Living Paycheck to Paycheck

Luis: Food expenditure in the U.S. is but a fraction (10%) of total disposable income. Over time, affluent consumers have "traded up" to foodstuffs that improve lifestyle and fulfill all manner of social and emotional needs. This trend is not expected to vanish.

However, there are signs that a growing segment of Americans are under economic strain and trading down at a fast rate. Therefore, this holiday season one may expect Wal-Mart and other discounters to intensify already relentless price pressure over produce suppliers.

More retailer "letter to dear supplier" in the horizon?

Living Paycheck to Paycheck Gets Harder
By Anne D'Innocenzio

NEW YORK Oct 19, 2007 (AP)

Excerpt:
"The calculus of living paycheck to paycheck in America is getting harder. What used to last four days might last half that long now. Pay the gas bill, but skip breakfast. Eat less for lunch so the kids can have a healthy dinner.

Across the nation, Americans are increasingly unable to stretch their dollars to the next payday as they juggle higher rent, food and energy bills. It's starting to affect middle-income working families as well as the poor, and has reached the point of affecting day-to-day calculations of merchants like Wal-Mart Stores Inc., 7-Eleven Inc. and Family Dollar Stores Inc.

Food pantries, which distribute foodstuffs to the needy, are reporting severe shortages and reduced government funding at the very time that they are seeing a surge of new people seeking their help.

While economists debate whether the country is headed for a recession, some say the financial stress is already the worst since the last downturn at the start of this decade."

Luis: Or as some economists say: Why don’t prices rise during periods of peak demand?

Baldor Specialties set sights on move to space across from NYC Terminal Market. Is denied federal aid.

From a NY Daily News October 16th 2007 (BY BILL EGBERT)

"A major Bronx speciality food distributor wants to get moving on its long-delayed expansion plans, but nearly a year after a court ruling cleared the way, the plan is still hitting snags.

Started in 1991 working out of a single van, Baldor Specialty Foods has grown to be one of the biggest distributors of fresh produce in the region, serving fine restaurants and high-end chefs like Tom Valenti and Mario Batali from a 140,000-square-foot complex in the Bronx.

Now the company plans a major expansion onto a 16-acre site of the former A&P refrigerated warehouse and distribution center just outside the Hunts Point Produce Market.

Last year, a judge nullified Baldor's lease agreement with the city, citing an unfair bidding process, putting the expansion on ice until an appellate court overturned the ruling and reinstated the agreement in November.

Almost half of Baldor's 600 employees live in the Bronx, and the expansion would add as many as 450 new local jobs over the next three years.

Baldor applied for federal Empowerment Zone funds to help pay for the $14 million expansion, but has met resistance from a congressman on the board that allocates the money.

Rep. Jose Serrano (D-South Bronx), in whose district the Baldor site lies, is skeptical about investing the limited federal funds in the expansion.

"A business has their own money," said Serrano, "and when they want government money, it had better be for something special."

The Hunts Point Produce Market received aid when it moved to its current location from Manhattan and Rep. Serrano's reasoning rings more than a little hollow.

Serrano said that with the Empowerment Zone legislation due to expire, and little political will to renew funding, the remaining bonding authority must be judiciously deployed.

In determining what projects warrant funding, said Serrano, it is important to look at not only the number of jobs created but also their quality.

According to payroll records, more than half of the Bronx residents working for Baldor earn less than $9 an hour - above minimum wage, but below the city standard for a living wage.

But Baldor President Michael Muzyk counters that his workers get generous benefits, including no-cost family health insurance, a 401(k) plan with an employer match, death benefits and free, on-site English classes.

"It works out to more like $11.75 an hour, really," Muzyk said.

As another example of the public benefits of the expansion, he pointed to the multimillion-dollar renovations and upgrades Baldor will make to the city-owned facility Baldor will be leasing."

Clearly this seems to be more of a political issue than one of merit. Baldor has been a contributor to the South Bronx community in many ways for years including local charities.