Behind the Headline: Black Friday Comes Early

Mall picture by Skeezix1000

Tomorrow is Thanksgiving, a day for celebrating one’s blessings and one’s family. Most Americans, myself included, will be working in the kitchen to make a turkey dinner, then sitting down to share the meal with loved ones, laughing in each other’s company. Some might also spend some time watching the Macy’s Thanksgiving Day Parade or maybe some football.

Yet thousands of employees at retail outlets across America will have to gobble down their turkey and then head straight to work. Best Buy, Big Lots, J.C. Penney, Kmart, Kohl’s, Macy’s, Sears, and Toys ‘R’ Us are just a few of the retail chains that will be opening Thanksgiving evening with Black Friday sales offered to their customers a day early. Many of those customers will be spending the holiday camped out in front of the store for hours on end, waiting for it to open so they can get their hands on those Black Friday bargains.

Over the years, Black Friday, the day after Thanksgiving and the “official” start of the Christmas shopping season, has gradually become a bigger and bigger event for retailers. People will line up for hours before the store opens, and then rush in as soon as the doors open to grab whatever they can find for their Christmas shopping list.

That sentence may have sounded like a metaphorical exaggeration, but as this video shows, it is quite literal. Every year, there are reports of violence at retailers during Black Friday sales as shoppers stampede into the stores and fight over products. According to the morbid blackfridaydeathcount.com, there have been 7 deaths and 90 injuries resulting from chaos in the aisles as of 2013. My grandmother and aunt went to a Black Friday sale once. They saw people running through the store just grabbing things without even looking at what they had grabbed. After a woman with a cane started beating people up over an Xbox, my grandmother and aunt both decided to stay away from the stores on that day from now on.

Yet Black Friday only continues to grow stronger. In the past three years, retailers in the United kingdom have taken up the practice, even though they don’t celebrate Thanksgiving there! Businesses have started up offering to hold your place in line for you as you wait for the store to open. This is all on top of the decision by many retailers to, as the San Francisco Chronicle put it, turn Thanksgiving into “Black Thursday”.

Many people are unhappy about this trend. Some have started a trend on social media sites calling for people to “Boycott Black Thursday”. Those retailers that will stay closed on Thanksgiving, such as Barnes & Noble, Costco, GameStop, and Nordstrom, are spinning this fact to showcase how they respect their employees and their families.

Where did Black Friday come from? Why are so many retailers supporting it and helping it grow? What will become of Thanksgiving? It’s time to go Behind the Headline.

How did Black Friday get its start?

Black Friday logo from Purple Slog

Very, very gradually. The tradition of giving gifts on Christmas inherently turns the holiday into a major boon for retailers, who can usually rely on the “Spirit of the Season” to boost sales. In the late 19th and early 20th centuries, retailers began to sponsor parades in major cities (such as the famous Macy’s Thanksgiving Day Parade), proclaiming that the “official” start of the Christmas shopping season began when the parade ended, usually with Santa Claus reaching a main square. There was a sort of unwritten gentleman’s agreement between these stores that they would wait until after Thanksgiving to begin advertising Christmas sales.

My mother used to work at Macy’s before I was born. She remembered that as the store prepared to close the night before Thanksgiving, a special crew would come in and start pulling out the Christmas decorations. The idea was that when shoppers came in the day after Thanksgiving, the store would be bright and shiny with trees, lights, and ornaments. To put out Christmas decorations any earlier would be seen as unthinkable and quite tacky.

However, the fact of the matter is that Christmas is so important to many retailers that confining it to a single month was bothersome. Plus, there are plenty of people (myself included) who like to start Christmas shopping a bit early. As early as 1939, retailers schemed with then-president Franklin D. Roosevelt to try to add a week to the holiday shopping season by moving Thanksgiving a week earlier. The public was not amused, and Thanksgiving was moved back in 1941. Still, in the mid-1970s the gentlemen’s agreement started to be broken, as more and more retailers started a practice known as “Christmas Creep”, putting up their Christmas decorations and advertising Christmas sales earlier and earlier, until today some businesses count the holiday season as starting on September 30!

