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Show ;13 ' iii If i Local Business E2 "" Garden E6 I jP ,1 . !H. ;The Daily Herald Sunday, December 3, 1935 Joyous tiding s for hoppers: There wil be bargain s galore workers ;Underpaid?; i&re ; . ; ; kather than settling disputes, jjonomic analysis often seems to" jdiHldy the issue, allowing dis- - v f)tiuints to pick and choose what 'suits their predisposition. It is almost always that way, lamented Harry Truman, who threw up both hands in despair about finding a econo-- ; mist, the sort, he explained, who wouldn't be inclined to say "On the one hand ..." And so it is with the current battle over wages. Are wages falling and are American workers underpaid? Yes and no. It may depend on your predisposition or on which argument you find most convincing. "Real wages have fallen 20 percent since 1973," says Greg Tarpinian, economist for the Labor Research Association, whose studies are used widely by unions and others in the labor The scarlet ribbons and white candles are hung by the cash register with care, in hopes that shoppers soon will be there. Beneath the stores' cheery Yuletide exterior, the merchant dancers haggard and drawn a in desperate fandango, spin reducing prices, marking down to one-arm- By John Cunniff AP Business Analyst nomic), expansion," said First Chicago Corp. chief economist Diane Swonk. But, she adds, ' "Christmas will not be enough to I save the retail industry." ,' in think the that, end, Experts consumers will spend a little more than last year but only after retailers have bent over backwards to attract them, i ; v.t " As retailing consultant Kurt Barnard puts it, "It'll be very difficult for most retailers, lackluster at best. Consumers are going to be spending very carefully, very cautiously, looking for bargains. They will be lured into, stores by sales." Indeed, much of the news leading into retailing's most important quarter has been grim. Discounters Bradlees Inc. and Caldor Corp. have filed for bankruptcy. Jamesway just up and liquidated. .Silo shut its doors. Many retailers lossreported sizable . movement. "Between 1948 and 1994, the hourly rate of compensation increased an average of 1 .7 percent a year after inflation," say former Treasury analysts Gary and Aldona Robbins in a study for the Institute for Policy Inno- tvjist majority of American fami-j- ' ki are no better off in 1995 than rela-iifesh- ip " col-Iijcti- ve bargaining. with unions representing only 10.5 percent of the private-sectwork force and no longer setting the terms of collective bargaining, the "law" that tied .together wage and productivity increases has evaporated. The Robbinses, much of 'whose work is for the conservaor tive Policy Innovation institute, jilaintain that labor compensation, ratner than having fallen, has risen 1.7 percent a year after inflation between 1948 and 1994. In fact, they claim it is impossible for a decline to hav e occurred since it can be shown the, economy has grown at a 3 percent rate for several decades. And labor, they say, receives of national income. The change that has occurred, : they contend, and which causes theconfusion, is that nonwage compensation has' grown much faster than wage compensation. We must remember, they explain, "that employee compensation includes such things as payroll taxes for Social Security and Medicare, as well as pensions and health insurance benefits." They concede that workers are rightly concerned with their paychecks because the rate of wage increases has indeed slowed and because hours worked have not been expanding as fast as in previous recoveries. But, rather than blaming the situation on a decline in union power, as Tarpinian does, the Robbinses attribute it to a a slowdown in capital formation. The key determinant of wage rates, they say, is the amount of Capital each worker has to work with, and that higher wages "require more capital formation than has been the trend since the late 1980s." two-thir- ds m, " n.i those surveyed expected their 1996 household finances to be a little worse, or a lot worse, according to Lake West's survey. In other regions, that figure ranges from 7 to 9 percent. Fred Siegel, senior vice president of marketing at QVC, thinks g the West Chester, Pa., channel already has them. "This holiday is exceeding our - . home-shoppin- said happily, increases year. "There's in our business Others are cerned. ' By VIVIAN MARINO AP Business Writer . , win-wi- Fund-Raisin- upper-incom- g nomic Agencies Inc. in Rolling Meadows, 111. "The impulse to buy during the holidays sends too many people over the financial edge," Kirschbaum adds. But there are practical, sensible ways to rein in holiday spending without spoiling the season for yourself and, in some ways perhaps, maybe even improving it by taking some of the emphasis off the material nt Americans statistics, came into the 1995 yearend period with their credit cards and other resources borrowing stretched thin. And they are already being bombarded with a heavy barrage of advertising and promotion by retailers, credit card issuers and other businesses who are worried about the prospect of sluggish sales. "Consumers are tapped out," says Edward Yardeni, chief economist at the Wall Street firm of Deutsche Morgan Grenfell C.J. Lawrence Inc. presents-and-partie- aspect of s the holidays. "Create a written plan for holiday spending and in advance," urges the National Center For Financial Education, gift-givin- "The ratio of consumer installment debt to disposable g a nonprofit organization based in San Francisco and San Diego. "Establish spending limits for gifts for each person on your list and start looking for bargains early. "If it has been a challenging year financially, shrink your holiday gift list. Begin by talking with those you exchange gifts with and explain, perhaps suggesting not exchanging gifts or mutually observing much lower dollar limits." For many people, says the NCFE, a budget plan is much personal income rose to a record high of 18.8 percent during September," Yardeni notes. "This measure actually understates the degree of consumer illiquidity