Do Dollar Stores make us poor?

One of the great lifesavers for those on the lower shore, especially in Cape Charles, is Dollar General. In a pinch, you can usually find the item you need at an extremely low price. But, is this a bad thing?

Dollar General and Dollar Tree store, which offer inexpensive goods, along with a wide assortment of canned and dried foods, along with milk, meat, eggs, and frozen foods, have recently come under attack for not providing fresh produce. So claims Tanvi Misra in Citylab :

It has become an increasingly common story: A dollar store opens up in an economically depressed area with scarce healthy and affordable food options, sometimes with the help of local tax incentives. It advertises hard-to-beat low prices but it offers little in terms of fresh produce and nutritious items—further trapping residents in a cycle of poverty and ill-health.

Misra quotes the Institute for Local Self Reliance: “While dollar stores sometimes fill a need in cash-strapped communities, growing evidence suggests these stores are not merely a byproduct of economic distress; they’re a cause of it.”

This seems counter-intuitive–the presence of retail stores that make goods available to people who otherwise would have few or no shopping choices at all is the cause of the poverty that grips the regions where these people live.

Misra then tries to clarify her claims:

Dollar stores have succeeded in part by capitalizing on a series of powerful economic and social forces—white flight, the recent recession, the so-called “retail apocalypse”—all of which have opened up gaping holes in food access. But while dollar stores might not be causing these inequalities per se, they appear to be perpetuating them. The savings they claim to offer shoppers in the communities they move to makes them, in some ways, a little poorer.

The theory that making goods available at affordable prices perpetuates poverty relies on the notion of what the government calls food deserts.

According to the U.S. Department of Agriculture, a food desert is a part

of the country vapid of fresh fruit, vegetables, and other healthful whole foods, usually found in impoverished areas. This is largely due to a lack of grocery stores, farmers’ markets, and healthy food providers.

The criticism is that since Dollar stores sell mostly processed canned foods and do not have sections providing fresh foods and vegetables, it is some preventing it from being sold at all.

As for food choices, the claim that fresh food (or maybe semi-fresh, given the distances these foods are hauled, especially in winter) food is more nutritious than frozen or canned foods is overblown.

The January 27, 2014, edition of the Journal of Lifestyle Medicine said that “fruits and vegetables packaged as frozen or canned are cost-effective and nutritious options for meeting daily vegetable and fruit recommendations in the context of a healthy diet.” In other words, one can both eat healthy and shop at the Dollar Store.

Misra continues:

Today, dollar stores are thriving both in the poorest of small rural towns , where environmental changes or globalization have wiped out economic activity, and larger cities like Baltimore, where decades of disinvestment in largely African American communities have left vast tracts barren of retail options. In a recentblog post tracking their rise in low-income parts of Baltimore , planner and architect Klaus Philipsen observes that dollar stores are now “flourishing in many poorer neighborhoods like a parasite.” (Emphasis mine)

She continues:

The problem is not just the stores themselves. According to the ILSR, they tend to create fewer jobs on average than independent groceries—9 versus 14. The low-wage jobs they do create aren’t of great quality . And it’s not entirely clear if their offerings are that much more affordable either. When economists compared the price of goods like flour and raisins of the same weight, they noticed that dollar store products were higher cost than those at the nearby Walmart or Costco.

Misra also claims the firm is undercutting other businesses with low prices:

Then there’s their negative effect on others stores nearby. When a dollar store opened up in Haven, Kansas—subsidized through tax breaks by the local government—sales at the the nearby Foodliner grocery store dropped by 30 percent, The Guardian reported earlier this year. While the ILSR doesn’t have quantitative data supporting this effect on supermarkets in the vicinity, anecdotally, they surmise that “the difference in margins is just enough that the local stores are not able to stay in business when there are so few options and there is an undercutting of prices,” Donahue said.

As for jobs, the purpose of retail stores is to provide goods for customers; no one has touted them as an employment program. However,jobs are not the “cause” of poverty. That assumes that people are better off with no income (and no employment) than they are earning money. It is true that retail jobs do not pay very well – something to be expected – but to claim that people are better off having no job, no income, and no available food to purchase than having the presence of a Dollar Store is silly.

Dollar Stores are not trying to be Nieman-Marcus, but neither are they the cause of poverty. They are places where people can purchase necessities and decent food and snacks. In rural areas like ours, they mean people don’t have to drive long distances to buy what they need. To put it another way, they serve their customer base well, but it is just not a customer base of elite liberal left.

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Wayne Creed

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