The advantage of Christmas Creep to retailers is that it not only takes advantage of early-bird shoppers, it also allows them to start advertising their Day-After-Thanksgiving-Sales early. This means more people show up to buy gifts on that day. Stores encouraged this with so-called “Doorbuster” sales, a term coined in 1949 by J.C. Penney. These sales are classic “loss-leaders”, the store marks it down so low that it actually loses money on the sale, but once the customer is in the store he or she decides, “Well, while I’m here, let me get this other thing I need. Ooh! And this is a nifty item! My niece will love that! Hey, what’s this?”

Of course, the term “Doorbuster” was just meant as a clever marketing term, but in 2008 that’s literally what happened at a Wal-Mart in Vallet Stream, N.Y. Five minutes before opening, the massive crowd gathered at the front entrance smashed in the front door and stampeded into the store, trampling an employee to death.

So it’s called “Black Friday” because of the violence, then?

Nope. It’s because of traffic.

Traffic image by Gemma Longman

In the 1960s, Philadelphia police coined the term for the day after Thanksgiving because of all the traffic jams that held up the city on that day. There would be so many people on the road shopping for Christmas gifts and then going to see the Army-Navy football game that police would have to pull all-hands-on-deck overtime duty directing traffic. By 1975, the term was starting to spread outside the city. Retailers started putting a positive spin on it, thinking of the “Black” in Black Friday as referring to being “in the black”, i.e. making a profit.

As far as I can tell from my research, the violence and rioting associated with Black Friday is a very recent phenomena. As far as I can tell, the earliest reports I found in my research of Black Friday violence occurred in 2006, with a stampede at a mall in southern California that injured 10 people. Since then, it’s gotten so bad that the U.S. government has created guidelines for ensuring employee safety on the day.

If Black Friday is so dangerous, why don’t retailers abandon the practice?

It's all about the Benjamins, Baby!

It’s all about the Benjamins, Baby!

It turns out that while Black Friday is not the biggest source of revenue for stores in the year (that would be the week right before Christmas, because procrastination), it is the day of the year when they are most able to take advantage of their customers and squeeze the most out of them. Many of the “spectacular bargains” are actually being sold to you at the price the store normally sells it; they just raised the official full-ticket price to an unholy sum right before the sale. Besides, all those people who just race through and grab things without looking are sure to have snatched more than a few overpriced goods in their loot.

Having said that, this report from CNN reveals that pushing Black Friday up to Thanksgiving actually doesn’t give stores a sales boost at all. So why are they doing it? Because of their competition – “My rival is opening at 6 P.M. on Thanksgiving. If I don’t also do the same, all my Black Friday customers will go to his store instead.”

In other words, for many retailers, the risks of rioting and violence as well as the public backlash from opening on Thanksgiving might well be worth it.

Maybe not for long, though.

How do we stop this madness?

Two words: Stay home.

This year, many retailers are offering so-called “Black Friday” discounts and sales early if you shop online. Amazon, Best Buy, Wal-Mart, Kohl’s, Lowe’s, Toys ‘R’ Us and Overstock are just a few of the businesses offering their online shoppers Black Friday prices without having to visit the store. Plus, every year since 2005, retailers have also offered deals on “Cyber Monday”, the Monday after Thanksgiving. Last year, retailers offering Cyber Monday sales made more than $2 billion!

Businesses do what makes money. That is the nature of capitalism. If retailers see that online sales like these are making more money than their in-store bedlams, they will start to focus more of their attention on the online sales. So, you can choose to spend your Thanksgiving standing in line waiting for the doors to open, then pushing and shoving your way through a cramped sea of bodies to violently assault the store shelves and risk getting beat up over a Blu-ray player, or you can enjoy your Thanksgiving and buy those Christmas gifts online. I know which one I’ll be doing.

Cat Flag’s Health Insurance Misadventure, Part 3

Healthcare image from SocialInnovationMN

I honestly never thought I would have to do another one of these, yet here we are. This past month, I have had to deal, once again, with America’s health care system. So, once again, I am telling you about my experiences in the hope that in doing so, I will be able to help guide others who might wind up in similar situations. Besides, open enrollment for the so-called “Obamacare” health insurance marketplaces begins once again tomorrow, so now is as good a time as any to look at how the system works.

