "Three days after I get paid, the money is
gone," he said. "We live on the base, buy our food at the
Navy Exchange, pay for our cars and insurance and then do
nothing until two weeks later when the next paycheck

He and his wife, Nicki, used to have a Wal-Mart credit
card, but that did not turn out well, he said, and now they
owe more than $1,000. "We cannot pay anything on the
balance," he said. Nor can they afford to give each other
Christmas presents this year, Nicki Sumbles said, but their
children will get gifts and the couple may go out to

Wal-Mart, which is based in Bentonville, Ark., began its
layaway plan in 1962 with its first store. This year it
began cashing payroll checks and government-issued checks
for a fee, in a program that has already spread to 20
states and is expected to be available nationwide by next
year. It began "as another form of convenience at the
register," said Melissa Berryhill, a Wal-Mart spokeswoman.
At the same time, she added, "we are aware that we have
some customers who don't have bank accounts."

But the economy is getting better, that's what Fox says.

posted by Steve @ 11:28:00 AM

11:28:00 AM

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