The hidden behavioral tax from a tight budget: Lessons from late-night Walmart

Note: The following post is a revised and expanded version of an earlier one on the paycheck cycle.

On the eve of each new month, a consumer ritual unfolds at Walmarts around the country.

At around 11 p.m. “customers start to come in and shop,” Walmart’s CEO of U.S. Business Bill Simon told a conference of investors last year (pdf of transcript here). Shoppers fill their carts with staples. Baby formula, milk, bread, and eggs. They browse until midnight when their government electronic benefits cards activate. Walmart’s dead-of-night sales zoom well above its daily average over the month.

Retailers have long known about this phenomenon, commonly called the “paycheck cycle,” in which cash-strapped consumers make big purchases when they get paid and are forced to cut back to the bone later in the cycle until the next paycheck arrives. In this tough economy, said Simon, the paycheck cycle is “extreme.” It can affect Americans at all income levels, but at the end of the month, that extremity is most crushing to the poor and the working class.

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  • David J

    Seems we should do something to get rid of the paycheck cycle where people are payed on a continious/gradual basis – leading to more prediction in how we behave/save financially.

    Seems this should be entirly possible.