Quick Review: California and the U.S. Health Care System

The Flag of California

I’ve brought up before that California’s health care system is a bit different than the federal system. California has its own Department of Health Care Services to handle many health care matters. While California must follow federal health care laws, such as the Patient Protection and Affordable Care Act (better known as “Obamacare”), these laws are often flexible enough that the states can set up their own systems, so long as these comply with the federal law. So far, only 17 states and the District of Columbia have done so; all other Americans have to depend on the federal government and apply for health care through HealthCare.gov.

Most Americans are still able to get health insurance for themselves and their families through their employers, and both the federal and Californian health care systems have set up exchanges for small businesses to get insurance to cover their employees. Americans over the age of 65 or who are disabled can still get health insurance coverage through Medicare, which is run by the federal government. Veterans of the U.S. military can also receive health care from the federal government through the Department of Veterans Affairs.

That leaves people who are not able to get health insurance from their employers – either because they are part-time workers, or because they are unemployed or self-employed – and do not qualify for Medicare or veterans benefits. I am a full-time MBA student and part-time worker, so I fall into this category. Under Obamacare, this means I have an individual mandate to buy health insurance or get fined. So, last year, I applied through California’s health insurance exchange system, known as “Covered California”. Both Covered California and HealthCare.gov are mainly interested in your income level, because that determines what type of insurance you can get.

Medicaid is a federal-state partnership to guarantee health care for Americans who are living in poverty. The government foots the bill for Medicaid patients’ health insurance, so they don’t have to pay a monthly fee or “premium”. California’s version of Medicaid is called “Medi-Cal”, and is managed by the state. If you apply for health coverage through Covered California, and your income is deemed to be low enough to qualify, they will send your case to Medi-Cal to be processed. This is what happened to me last time, and I got a Benefits Identification Card and a note saying I had been enrolled. Just keep that in mind for now.

If you do not qualify for Medicaid, you will have to buy insurance through government-run exchanges. In those states that have not set up their own exchanges, you will have to buy insurance from the federal exchange at HealthCare.gov, while we Californians will be buying insurance through Covered California. Either way, the federal government offers a special “tax benefit” for those whose income is not low enough for Medicaid but is still less than four times the federal poverty level. If you qualify, Uncle Sam will foot some of the bill for your health insurance. The government will pay the insurance company directly, so the amount you get billed for your insurance is much lower. If you make more than four times the federal poverty level, though, then get out your checkbook – you have to foot the whole bill yourself.

A Crash Course in Medi-Cal

Medical image from CDC and Ryan M Wallace

Now let’s go back in time a little bit, to when I first learned that I was approved for Medi-Cal. A few days after I got my approval notice in the mail, I got a packet of information in the mail from a private health insurance company called CenCal Health. I had always thought that Medi-Cal was run directly by the government, but I was wrong. The state government contracts with various private insurance companies to provide coverage for Medi-Cal patients from different areas. CenCal Health covers San Luis Obispo and Santa Barbara counties, billing the state government for the insurance plans it provides instead of the patients themselves. I was enrolled in CenCal Health’s insurance plan automatically when I was enrolled in Medi-Cal. I had no choice in the matter; there are no other insurance companies providing Medi-Cal coverage in my area and I couldn’t opt-out of Medi-Cal. I was legally obligated to get my insurance through them.

The next thing that CenCal Health sent me was a list of all the doctors in my area that accept Medi-Cal. It turns out that many doctors do not accept Medi-Cal, and many of those that did were not taking any new patients. This was a problem, since Medi-Cal is like an HMO: everyone has to have a primary care physician that he or she goes to see first, before being referred to a specialist for actual treatment. The good news was that there is a non-profit network of medical clinics in my area known as “Community Health Centers” or CHCs. These outfits were taking new patients, so I went in and signed up to get enrolled on their patient list.

