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Dollar Tree Boosts Sales After Raising Wages
"Every extra dollar in a frontline worker's pocket is helpful, but let's not pretend they're still not living on the edge."
By Eric Gardner, More Perfect Union
Dollar Tree, the discount retail giant that operates over 16,000 stores across 48 states, saw sales jump after modest wage increases helped reverse the negative business impacts associated with underpaying workers.
This spring, the Virginia-based retailer, which also owns Family Dollar, announced an average hourly wage increase of $2 over two years. Dollar Tree’s previous wages failed to entice workers to stock shelves or mind the store — which forced locations to close early and lose sales.
“We have made significant progress on this,” CEO Richard Dreiling told investors earlier this summer. “If we got every store open when we're supposed to be open, and every store stayed open as long as it should stay open, that's worth (the increased cost).”
Dollar Tree has been notorious for worker mistreatment for years. It’s been hit with at least $13 million in fines from the Occupational Safety and Health Administration since 2018, and earlier this year, a Louisana store faced protests over unsafe working conditions. In the spring, a clip went viral of a worker relying on customers to watch the store so they could use the restroom.
In a June meeting with investors, management tied the modest expense to direct positive financial results. Early store closures and late openings are down 51 percent. More people are applying for roles, and long-vacant store manager positions are being filled. Combined, the higher wages have boosted sales by 2.75 percent. On last week’s investor call, Dreiling estimated that if all stores were fully staffed, it would drive sales an additional 1.5 percent.
Dollar Tree joins the list of numerous national retail chains that made headlines for increasing wages throughout the pandemic. CVS and Walgreens both boosted hourly worker pay to $15. Target established a $15-$24 an hour range. After a series of raises, Walmart’s average hourly pay is now $17.50.
“It’s great to see,” said Rick Wartzman, the author of Still Broke: Walmart's Remarkable Transformation and the Limits of Socially Conscious Capitalism. “But there’s some really important context to bear in mind. Over the last 40-50 years, we’ve dug a deep hole for folks to climb out of.”
Poverty level wages.
The federal minimum wage was last raised in 2009 when it was set at $7.25. Historically, low wages were foundational to discount retail’s business model. In an 1892 annual report, Woolworths, the original American discount variety store, wrote: “We must have cheap help, or we cannot sell cheap goods.”
Dollar Tree has taken the strategy to the extreme. According to its most recent filings, the median worker earned under $15,000 a year in 2022 — slightly more than the federal poverty threshold for a single-person family. And in spite of the modest raise, Dollar Tree’s reputation for poor working conditions persists — just last week, the company was fined $1.35 million for poor working conditions.
“Every extra dollar in a frontline worker's pocket is helpful,” Wartzman said, “but let's not pretend they're still not living on the edge.”
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