Black Friday is the name given to the day after Thanksgiving. It marks the first day of the Christmas shopping season with grand bargains and the feeding frenzy of consumers to find the best price on the most desirable gifts for the holiday. The term originated in Philadelphia as a description of the crowded stores and heavy traffic the day after Thanksgiving. It later took on the meaning that it was the day retailers begin to turn a profit and are “in the black.”
It has taken on a new meaning for retail workers in the “big box” stores, who are now being forced to work and forgo their Thanksgiving holiday evening because the largest retailers, specifically Walmart, decided to open at 8 PM on Thursday. Most of these retail workers barely make a living wage, the typical employee is paid $22,100 a year, slightly below the federal poverty line for a family of four (which is at $23,050 in 2012). Walmart workers, although not unionized, have banded together to strike the retailer on Black Friday. Here is why:
– WHY WORKERS ARE STRIKING: Workers – organized by non-union OUR Walmart – are protesting that Walmart continues to pay low wages and cut benefits, even while it is making billions of dollars in profits. The strikes that have occurred are the first in the 50 year history of the company. Workers have demanded “more-predictable schedules, less-expensive health-care plans and minimum hourly pay of $13 with the option of working full-time.” The company is increasing employee contributions towards its health plan in 2013. Walmart made $15 billion last year, and paid its CEO $18.1 million.
– WALMART’S RESPONSE: The company has claimed that it is “not aware of any major disruptions that are going to happen Black Friday.” However, it has filed a complaint with the National Labor Relations Board alleging that the protests are being orchestrated by the United Food and Commercial Workers International Union, which Walmart claims is a labor law violation.
– WHY NOW?: Black Friday is not only one of the biggest shopping days of the year, but Walmart and other large retailers have steadily increased their Black Friday hours to extend into Thanksgiving Day. This year, Walmart’s “Black Friday” starts at 8 p.m. Thursday, so workers will miss Thanksgiving evening with their families. Employees claim “they weren’t given a choice as to whether they would work on Thanksgiving and were told to do so with little warning.”
The argument that Walmart cannot afford to raise pay and benefits claiming it would hurt their ability to keep prices low has quite a few holes. A study made by Demos show that by increasing wages not only do the workers benefit but so does industry and the economy as a whole:
A wage standard at large retailers equivalent to $25,000 per year for full-time, year-round workers would increase GDP between $11.8 and $15.2 billion over the next year.
As a result of the economic growth from a wage increase, employers would create 100,000 to 132,000 additional jobs.
Effects on Retail Sales: Increased purchasing power of low-wage workers would generate $4 to $5 billion in additional annual sales for the sector. Much of the increased consumer spending by low-wage workers after the raise will return to the very firms that offered the raise. The average American household allocates 20 percent of their total expenditures toward retail goods, but for low-income households that proportion is higher. A raise for workers at large stores would bring billions of dollars in added retail spending back to the sector. Our study finds that:
Assuming that workers do not save money out of their wage income, the additional retail spending by employees and their families generated by the higher wage would result in $4 to $5 billion in additional sales across the retail sector in the year following the wage increase.
The wage increase would hardly effect prices:
The potential cost to consumers would be just cents more per shopping trip on average. If retail firms were to pass the entire cost on to consumers instead of paying for it by redirecting unproductive profits, shoppers would see prices increase by only 1 percent. But productivity gains and new consumer spending associated with the raise make it unlikely that stores will need to generate 100 percent of the cost. More plausibly, prices will increase by less than the total amount of the wage bill, spreading smaller costs across the entire population of consumers. The impact of rising prices on household budgets will be negligible, while the economic benefits of higher wages for low paid retail workers will be significant. Our study finds that:
If retailers pass half of the costs of a wage raise onto their customers, the average household would pay just 15 cents more per shopping trip-or $17.73 per year.
If firms pass on 25 percent of the wage costs onto their customers, shoppers would spend just 7 cents more per shopping trip, or $8.87 per year.
Higher income households, who spend more, would absorb a larger share of the cost. Per shopping trip, high income households would spend 18 cents more, for a total of $36.80 per year. Low-income households would spend just 12 additional cents on their shopping list, or $24.87 per year.
I would personally rather pay 15 cents more per shopping trip rather than pay the costs of a working individual who nevertheless has to go onto Medicaid or collect food stamps. What’s more, as a result of the economic boost from higher wages, I would probably make more money myself, so this would all come out in the wash. Prosperity for retail workers would really mean more prosperity for all.
Up with Chris Hayes host Chris Hayes discussed the Black Friday strike by Walmart employees with guests Greg Fletcher, a Walmart associate in Duarte, CA; Heather McGhee, vice president of Demos; Raymond Castillo, a member of Warehouse Workers United; and David frum, CNN contributer.