A few days later, I got a call asking me to come down and get a check-up, so they would have a base-line idea about my health if I had to come in. They assigned me a primary care physician, a really friendly guy, and we chatted a bit while he did all the usual procedures (check my pulse, look in my ears, check my breathing with the stethoscope, and so on). It was all pretty routine. A few days after that, I got a call from CenCal Health asking me about my primary care physician. It turned out, they didn’t know I had signed up to be a patient at the CHC! Oops. At least it was an easy fix, and soon I got an insurance card in the mail stating who my primary care physician was.

Then, for several months, I didn’t think about health care or health insurance at all. I was healthy, I didn’t have a big bill to pay every month, everything was good. Or so I thought.

The Big Twist: I’m a Welfare Queen?

"Mama mia, Mama mia, Let me go!"

“Mama mia, Mama mia, Let me go!”

Then, just last month, I got a note in the mail from Covered California. It said, and I’m quoting here, “Based on the change you reported: You qualify for health insurance through Covered California.” To which I said, “What?”

I hadn’t changed anything! My first thought was that there was some fraud or identity theft going on, so I called Covered California’s customer service hotline to sort it out. That’s when I got the bad news.

Apparently, Covered California had done an audit of their applications for 2014, and found that my application was one of many that had been misfiled or mishandled. I had not qualified for Medi-Cal after all! I had been enrolled by mistake! I was supposed to have been in Covered California’s program all along.

This was a big problem, because now I had only two days to select and apply for health insurance through Covered California or else I would be without health insurance when November arrived, and subject to a fine. As you can imagine, I was not happy about any of this. But I had no real choice in the matter, so I logged on to Covered California and looked at their insurance plans.

What insurance options are there?

Signing form image from Florida A&M

I looked at the available list of insurance plans I could choose from. All of them were PPOs, meaning I could see any doctor on the plan I wanted and would not need to go through a primary care physician first. There were only two companies offering insurance plans to pick from – Anthem Blue Cross and Blue Shield of California. It turns out that next year there will be more insurance companies available to choose from, but for now, there’s just the two.

The plans that were offered, for the most part, fell into four “Coverage Levels”: Bronze, Silver, Gold, and Platinum. Bronze is the cheapest, but forces you to pay more out-of-pocket for your medical care. Silver covers more of your medical bills, but is more expensive. The pattern repeats up the chain, until you get to the Platinum plans, that cover almost all of your medical expenses but make you pay the heftiest premiums. Again, the actual amount you would pay for each plan would vary based on your income.

Interestingly, I noticed that the plans at each tier were exactly identical – both companies’ Bronze plans offered exactly the same coverage, both Silver plans offered exactly the same coverage, and so on. The only difference between the two plans was the cost. Anthem’s plans were more expensive than the Blue Shield plans. Well, shoot, I thought, why would I pick Anthem, then?

There was one more interesting option that I discovered while shopping and comparing insurance plans. I learned that California offers a special tier of insurance coverage for certain, income-eligible individuals, known as an “Enhanced Silver Plan”. These are plans that offer coverage equivalent to a Gold or Platinum plan, but Uncle Sam pays most of the bill, and the price the patient is left with is about the same as that of a Silver plan. Not everyone will qualify for these plans, but for those that do, it sounds like a pretty sweet deal to me.

Once I made my selection and applied through Covered California, they contacted the insurance company, and in turn, the insurance company sent me a letter saying that all I had left to do to enroll was pay my first bill. Then, I would be enrolled on November 1.

The problem was that I didn’t get that letter in the mail until October 30. Ack! I couldn’t pay by mail, so I tried to pay online. Wouldn’t you know it, just as I clicked “Pay Bill”, their website crashed. I had to wait until morning, when I could finally pay by phone, just hours before the deadline. Disaster averted!

With that finally out of the way, I got confirmation of my enrollment via e-mail and snail mail. Now, I’m just waiting for the stack of paperwork associated with my new insurance coverage listing all the rules and all the doctors I can see. Meanwhile, open enrollment for next year’s Obamacare exchanges starts tomorrow, and if I want to get coverage by January 1, 2015, and I do, then I will have to apply through Covered California again by December 15.

Ripping hair out image from Vempyre