because consumer installment debt data do not include auto leases or home equity loans." The figures, of course, are generalizations, and do not paint a true picture of the state of every individual's and family's finances. But they would not be so high if a lot of households weren't at a point where there tion. One tactic that can be used to stay strictly with spending limits, Kirschbaum says, is to buy gift certificates, which can be obtained at the precise dollar amount you choose and which may have the bonus of providing extra purchasing power anyway at sales. post-holid- An empty book doesn't give presents, You can give wallet or checkmean you can't the NCFE adds. services you can provide yourself, such as homemade certificates for baby-sittin- g time or car washing. Tiiere are many ways to save money, as well, on incidentals such as decorations for your which home and can easily get very expensive. For instance, "use newspapers, magazines, grocery and shopping bags as gift wrap, or g, reusable gift boxes," Richard says. If you are off to a late start on the holidays, maybe you can turn even that into an advantage. As Richard notes, "sometimes shopping later in the season will allow you to take advantage of clearance sales." predicting double-dig- it in sales over last a lot of good cheer right now." a bit more con- our poor results so far. this year.' Strawbridge officials last Wednesloss of day reported a $7.2 million. Last month, the department store announced that it had hired an investment banker to help explore its options, including a sale or merger. Officials said, however, they were "cautiously optimistic" about the coming season. Last year at this time, executives at John Wanamaker's parent company, Woodward & Lothrop, still hoped they could preserve the chain's independent status. By February, when the Christmas numbers came in, they kriew they'd have to sell the stores. "Last year, there were some people hanging on by their fingers, and they got their fingers stomped and fell," Rice said. I third-quart- r ' ' When it comes to helping the less fortunate, savvy donors; ' are discovering there's nothing wrong .with charity beginning at horrie. ' ' In fact, that's the added benefit of what's known as planned or deferred giving. Once a vehicle for the rich, philanthropic arrangements like charitable remainder trusts, gift funds and annuities are becoming increasingly popular among middle class individuals who want to support a worthy cause, get a tax break and even receive income from their donation. Financial advisers say the huge run-u- p on Wall Street this year presents a good opportunity to donate appreciated securities like stocks, bonds and fund holdings, especially during the holidays when goodwill is also at a peak. n situation ... "It's a (and) it's a growing phenomenon," said Ann Kaplan, research director of the American AssociaCounsel in tion of New York. "Instruments (hat had always been very well used by e contributors who plan a lot of their finances are now available to people in the average usual this year. By all the evidence in the eco- Straw-bridg- ss . It has never been easy getting through the holiday season without busting your budget, but the job may be even tougher than "Every Christmas season is important to us," said Francis e Strawbridge, chairman of & Clothier. "If this one is more important, it's because of es and drops in sales, when stores open at least a year are compared. Even healthy retailers will be hard-pressto compete when 'their neighbors are unloading' inventory at 30 percent to 40 per- cent off in sales. Women's Wear ... Daily reports that more than 1,100 stores will be conducting sales by the end of the year. In addition, chains in bankruptcy court will be under pressure to cut prices to keep cash flowing. "You are seeing a lot of (Chapter) lis, and liquidation," said James Rice, credit manager for Bernard Sands Credit Consultants Inc., a New York company that evaluates retailers' credit. "When the dust finally settles, the survivors will be in better shape. ... So you may not see these kinds of markdowns next year. I hope it's going to hit bottom this year," he said, predicting that the retailing climate would improve by the second half of next year. Of course, consumers with a little extra jingle in their pockets, or a piece of plastic not charged to the max can benefit, if they are willing to buy. But are they? That's the $428.1 billion questhe amount consumers tion spent last year during Christmas, according to the National Retail Federation. Gains in stocks and v isn't much left to spend on holieasier to stick with if you buy 'with cash rather than credit day extravagances. "A great number of people cards. "Credit card users often are still paying for last year's say they had no idea how much Christmas presents and finding they spent on the holidays until themselves strapped this year," the bills arrive in January or Febsays Les Kirschbaum, president ruary," observes Paul Richard, of the debt collection company the center's director of educa- By CHET CURRIER AP Business Writer optimistic expectations," Siegel ed growth. Oncehe said, Ihe'two rose in tandem but now they don't. Productivity, he says, U has raced ahead. (A By his calculations, based on Commerce Department data, real (adjusted for inflation) hourly compensation in manufacturing rose 0.6 percent while manufacturing productivity jumped 37.4 percent. But viewed broadly, isn'ta ' productivity increase synonymous with a raise in living standards? Tarpinian agrees, but says the point is one of distribution. The increases, he argues, went to profits, not wages. He ties the breakdown of the : productivity-wag- e relationship to the decline of union power. In the old days, he says, the unions, not employers, set the terms of ; nt third-quart- er jif 1989." 