Paychecks too far apart: Working poor's struggles extend to the middle class

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 is affecting the day-to-day calculations of merchants such as Wal-Mart Stores Inc. and Family Dollar Stores Inc.

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

Economists are debating whether the country is headed for a recession, but some say the financial stress is the worst since the last downturn, at the start of this decade.

Merchants have adjusted their product mix and pricing accordingly. Sales data show a marked and more prolonged drop in spending in the days before shoppers get their paychecks, when they buy only the barest essentials before splurging around payday.

"It's pretty pronounced," said Kiley Rawlins, a spokeswoman at Family Dollar. "It seems like to us, customers are running out of food products, paper towels sooner in the month."

Wal-Mart, the world's largest retailer, said the imbalance in spending before and after payday in July was the biggest it has seen, though the drop-off wasn't as steep in August.

In Modesto, Lynne Smith, 42, said she gets paid weekly at her job as a warehouse worker in Patterson but gas prices are swallowing her check before the week is done.

"I stress about getting back and forth from work," said Smith, 42, sitting in her 1981 Chevrolet truck after her 4 a.m. to 12:30 p.m. shift Friday. "Gas takes almost half of my check. Sometimes I do without breakfast and lunch."

Breakfast cereal has become a luxury. Prices for cereal and milk have gone up.

Balbir Gill, who works at the Salida Home Market on Broadway Avenue in Salida, said he has fewer people come in because customers are having to scale back.

"I get some people who come in here and ask why things cost so much, they can't afford it," he said.

Gill said the market is paying more for the goods it sells, for energy to power the refrigerators and to delivery companies, some of which charge a new, $10 per visit gas fee.

Gas prices hit a record nationwide average of $3.23 per gallon in late May before receding a little, though prices are expected to soar again this year. Food costs have increased 4.5 percent over the past 12 months, partly because of higher fuel costs. Egg prices were 44 percent higher, and milk was up 21.3 percent over the past 12 months to nearly $4 a gallon, according to the Bureau of Labor Statistics.

The average family of four is spending $7 to $10 extra each week on groceries, compared with a year ago, retail consultant Burt Flickinger III said.

Michelle Grassia, who lives with her husband and three teenage children in the Bedford-Stuyvesant section of Brooklyn, N.Y., said her husband's check from his job at a grocery store used to last four days. "Now, it lasts only two," she said.

To make up the difference, Grassia buys one gallon of milk a week instead of three. She sometimes skips breakfast and lunch to make sure there's enough food for her children. She cooks with a hot plate because gas is too expensive. And she depends more than ever on the bags of free vegetables and powdered milk from a local food pantry.

Grassia's story is neither new nor unique. With the fastest- rising food and energy prices since the 1980s, low-income consumers are stretching their budgets by eating cheap foods.

"The reality of hunger is right here," said the Rev. Melony Samuels, director of the BedStuy Campaign Against Hunger, a church-affiliated food pantry in Brooklyn.

The pantry scrambled to feed 5,000 new families over the past 12 months, up almost 70 percent from 3,000 the year before.

Cheaper foods in higher demand

To economize, shoppers are choosing less expensive food. "They're buying more peanut butter and pasta. And they're going for hamburger meat," said Flickinger, the retail consultant.

He said the last time he saw this was 2000-01, when the dot-com bubble burst and widespread layoffs led to a recession.

For now, low-price retailers are readjusting their merchandising and pricing.

Wal-Mart is discounting more aggressively. It announced Thursday it is expanding price cuts to 15,000 items, ranging from Motts apple juice and Progresso soups to women's fleece tops, heading into the holidays.

Family Dollar, whose food offerings were limited to candy and snacks until two years ago, has expanded to groceries such as fruit cups and cereal, and refrigerated items such as milk and ice cream. In the summer, the chain began accepting food stamps.

Bee staff writer Inga Miller and Associated Press writers Geoff Mulvihill and Terry Tang contributed to this report.