As the older woman checked out ahead of me, she carefully watched the cashier ring up each item. The price was the same: $1. But that reliable rate — a friend to millions of poor and working-class Americans — will soon be a thing of the past.
Dollar Tree recently announced that higher freight costs — one element in rising inflation affecting consumer prices nationwide — are forcing the company to abandon its just-a-buck policy. Dollar Tree, with 15,000 stores in the United States and Canada, had already been testing prices up to $5 at its “plus” and “combo” stores, but had resisted pressure from investors in recent years to ditch the dollar barrier in its traditional stores.
Many Americans may have been alarmed by inflation news on Wednesday. As the Associated Press reported, “Another surge in consumer prices in September sent inflation to 5.4% from a year ago, matching the highest such rate since 2008 as tangled global supply lines continue to create havoc.” But most people won’t need to start worrying about their household budgets just yet.
For Americans who are less well-off and depend on discount stores such as the Dollar Tree, though, rising prices do immediate damage. That’s why it’s unfathomable that President Biden and progressive Democrats contemplated an inflation-stoking $3.5 trillion social spending plan (does anyone other than the president believe it would cost “nothing”?) that was largely intended to help the very same Americans who would most suffer from its inflationary effect.
Democrats should keep in mind who gets hit hardest by inflation.
As Americans struggled financially during the coronavirus pandemic, foot traffic increased at discount stores. They made 10 percent to 30 percent more in-store visits to stores including Dollar General and Dollar Tree in July 2021 compared with July 2019. Dollar-store visits also significantly outpaced foot traffic at Walmart.
A demographic profile of Dollar Tree customers reveals that discount store shoppers skew older (in the 45-64 age range) and tend to be African American. Not surprisingly, people in those groups fall in the lowest income brackets (below $60,000 annual income) and are less likely to be college-educated.
Dollar Tree’s announcement of its policy change suggested that prices could hit $1.25 to $1.50. That might not sound like much, but to a shopper counting on spending his or her last $10 for the month on necessities, a sudden jump to $15 for the same 10 items could be devastating. Sure, plenty of discount shoppers would swallow a 50-cent price jump, but others might be forced to make tough choices.
In every inflationary period, the elderly are especially vulnerable, as they watch savings stashed away for retirement become devalued, their purchasing power eroding just when they most depend on it. They, along with poor and low-wage Americans, have the most to lose by rising prices because they spend a disproportionately higher share of their income on everyday goods.
Even seemingly good economic news has a way of souring: Hourly wages are inching upward as employers scramble for workers, but inflation saps the benefits from the increase; in July, CNBC reported that “inflation essentially gave the average worker about a 2% pay cut.”
The current inflation was brewing for some time. Federal spending during the pandemic pushed hundreds of billions of dollars out to many households where the cash wasn’t needed, and prolonged, overgenerous unemployment benefits incentivized millions of workers to stay on the sidelines. Households flush with cash drove demand, and the worker shortage contributed to supply-side disruptions. Raising wages drove up labor costs, and higher labor costs fed right into prices.
One dollar might not mean much to Washington policymakers who talk about spending trillions, but to many poor and working-class Americans, when you can’t even depend on a dollar store to cost you a dollar, that’s a big problem.