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  Holiday Spending 2005
Did The Grinch Steal Your Holiday Shopping Dollar?
  The individual American worker plans to spend an average of 2.4% of their salary ($1,037) on holiday shopping this year, 7% less than last year.  
 

By Dan Malachowski, Salary.com

According to a recent Salary.com survey of over 1,000 employees, workers will be spending an average of 7% less on holiday shopping this year than in 2004, despite the fact that 2005 salaries are up a modest 3.7%. Overall, 37.7% of the survey respondents indicated that they will be spending less this holiday season than last. 40.7% said they will be spending about the same, while only 21.5% responded that they will spend more.


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Many of the survey respondents have cited rising cost of living as the reason they will be spending less this holiday, even though they are earning more in salary on average. Consumers are feeling the pinch of high oil prices, escalating insurance premiums, college tuition, and even hurricane rebuilding this year, and all just in time for the holiday season. According to the survey, 25% of respondents expect to spend more on home heating costs than on the holidays this year:

Top 3 Reasons Why Holiday Spending is Down
1
Fear of High Home Heating Costs
2
Rising Insurance Premiums
3
High College Tuition
Source: Salary.com November 2005

All I Want For Christmas

Despite the fact that Christmas spending may be slightly down, the average American worker shouldn't feel like a Grinch just yet. The survey indicated that the individual American worker still plans to spend an average of 2.4% of their salary ($1,037) on the holidays in 2005. They will just be more selective with their holiday dollar this year. See the below chart for the 5 most expensive items, ranked by popularity, on the 2005 holiday lists of the survey respondents:

Most Expensive Gifts on the List (2005)
1
iPod®
2
Digital Camera
3
XBox®
4
Play Station®
5
Computer
Source: Salary.com November 2005

To compare and evaluate your expected 2005 holiday spending, see the below chart on what employees in your annual base salary range are planning to spend this year:

Holiday Spending (2005)
2005 Annual Base Salary Range
Planning to Spend 2005 (on average)
% of Salary
Less Than $25,000
$717
4.3%
$25,000-$50,000
$852
2.4%
$50,000-$75,000
$1,194
2.1%
$75,000-$100,000
$1,416
1.7%
$100,000-$500,000
$1,566
1.3%
All Employees
$1,037
2.4%
Source: Salary.com November 2005

Is Santa Claus Coming to Town?

The only income bracket that showed a marked increase from 2004 to 2005 in terms of holiday spending were those earning less than $25,000, who indicated in the survey that they would be spending 5% more this holiday. The biggest year over year change in holiday spending occurred in the $25,000 - $50,000 income bracket, who felt as if they would be spending 11.5% less in 2005 than in 2004.

See the below chart in order to map the year over year holiday spending changes by income bracket:

Holiday Spending (2005 vs. 2004)
Annual Salary Range
Planning to Spend 2005
Spent in 2004
% change
Less Than $25,000
$717
$683
+5.0%
$25,000-$50,000
$852
$963
-11.5%
$50,000-$75,000
$1,194
$1,239
-3.7%
$75,000-$100,000
$1,416
$1,560
-9.2%
$100,000-$500,000
$1,566
$1,564
0.0%
All Employees
$1,037
$1,115
-7.0%
Source: Salary.com November 2005

The survey results indicate that there is some sort of income threshold, which seems to be when workers start to earn 6-figure salaries, where employees can absorb the rising costs around them and not have to adjust their spending on other things like the holidays. This is shown by the fact that workers earning between $100,000 and $500,000 per year plan to spend almost exactly the same on the holidays in 2005 as they did in 2004.

On the other side of the spectrum, workers who are earning less than $25,000 are the only group indicating that they will be spending more on average this holiday, 5% over 2004. These employees are more likely to be younger workers who rent and don't have to worry about home heating oil, or who don't have high health insurance bills or children in college. These workers are poised to spend the most substantial piece of their paycheck on the holidays this year.

"It's the average worker, who has a house to heat, insurance premiums to pay, maybe even kids in college, who will be watching their pennies this 2005 holiday season", says Bill Coleman, Senior VP of Compensation at Salary.com.

I'm Dreaming of A Green Christmas

Many workers are counting on a holiday bonus to help stretch their 2005 holiday spending budget. According to the survey, 18.7% of respondents expect to receive some holiday cheer in their stocking from their employer this year, while 58.3% do not. 16.9% aren't sure if their employer will be a Grinch or not. The median holiday bonus, as reported by those respondents who expect to receive a bonus, is $800.

So what can be done in order to prevent those cost of living increases from shrinking your pile of presents this year? Budgeting and planning tools such as Salary.com's Cost of Living Wizard and College Tuition Planner can help.

Negotiating your salary by proving that you are worth more in the marketplace can also bring you closer to that six-figure salary threshold, where cost of living increases will not necessarily impact your holiday spending habits.

One way to find out if you are being paid what you are worth is by utilizing Salary.com's salary negotiation tool, the Personal Salary Report. The Personal Salary Report will help you determine your value, based on job title, industry, geography, company size, education, experience, and other personal factors.

Salaries are also not the only part of your total rewards package that can be negotiated. Bonuses, benefits packages, stock options, even a car allowance will help cover rising living increases so that you have money left over for more important things, like the holidays.

Salary.com Survey Methodology

Salary.com surveyed a panel of 1,000 Salary.com members in order to derive the data for the 2005 Holiday Spending Survey. Respondents were asked how much they spent on the holidays last year and how much they expect to spend this year. If a year over year holiday spending change occurred, respondents were encouraged to tell Salary.com why. Respondents in the $25,000 and under income category include part-time workers.

Data from the home heating costs and expected bonus analysis came from the pool of 1,000 submissions. Data was scrubbed for inconsistencies and analyzed by Salary.com's expert team of certified compensation professionals.

About Salary.com

Salary.com is the leading provider of compensation-related data, applications, and services to enterprises, small businesses, and individuals. Salary.com's products shape, influence, and facilitate millions of pay-related decisions each year. Salary.com's enterprise software helps companies manage their compensation expenditures with real-time, decision-ready data and analytical tools. Backed by a team of Certified Compensation Professionals, Salary.com is your partner in compensation.


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