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Debate over working on the holiday continues rage; meanwhile there's signs that employee bonus pay may be slipping away

Retailer Costco Wholesale Corp. (COST) has bucked a key industry trend and is provoking a heated debate and likely more than a little animosity from other retailers.
 
I. Black Friday Creeps Into Black Thursday
 
It all started with a simple decision -- Costco decided its employees deserved Thursday off to enjoy Thanksgiving Day, a national holiday in the U.S.  But that decision has riled fellow retailers, most of which have promised to open on Thanksgiving evening, hoping to cash in on the "Black Friday" holiday shopping craze.

Costco shopper
As it did last year, Costco has again refused to open on "Black Thursday", aka "Thanksgiving" to most Americans. [Image Source: Costco/Facebook]

Sears Holding Corp. (SHLD) hasn't announced its hours yet, but it went to the opposite extreme with its K-Mart stores, announcing they would open at 8 a.m. on the holiday.  Macy's Inc. (M), Best Buy Comp., Inc. (BBY), and Wal-Mart Stores Inc. (WMT) have also opted to open on Thursday, albeit slightly later (at 6 p.m.).  Most other retailers have yet to announce their hours.
 
The origin of the term "Black Friday" is somewhat vague, given that it's a reoccurring label that's been used to describe a number of dire or chaotic events of different natures in different nations.  In the U.S. it was originally associated with the financial crisis of 1869.
 
In the 1950s and 1960s various groups began to refer to the Friday and Saturday after Thanksgiving as "Black Friday" and "Black Saturday".  The terminology stemmed from the fact that these were the busiest holiday shopping days of the season, typically.  Police viewed the day with frustration, as traffic jams were a regular occurrence in major cities by the 1960s.  And manufacturers also griped, as employees would call in sick to go shopping.
 
The term stuck, but ultimately took on a more positive meaning as many Americans enjoyed the bargain hunting and retailers salivated at the windfall in revenue from this day of unbridled consumerism.
 
In the 1980s and 1990s retailers began to play a game of timesheet brinksmanship, pushing their openings earlier and earlier.  Shoppers appreciated this, as it meant less sleep-deprived waits in line.  Instead they could duck in (in theory, if not in practice) late on Thanksgiving Day and squeeze in a bit of shopping.
 
But for employees, this became a new headache.
 
II. Costco Stands Its Ground on Thanksgiving Closure
 
Most large retailers drew a hard line at midnight openings at the end of Thanksgiving Thursday.  But in 2011 Wal-Mart, the America's largest retailer by revenue, defiantly opened on Thursday night, and made a killing so other retailers began to quickly follow in suit.  Thus "Black Thursday" was born.

Black Thursday
Shoppers wait in line for "Black Thursday" at Best Buy on Thanksgiving Night, 2013. [Image Source: AP]

Retailers blamed online retailers like Amazon.com, Inc. (AMZN) for the creep.  They claimed Black Thursday was a necessary evil in order to stay competitive with online retailers who were outcompeting them revenue-wise, thanks in part to 24-7 shopping.
 
Most retailers give holiday pay for working on Black Friday.  Those who bought in to Black Thursday typically gave holiday pay, as well.  Some retailers also offer other perks.  For example, since starting Black Thursday openings, Macy's gives employees who work on Thursday the next day off.
 
But not all employees were happy about this.  Starting around 2012 many employees at retailers that participated in Black Thursday began calling in sick in protest.  Some employees even banded together to stage formal protests at retailers.  And online, a Target Comp. (TGT) employee started a Change.org petition asking retailers to knock it off and let employees enjoy the time with their family.

Black Thursday
[Image Source: Change.org]

Costco seemed to heed the call.  The nation's second largest retailer by revenue, the chain of 487 members-only warehouse-style stores did not open its doors till Friday last year.  This year it stuck to its guns.  A spokesperson for the store told ThinkProgress:

Our employees work especially hard during the holiday season and we simply believe that they deserve the opportunity to spend Thanksgiving with their families.  Nothing more complicated than that.

Costco also closes on Labor Day, Easter, and Christmas Day.
 
III. Retail Workers Could See Thanksgiving Bonus Pay Disappear
 
Not all Costco employees are happy about the missed opportunity at overtime.  But if accusations leveled against Wal-Mart are any indication Black Thursday holiday pay may be slowly shrinking as fast as the Black Thursday trend is growing.
 
Wal-Mart, according to reports, decided to eschew the traditional cut-and-dry 1.5x pay rate formula, for a more slippery one.  Its employees -- who last year made on average $8.81 USD/hour at regular rates -- instead get "holiday wage" equivalent to the average daily pay for an employee in the two weeks before Black Thursday.  The practice was first noticed in 2013 posts by ThinkProgress and CNNMoney. Each report cited different current Wal-Mart employees as its sources.
 
Walmart full-time employees work an average [PDF] of 35 hours a week, according to internal memos.  So on paper this works out to a bonus of 5 hours day -- perhaps an even bigger bonus than at other retailers.
  

Walmart workers
Wal-mart workers have staged a recent number of protests on Black Thursday/Friday in recent years, amid general anger over low wages and benefits, but also amid accusations that Wal-Mart was cutting holiday bonus pay in underhanded ways. [Image Source: ABC/AP]

But much like America's sliding scale of taxation, the more complicated formulation has reportedly led to a very sneaky form of wage abus.  Employees claim that for those scheduled on Black Thursday Wal-Mart purposefully cuts hours in the two weeks before the holiday.

It turns out most Wal-Mart employees are part-timers.  For these employees who average 32.2 hours a week annually, typical cuts (according to a recent interview with a manager by Gawker) are to around 25 hours a week.  So based on this information you might calculate that an employee might make as little as 3 hours of overtime pay -- less than 50% of the hours they worked.

Wal-Mart subsequently denied those claims, stating that the pay was actually calculated for the last 12 weeks (not 2) and that the initial reports were based on an executive who misspoke themselves on an earnings call.  Wal-Mart also claimed that it couldn't cut employee hours as the holiday season was the business shopping season of the year.

That said, CNN Money claims that many Wal-Mart workers emailed it stories claiming to have made less than a 50 percent bonus, with 1.3x or 1.4x pay rates.  The different accounts from Wal-Mart employees could be explained by the increased trend of hiring seasonal employees, which would allow Wal-Mart to keep its part-timers hours low.

In yet more controversy Redditors revealed that while Wal-Mart gives employees perks --a  Thanksgiving turkey dinner during their shift break and a 25 percent discount on one item -- these perks count against a store's earnings total which determines whether or not employees get a bigger bonus.

Black Friday sign
For some employees Black Thursday is a welcome observance as it brings overtime pay.
[Image Source: Reuters]

The moral of all this?  Yes, for some employees Black Thursday brings welcome cash.  But on the flip side other employees are being forced to work who want desperately to spend at least one holiday day with their family.

And while it's unclear what Wal-Mart's fuzzy math relating to Black Thursday/Black Friday employee perks and bonuses works out to on average, the terms seem to suggest that retailers are shifting towards -- or at least eyeing a shift towards -- normal pay on the Black Thursday Holiday.  That could in turn shift the minds of some Black Thursday supporters in retail, given that the pay boost is no longer as big.

If there's one thing that appears unambiguous it's Costco's position on all this.  Its answer is simple -- we don't work on Thanksgiving Day.

Source: Costco





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