The Dirty Secret Behind Dollar General’s Low Prices

May 28 2021

The past decade has seen millions of people fall out of the middle class. To some companies, the rising numbers of Americans living on a “low-or fixed income” is an opportunity.

Over the last ten years, dollar stores have proliferated across the United States. The stores have become ubiquitous: 75% of Americans live within five miles of a Dollar General and the chain has more locations than all the McDonald’s and Walmarts in the country combined.

The company’s growth cannot be disentangled from widening income inequality and the struggles of both rural and urban neighborhoods left behind in America. The company acknowledges this relationship: Dollar General describes its core customers as “low and fixed-income households.” As such, its 18,000 stores are concentrated in small towns and low-income urban neighborhoods that have been subject to decades of economic marginalization.

In early May, three of four employees at a Dollar General in Eliot, Maine quit within 24 hours. The store manager, Paige Murdock, left after repeated pleas for additional staffing and time off were left unheeded by the company’s district management. She quit after working for 14 days straight, for 14 or 15 hours per day, with no additional compensation.

Berndt Erikson and Hannah Barr decided to follow suit when they heard nothing from management after Murdock’s departure. “I saw that they were probably about to do that same thing to me, of having me basically run the store as a key holder, but without a raise or even a promotion or anything,” Erikson told More Perfect Union. Before they walked out, Erikson and Barr left notes on the door to make sure customers knew why: “Closed indefinitely because Dollar General doesn’t pay a living wage or treat their employees with respect.”

Dollar General’s growth shows no sign of slowing down. Chief Executive Todd Vasos, who raked in $16 million dollars last year, noted that “the economy is continuing to create more of our core customer” in a 2017 interview. The COVID-19 pandemic has bolstered business, increasing the company’s operating profit by 54.4% to $3.6 billion, and they plan to open 1,035 new stores and hire 20,000 new employees this year. While the company presents itself as a source of jobs, low-cost goods, and food in neighborhoods that have not been served by traditional retailers, Dollar General’s expansion and profit has been built on the backs of exploited workers.

Maintaining low labor costs is a key component of Dollar General’s business model. The chain pays workers an average of $9.68 an hour, the lowest rate of any major retailer. Walmart, not exactly a leader in high-road labor practices, pays its workers an average $13.08 an hour. Target, meanwhile, has a $15 minimum wage. Former Dollar General worker Erikson told More Perfect Union, “I wasn’t being paid enough to live in my house…to seek medical treatment, to fix my teeth as they rotted out of my head.” This leaves Dollar General employees to rely on public benefits to meet essential needs; in several states, including Oklahoma, Arkansas, and Georgia, Dollar General workers alone make up 1% or more of Medicaid or Supplemental Nutrition Assistance Program enrollees.

In addition to low wages, Dollar General cuts costs by keeping staffing levels low. The typical Dollar General store is staffed by a store manager, one to three assistant store managers, and three or more sales associates–much less than the typical small independent grocery store, which employs an average of 14 people. In order to maintain operations with such lean staffing, the company demands long hours from its salaried managers who are not eligible for overtime pay. Dollar General stores have been the subject of multiple class-action lawsuits and investigations for wage theft and misclassifying workers as managers to avoid costs of overtime. Former Dollar General store manager Murdock recounted that “We were paid for 40 hours a week […] but managers easily work anywhere between 60 to 80 hours a week salary. No overtime whatsoever.”

Understaffing has also turned Dollar General into a magnet for armed robberies and other crimes. At least six Dollar General employees have died during robberies since 2016 and thirty-two workers and customers were injured during violent robberies at Dollar General stores from January 2019 to January 2020, according to NBC News. Despite this threat, Dollar General executives are unwilling to pay for increased staff or security to protect their workers or customers, instead relying on cameras and panic buttons that do little to deter armed robberies.

The COVID-19 pandemic further heightened workers’ safety and security concerns. In addition to questions about paid sick leave, PPE, and social distancing measures, Murdock recalled that “we had a lot of hostile people that wanted their supplies.” When Erikson asked for additional support, they said “the only advice I got for that was if it gets too bad, call the police. That made me feel very unsafe. It made me feel like the only line between me and the customers was me.”

As workers and communities become aware of the negative impacts of dollar store chains, many are taking action. Municipalities like Tulsa, Oklahoma, Fort Worth, Texas, Birmingham, Alabama, and Georgia’s DeKalb County have passed laws restricting dollar stores and offering financing for new grocery stores. Workers at the Dollar General store in Auxvasse, Missouri voted to unionize in 2017 and more have been discussing unionizing after the experience working during the COVID-19 pandemic.

The company considers unionization a serious risk and requires employees to watch anti-union videos as part of their training. But Erikson’s experience after the Eliot, Maine walkout suggests more action may be coming: they told More Perfect Union, “after posting the pictures of the sign, I absolutely heard from other Dollar General employees, a lot of people saying that they wished they had done it too.”