1 jrhe evidence of his argument eed to a breakdown in the between wage and , mid-Atlant- ic the narrowest of margins anything, anything to bring customers into the stores. In this holiday story, bad news for retailers means glad tidings for consumers, in what promises to be a bargain-ric- h shopping season. "Our view is that this will be the most promotional Christmas that we've, ever seen in an (eco- usiness vation. Tarpinian supports his contention with a study from the Economic Policy Institute, a lib-- ; feral, think tank that concludes the bonds have made some wealthier, and consumer confidence is up. But, then, so is consumer debt. And, in the region, consumer confidence is trailing badly, according to the consumer confidence index. The higher the rating, the more likely shoppers are ,to part with their money. Everyone has a theory. The National Retail Federation's bet is that Americans will spend more than $450 billion, up 4 to 5 percent over last year and well above the inflation rate of 2.7 percent. Others, such as New York retail consultant Howard Davidowitz, are less optimistic: "I think this 2 Christmas will be only fair 12 percent increase in sales. And, it'll be more promotional than last year, if that's possible." . And Lake West Group a Cleveland, Ohio, consulting firm, predicts a 1 percent sales decline, for. the Northeast region. Here, 16 percent of By JANE VON BERGEN Newspapers Knight-Ridd- Holidays pose many money perils - er Barnard, of Plainfield, N.J., predicts that retailers are going to be struggling to get back to profitability in 1996. "And it will be hard. There are too many stores, not enough dollars, and competition is brutal. ... Too many people have already been downsized. "It's a witches' brew," he said, "and it is playing a poisonous role in the retail marketplace." range of giving. More charities are targeting a broader audience for planned giv- and it appears to have paid .ing off for some. The American Red Cross,, for instance, received $65 million through. planned giving in .fiscal 1994-9up from $40 million the previous year and more ' than double '91-9Fidelity Investments' charitable gift fund has risen to more than $300 million in assets in four years. Jennifer Garf, a Fidelity . marketing manager, says higher stock prices fueled interest this year. Those who donate appreciated securities can derive greater tax benefits by setting up specialised trusts and funds than by selling the same securities and donating the cash. In most instances, donors can deduct the full market value of their gift and avoid tax on any capital gains. Wealthier individuals will also lower their estate tax by reducing the size of their net worth. Someone in the 28 percent income tax bracket who bought 100 shares of a hot technology stock at $10 per share, or $1,0(X). would be hit with $1,120 in capital gains taxes if he or she sold the stock at $50 a share even t "',3i "lit II i l'! J in ii inn urn ii mi mi ihi wiiinim in -- mum mm mini T- nnniiiiil mi im ' ""Ti Daily Herald A though the resulting cash was ear marked for charity. But the tax bill disappears' when' the stock is sim' 5, 2. mum mi ntf the first month of operation in Orem, the restaurant made a donation from every meal served. The business is located at 672 S. State St. and joins the ranks of the many restaurants that have opened for business this past year in Utah County. For fixed period or the life of the named individuals. Afterwards, the remaining assets are distributed to one or more charitable organizations. Although the donor retains a life income interest, he or she gets an immediate tax deduction for the value of the remaining interest that goes to charity upon the trust's termination. In a charitable income or lead annuity trust, the donor transfers assets to a trust that pays a set amount each year to charitable organizations for a fixed term or the life of a named individual. When the trust expires, the remaining assets are distributed to beneficiaries. A gift annuity pays the donor or any other specified person a fixed annual income, guaranteed for life, w ith the size of the payout depending on the person's age. (Some charities will accept reverse annuities, whereby donors give real estate to a charity, retain the right to live there and can get a lifetime income, too. The property goes to the charily upon the donor's le Planned giving comes in many forms. (Because of their complexity, it's best to review each with a financial adviser before making any commitments. Remember: Some have minimum startup requirements along w ith fees from trust mangers and arc irrevocable. And while there's a tax deduction for the donation, any income it generates may be taxable.) A donor can transfer assets into a charitable remainder trust. The trust pays a set amount each year beneficiato named ries, like a spouse or child, for a le ,, PhotoJason Olson generous contribution Mike Feuer, left, Carvers general manager, presents a check worth $5,000 to Utah Special Olympics Executive Director J. D. Donnelly, right, and Utah Special Olympics representative Geniel Petersen, center, Thursday at the grand opening of Carvers Restaurant in Orem. ply given away. lllt death.) Another option is a pooled the like fund income Fidelity charitable gift fund, which operates like a mutual fund. Donors place securities or cash into a pool and they or their named beneficiaries receive a share of the net income generated by the fund for life, after which the individual's share of assets are removed from the fund and distributed to the charity. Donors receive an immediate income tax deduction at the time funds are contributed and escape capital gains taxes. Hank Madden, who runs Madden and Associates Financial Consultants in Jacksonville, Fla., and puts together several remainder trusts a year, says planned giving isn't for everyone regardless of the tax benefits. "It matters not the ... dollars you can gain," he said. "What will make it work is your philanthropi-ca- l needs," or desire to really help out. Bennett M. Weincr, director of the philanthropic advisory service of the Council of Better Business Bureaus in Arlington, Va., agrees, saying individuals should thoroughly research the charities earmarked for planned giving before- hand. Potential donors should ensure, for example, that the charity has a solid history both financially and in delivering its programs and services, he said. |