The dollar store economy


My second impression of New York was a frightening one. I landed at JFK Airport, and, after almost falling victim to an unlicensed taxi scam, was whisked away by a real cab to my new home, a 3-month summer apartment in Bedford-Stuyvesant. What I distinctly remember is staring out the car window in the dead of night and seeing mile after mile of payday loan stores, pawn shops, fast food restaurants, dollar stores, and advertisements for divorce lawyers. It was a marked contrast with the tourist bubble I had been ensconced in during my first visit to the city. A la Dorothy, I wasn’t in Manhattan any more.

I realized later that I had been driven through some of the poorest areas of Brooklyn – East New York, Brownsville, Ocean Hill. I recently moved back to Brooklyn – in fact, not too far away from Ocean Hill – and my new apartment is only a block away from two dollar stores, which in turn are across the street from a public housing complex. Some of the stores in my neighborhood retain the scars of a more violent era – a thick pane of bulletproof glass separating the customers from the wary cashier. The entrance of the closest supermarket is lined with tall concrete poles, spaced one foot apart – just large enough to let a person through, but not large enough to allow a shopping cart to escape. My roommate bought some groceries there and returned home to find that all of his eggs had already been broken and that his salad greens were past their expiration date.

I suppose that story is emblematic of the dollar store economy at large. Dollar stores convey the impression of being cheap – after all, they have “dollar” right in the name. The reality is more complicated. From an article on dollar stores in Bloomberg:

The dollar chain doesn’t carry the big-ticket purchases—bikes, appliances—that Walmart does. It thrives mostly on selling low-ticket items and basics, such as toilet paper, that help shoppers on tight budgets get through the week. At Dollar General, a package of eight Pop-Tarts is $2, or 25¢ a tart. At Walmart, shoppers can buy the same eight-pack, but more often they save by spending $9.98 for a bulk package of 48—only 20¢ a tart. Dollar General doesn’t offer much bulk. A Dollar General store also has lower startup costs; it spends as little as $250,000 for a new store, vs. the more than $15 million Walmart puts into a new Supercenter.

Now, to be scrupulously fair, dollar stores are serving a real need.

Elizabeth Racine, a professor of public health at the University of North Carolina at Charlotte, is among the few academics who closely study dollar-store chains. In 2010 she was asked by the county health department to study Charlotte food deserts, and she soon noticed how many dollar stores were in these areas. “It’s not the kind of store a dietitian would love,” Racine says. She describes feeling bombarded when she first walked into a Family Dollar—chips, rows of candy, coolers of soda—and wondering how places so filled with unhealthful food could possibly be authorized to take food assistance cards. “I’ve come around,” she says. “I appreciate that they are willing to operate in low-income places because so many other stores aren’t willing to go there.” They may not be selling fresh fruit and vegetables, but they do offer some healthier staples, such as frozen meats, brown rice, 10-percent-whole-wheat bread, and dried beans. She calls them the Whole Foods of Charlotte’s food deserts.

Evidently, what dollar stores provide is not quite “savings”; instead, it’s convenience. There are three Targets within a mile of each other in Downtown Brooklyn, but none in Crown Heights or Ocean Hill or Brownsville. If you are too cash strapped to buy in bulk at Walmart or Costco (or to even afford a Costco membership), dollar stores provide an alternative that doesn’t require a lot of liquidity. And if your alternatives are a shitty corner bodega or an organic food market where a bag of rice costs $10, the choice is obvious.

As the saying goes, though, being poor is expensive. Since dollar stores don’t afford the opportunity to save by buying in bulk, customers end up losing their money in small dribbles. What I find remarkable is that that is the hallmark of all of the other business I mentioned – the payday loan shops and McDonalds’ and divorce lawyers and home flippers. They allow one to trade quality for time, and long-term savings for short-term reward. What they provide is not better, but instead sooner. And since poor people in this country often work two or three jobs, and raise kids without the help of a supportive partner, and spend hours sitting on the bus or subway or stuck in traffic because they can’t afford to live close to work, sooner is worth more than anything else.

Take McDonald’s, for instance. Here’s Mark Bittman in the New York Times, arguing that fast food really isn’t as cheap as it’s typically portrayed:

THE “fact” that junk food is cheaper than real food has become a reflexive part of how we explain why so many Americans are overweight, particularly those with lower incomes. I frequently read confident statements like, “when a bag of chips is cheaper than a head of broccoli …” or “it’s more affordable to feed a family of four at McDonald’s than to cook a healthy meal for them at home.”

