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This article appears in the August 2023 issue of The American Prospect magazine. Subscribe here.
You can tell the story of America’s economic and political divide through a spray chart of Dollar General store locations. One segment of America lives near a Whole Foods or another high-end grocery. In the other America, composed mostly of poor inner-city and rural areas, dollar stores are often the only game in town, with low-paid employment and little or no access to fresh foods.
Dollar General, the most dominant of the ultra-discount retailers, has explicitly built its business model around this chasm. The chain store’s growth strategy follows a pattern: It hunts for cheap land in depressed areas with average incomes less than $40,000 a year, and then crushes any remaining competitors by supplying low-priced products to cash-strapped populations.
The patchwork of dollar stores that has metastasized across the country has increasingly become a predictor for the country’s voting patterns. To put it crudely, dollar stores are red America, and Whole Foods are blue America. Dollar General and its main competitor Dollar Tree own more chain stores than all the McDonald’s, Walmarts, Targets, and Starbucks combined. Dollar General alone has 19,294 store locations as of the end of March, more than double what they had in 2010. The dollar store invasion went largely unnoticed for years by the media and political class precisely because its locations, just like the poverty inflicted upon these areas, were invisible to elites.
Fittingly, the company that has profited most from the splintering of the country is now setting its sights on expanding into another market that’s starkly bifurcated between the haves and have-nots: health care.
Earlier this year, Dollar General announced plans for an expansion of DG Wellbeing, a long-term play to attach health clinics to select stores. Executives at the corporation are making a bet that, in the same way the stores blanketed food deserts across the country, it can also take hold in rural “health care deserts,” where populations are underserved by traditional medical networks.
Dollar General is just the latest retailer to take a stab at the 800-pound gorilla of the health care sector. Widespread dissatisfaction among Americans with rising health costs has prompted a surge of new players to enter the market. Big-box stores like Walmart, Target, CVS, and Walgreens have already begun rolling up the pharmacy business and are now moving into primary care, leveraging foot traffic at their hypermarkets to draw customers to new health centers. Amazon’s recent acquisition of the subscription medical service One Medical and CVS’s purchase of Oak Street Health expand their reach into primary and virtual care too. Best Buy has a “hospital at home” service now.
While public-health reformers see the millions of Americans without insurance as a market failure, large retailers see it as a market opportunity. Their future customer base either may not live close to a hospital or cannot access adequate insurance coverage at work. As with the rest of the market, most new health care enterprises like Dollar General’s are hoping to tap a share of trillions of dollars in public-health programs like Medicare and Medicaid, and entice customers by making receiving a diagnosis as easy as buying a six-pack of tube socks.
Whether that’s advisable is open to question. “The retail-ization of health care is only going to drive more problems in the future … [it] leaves the core of our decrepit health care system intact,” said Stacy Mitchell, co-executive director of the Institute for Local Self-Reliance, which has chronicled the development of dollar stores and its effect on local communities.
Dollar General may be filling a void, but its retail model and extreme cost-cutting practices pose severe concerns for the quality of the medical treatment that patients will receive. The company has a hard enough time keeping its own employees safe and healthy, let alone its customers.
WHEN DOLLAR GENERAL ANNOUNCED the DG Wellbeing expansion earlier this year, it specifically focused on growth opportunities for mobile health clinics, which it sees as an untapped niche in the market.
In practice, what that currently looks like is roving vans in select locations across Tennessee, a state ranking at the bottom both for public health and rates of insurance coverage among the population. Though vans may have been adequate for rapid tests or vaccines during the pandemic, it’s hardly a substitute for the urgent-care treatment the company promises to deliver. Cheap and dodgy, DG’s health clinic on wheels is the perfect emblem for the company’s stripped-down business strategy in retail, applied to primary medical care.
In hindsight, the rollout of DG’s health care pilot this year came at an inopportune time for the company. When the move was first announced in January, Dollar General was still outperforming other retailers in sales, as it had been throughout the pandemic. The company was inoculated from the pandemic collapse of retail because of its locations in remote areas that initially had fewer COVID-19 cases. During inflation, many shoppers turned to dollar stores to stretch their purchases, which boosted Dollar General’s sales numbers despite increased costs for supplies.
In the first quarter of 2023, however, the economic slowdown finally caught up with the company, which saw its first decline in sales in years and a drop in stock valuation.
“We’re skeptical about the overall pitch for retail health care at this time and frankly have more serious questions about the fundamentals of the company for the moment,” said Brian Yarbrough, senior equity research analyst at Edward Jones, who has provided analyst coverage on Dollar General.
Dollar General is just the latest retailer to take a stab at the 800-pound gorilla of the health care sector.
