Payroll Tax Hike And Gas Prices Causing Pain For Lower-Income Americans
Lower-income Americans feeling the squeeze from the 2% payroll tax hike, soaring gas prices, and a rickety employment outlook are tightening their financial belts in ways that have discount retailers worried.
On Thursday, the National Retail Federation (NRF) released a new study that found that the payroll tax hike is causing 73.3% of Americans to budget more and spend less.
“We cannot grow the nation’s economy until consumers consume. A smaller paycheck due to the fiscal cliff deal early last month, higher gas prices, low consumer confidence and ongoing uncertainty about our nation’s fiscal health is negatively impacting consumers and businesses across the country,” said NRF President and CEO Matthew Shay.
Large discount retailers like Walmart, which is America’s biggest employer, are among the businesses that stand to be hit the hardest, as lower-income bargain seekers have less take-home pay in their wallets. Indeed, recently uncovered internal emails from Walmart executives revealed that February “sales are a total disaster” and mark the worst sales start of any month in seven years.
In real terms, Americans who earn $50,000 a year will now have $1,000 a year less in take-home pay because of the payroll tax hike.
The payroll tax hike also comes at a time when Americans are feeling greater pain at the gas pump. Today, Americans spend $900 more annually on gas than they did in 2009.
“Every day we hear about building the middle class,” says Shay. “We can only do that if we tear down barriers that prevent consumers from investing their hard-earned money back into our nation’s economy. It’s really that simple.”