This is just plain wrong. In fact it isn’t cheaper to eat highly processed food: a typical order for a family of four — for example, two Big Macs, a cheeseburger, six chicken McNuggets, two medium and two small fries, and two medium and two small sodas — costs, at the McDonald’s a hundred steps from where I write, about $28. (Judicious ordering of “Happy Meals” can reduce that to about $23 — and you get a few apple slices in addition to the fries!)

In general, despite extensive government subsidies, hyperprocessed food remains more expensive than food cooked at home. You can serve a roasted chicken with vegetables along with a simple salad and milk for about $14, and feed four or even six people. If that’s too much money, substitute a meal of rice and canned beans with bacon, green peppers and onions; it’s easily enough for four people and costs about $9. (Omitting the bacon, using dried beans, which are also lower in sodium, or substituting carrots for the peppers reduces the price further, of course.)

Bittman’s math is perfectly correct (and, whenever I’ve set foot in a Wendy’s or a McDonald’s, I’m always amazed at how much I end up spending for a meal that doesn’t really satisfy me), but again the picture is more complicated. Summoning the mental energy to cook isn’t easy, and there’s a “psychic cost” that isn’t included in his simple calculations. Later in the OpEd, he discusses this:

The core problem is that cooking is defined as work, and fast food is both a pleasure and a crutch. “People really are stressed out with all that they have to do, and they don’t want to cook,” says Julie Guthman, associate professor of community studies at the University of California, Santa Cruz, and author of the forthcoming “Weighing In: Obesity, Food Justice and the Limits of Capitalism.” “Their reaction is, ‘Let me enjoy what I want to eat, and stop telling me what to do.’ And it’s one of the few things that less well-off people have: they don’t have to cook.”

Let’s be real, though: the core problem isn’t that cooking is “defined” as work; it’s that it is work. Hell, leave poor people out of it. Just look at all of the middle class and rich people in Manhattan who’d rather order from Seamless than spend 15 minutes boiling the pasta that’s been sitting in their pantry for the last 3 months. (I’m occasionally one of them!). Is the problem with these people that, as Bittman remarks, we as a society don’t “celebrat[e] real food” enough? Or is it that American-style capitalism hardly gives anyone the work-life balance to allocate time to the real work of cooking?

I found one passage from Bloomberg’s article about dollar stores very interesting.

“It reminds me of a craps table,” Brown, the commercial real estate analyst, says. “Essentially what the dollar stores are betting on in a large way is that we are going to have a permanent underclass in America. It’s based on the concept that the jobs went away, and the jobs are never coming back, and that things aren’t going to get better in any of these places.”

The dollar chains do provide jobs of their own, of course. The chain employs about 121,000 people nationwide and has said it will hire 10,000 more employees this year. But those jobs will be or are mostly low-wage. Salaried managers can earn about $40,000, but they often work long hours without overtime pay.

It paralleled a passage I read in an article about gentrification in Brooklyn, and the way that it has spread like a wave from Williamsburg to Bed-Stuy to Bushwick and now to Brooklyn’s outer reaches, like East New York:

Craig Stuart Lanza is a friend, a former Brooklyn prosecutor who now represents several investors in distressed properties. They belong to a cohort of businessmen—many of them Hasidic—who have ridden the wave east from Williamsburg. “They’ve become incredibly wealthy,” Lanza says, but they face a supply problem. “They’re running out of slums.”

I’m torn between two conflicting views. One is that poor people need Dollar Generals, and McDonald’s, and EZ Pawn Corps, and Moneytrees, because no one else is serving their needs for groceries and fast food and cheap goods and quick cash. But the other is that all of these enterprises are fundamentally predatory and unsustainable. Dollar stores are betting on a “permanent underclass”. House flippers are betting on an endless supply of “slums”. McDonalds’ are betting on a neverending stream of people too busy to cook. And payday loan stores are betting on the presence of a population that never escapes living in debt. Each of these organizations and businesses mutually reinforces the others: the people who work the low-pay, long-hours jobs at dollar stores require the convenience – the “sooner, not better” – supplied by the rest of the dollar store economy. Viewed individually, the existence of each type of business makes sense – the natural filling of a market gap in the way described (and extolled) by an Econ 101 textbook. But viewed together, in their inescapable network of mutuality, the dollar store economy takes on a more insidious character. The sorry conclusion seems to be that the problems that it is solving are also the ones it’s creating.


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