But rather than pumping the brakes, Dollar General responded to the market slump by doubling down on new growth opportunities to please investors. At the company’s annual shareholder meeting at the end of May, executives emphasized the DG Wellbeing expansion. According to a recent Bain & Company analysis, 30 percent of the market in primary care could be captured by nontraditional players over the next decade, and Dollar General wants as much of that upside as possible.
Outside the walls of the shareholder meeting though, a worker protest put in stark relief how ill-equipped the business’s low-cost model is to deliver quality health care, especially for the low-income customers that its stores mostly serve.
Dozens of workers from stores across the country marched to demand improved working conditions after OSHA recently designated Dollar General a “severe violator” of worker safety.
Armed robberies targeting the stores have frequently resulted in worker deaths. One incident cited by protesters was the shooting of a St. Louis Dollar General employee by robbers. The employee, Robert Woods, had already been subjected to multiple robberies at the store and requested additional security from his manager. Since the shooting in 2018, the police have been called to the same store over 120 times.
According to workers, robberies have become routine in part because of a lack of security protections for employees provided by the company.
In response to months of pressure from labor advocates, the company’s shareholders passed a resolution to conduct an independent audit into safety and health policies. Workers saw it as a small step in the right direction, though far from adequate.
ROBBERIES ARE ONLY ONE ISSUE workers face. Since 2013, 49 workers have died and 172 have been injured, most from non-criminal-related accidents. OSHA filed penalties totaling $21 million against the company in that time, and found blocked emergency exits and other safety hazards on the sites that went unaddressed by the company despite employee complaints.
David Williams is a stock clerk at a Dollar General store in New Orleans and helped to organize the protests through the organization Step Up Louisiana. He described to the Prospect the conditions at the store that motivated him to speak out. As one example, the company refused to invest in a new rolltainer, used for transporting products into the store’s warehouse, despite Williams’s repeatedly notifying his manager about its dangers. The rolltainer had a rusty pole sticking out that posed a hazard for the workers unloading goods. On one occasion, the rolltainer slipped and the pole nearly impaled Williams.
“Workers were not getting the respect they deserved … and reporting [these incidents to the company] was like talking to a brick wall,” said Williams, in reference to the rolltainer and other similar incidents at the store.
TOM WILLIAMS/AP PHOTO
Sen. Patty Murray (D-WA) has called out Dollar General’s 986:1 CEO-to-worker pay ratio.
In addition to cutting corners on safety, the company pays its workers so poorly that it’s brought national attention from lawmakers. The median Dollar General worker makes $14,571 per year, far lower even than other big-box retailers. By understaffing and mostly hiring part-time workers, the stores also employ far fewer workers onsite than the independent retailers that typically get pushed out of the communities by cut-rate Dollar General competition.
Sen. Patty Murray (D-WA) blasted the company in a letter sent to management in 2022, pointing to the company’s 986:1 CEO-to-worker pay ratio, which is three times greater than the average for other large publicly traded corporations.
“As the company’s business grows, particularly in low-income communities, more and more Dollar General workers will face low wages, insufficient benefits, and unsafe working conditions,” wrote Sen. Murray.
THE HEALTH CARE INDUSTRY is already plagued by understaffing and an underpaid workforce, which has been shown to threaten patient safety. Dollar General would have to mimic those practices in order to keep its care prices low enough to get a foothold in the market. Quality care usually costs more than a dollar.
DocGo—Dollar General’s health care partner for the joint venture, which will operate the mobile clinics—has shown a willingness to shortchange medical staff. In public statements, the company’s former CEO Stan Vashovsky openly admits their employment recruiters seek out a precarious workforce with little professional experience because they’ll accept lower wages to escape working at large hospitals, plagued by burnout and bad working conditions.
“We ‘uptrain’ people of lower skill but who are medically certified to do that work … we can do it at a fraction of the cost. So far, we’re having phenomenal success with it,” he told Fierce Healthcare.
Dollar General often targets poor areas and heavily Black neighborhoods outside the network of big-box retailers. Once the stores open up, Dollar General uses predatory pricing to drop its price tag for goods to kneecap independent competition. It’s only a matter of time before the local stores go out of business.
Dollar General’s chokehold over neighborhoods has resulted in food deserts because until recently, the company didn’t offer fresh produce. To counteract negative press attention, Dollar General has begun to offer a wider array of produce, but only at certain locations.
By only selling low-quality foods, Dollar General has been linked to worse health outcomes in the communities it serves. For that reason, there’s a perverse irony to the company now also trying to take over health services in the same areas whose access to fresh foods are strangled by the stores.
“Dollar General wants to make money on both creating chronic conditions and apparently now in treating those conditions,” Mitchell said.
As the health care giants show signs of weakness, the retail sector is jumping at the chance to make inroads into the market. It ultimately may say more about the depleted state of health care than it does about the prospects of the business ventures.
