Today the Washington Post runs a story that just never gets old:
A growing number of Americans are relying on dollar stores for everyday needs, especially groceries, as the coronavirus pandemic drags into its 18th month....Analysts say the explosive rise of dollar stores is yet another example of how the pandemic has reshaped the economy and widened the gulf between the wealthiest and poorest Americans. Rising grocery prices — inflation is up 5.4 percent from last year — coupled with disproportionately high job losses among low-income workers have left many of the most vulnerable Americans in even worse shape.
....The pandemic, though, ushered an influx of new shoppers — including many who had previously been able to buy in larger, more cost-efficient quantities at big-box chains. But with smaller paychecks and rising prices, they say it’s no longer feasible to stock up elsewhere.
I've seen this same story during recessions, during expansions, and now during a pandemic. And it seems plausible. But is it true?
There's no way to say for sure since most detailed income statistics take forever to be released. I'm not sure when the numbers for 2020 will be available, but it won't be anytime soon. In the meantime, though, we can make do with what we have. Here, for example, are blue-collar wages:
Technically these are average wages for "production and nonsupervisory employees," which accounts for about 75% of all American workers. It doesn't include zillionaires, however, so it's also a pretty good estimate of median wages for blue-collar and middle-class workers.
As you can see, median blue-collar wages have been substantially higher during the pandemic than before it, which suggests that ordinary workers are not, in fact, falling even further behind.
But this measure includes only people who are working, and plenty of people got laid off or furloughed during the pandemic. So here's a look at poverty levels:
This measures the number of people at the very bottom of the income ladder. It's been falling ever since the end of the Great Recession and it continued to fall during the pandemic.
tl;dr: The average working Joe/Jane is doing fine. And the Joes and Janes at the bottom of the heap are doing OK too. This is tentative, but it suggests pretty strongly that the Walmart demographic has not deteriorated into some kind of grim Oliver Twistian dollar store demographic.
Needless to say, both of these metrics owe their happy results to the massive aid packages put in place during the pandemic. But that was the whole point of those packages: to aim a fire hose of money at the most vulnerable precisely so that they wouldn't lose ground.
And it worked. Of course it worked. If you give people lots of money, then they have more money. So why keep pretending that a huge gulf has opened up when (a) there's no evidence of it, and (b) there is evidence that the poor have done reasonably well during the pandemic? It's just too tempting a story, I guess.
POSTSCRIPT: And one other thing: the story implies very strongly that grocery prices are up 5.4% over last year. They aren't. They're up 2.5%. This is not a hard thing to get right.
I'm sorry, but the media has decided this is Jimmy Carter's second term and no amount of data is going to change their minds.
They miss Trump very badly.
Their $4800 figure in annual grocery spending conveniently omits the 30-40% of food the average American household wastes.
1) Cite sources.
2) No, it doesn't. Just because it is wasted/spoilage doesn't mean it isn't spending.
Still, it doesn't change the fact that the box of C&H sugar at the Dollar is cheaper than at the grocery store, and well, if you drive by one, stop by one and grab a few boxes. 🤷
Much like the media's failed Afghanistan tripe, this is yet another failure.
Is that with it without your magical mystery adjustment?
Without. https://www.bls.gov/news.release/pdf/cpi.pdf
Yes and no, but mostly no.
The "yes" part is that, indeed, there has been continuing progress in raising those technically below the poverty line (do you have any idea how low that is?), and recent temporary measures have done a lot to mitigate not only the effects of the pandemic but also some legacy conditions, and hooray for that.
And yes indeed, the media do not convey information so much as tell stories, advance agendas, stampede with the herd, and above all entertain, and simple stories are best, and this is a pretty good story.
BUT. There is simply NO question that economic inequality in the US is historically high -- higher even than in the Gilded Age -- and that very very many people are economically distressed, even if not quite below the poverty line. Whole regions are dying, whole industries have been eviscerated by offshoring and by becoming outmoded, and the Establishment Republican agenda of transferring wealth ever upward has continued relentlessly for decades. There's a lot of debate over just how much this economic distress is to blame for the rise of Trumpism (= modern Republicanism), but there's NO question that it exists, that it's widespread, and that it has changed the attitudes and habits of huge numbers of Americans. A little bit of study of the distributions of wealth and income in the US -- not point measures -- makes the picture abundantly clear. That is the larger context.
So ... mostly no. The subtext, at least, of the story really is more or less true.
There's very little question that there's too much inequality in the United States, and that this has been a problem that has tended to intensify over the long term (say, since the early 1970s, when the economy seemed to shift from its post-war "widely shared gains" dynamic).
However, the claim made by the article Kevin is questioning specifically talks about the widening gulf -- and the worsening economic conditions for those near the bottom of the income scale -- during the pandemic. And, as the numbers Kevin lays out indicate, that doesn't seem to be the case. (Perhaps you have numbers that contradict him?)
I agree. To say that there are fewer people under the poverty level is not saying much. Federal poverty level for one person is $12880. Try living on that. And in truth, dollar stores are not always the cheapest. Also, dollar stores have many higher income customers. Almost 25% of Dollar Tree customers are <$100,000 income. https://secondmeasure.com/datapoints/dollar-store-sales-buck-covid-era-retail-trends/
A statement about absolute levels is non-responsive to a post about relative levels.
The average wage earner may not be doing worse than before the pandemic, and many may be doing temporarily better from the stimulus payments and/or unemployment which paid more than their wages. But millions in the lowest-paid jobs got laid off, which is the main reason for the initial big jump in average wages. They have not all got back on the job and their assistance, such as unemployment and rent moratoriums, will be running out.
To say that wage earners are "doing fine" is nonsense. Nothing has fundamentally changed about the economy - the factors which have caused inequality are still there and in many ways worse. The economy and lower-income people got a boost from the unprecedented stimulus, but it is far from certain that the new bills will pass - it is possible that they will both fail.
In the term beyond 2022 and 2024 the prospects for reducing inequality are poor, unless Democrats can somehow get much larger majorities than they have now. A lot of people seem to have gotten overoptimistic from the election of Biden and the passage of the stimulus bills, and furthermore there is a very bubbly aspect to many financial markets.
Eh, your point is irrelevant. A bunch of words, little meaning.
What is this 'dollar'?
Recently something like a five dollar store opened up around here.
Mainstream media is total shit. I didn't think it could get much worse than it was after 911, but it did, and it continues to get worse. Deviant, immoral, stupid, shameless hacks; all of them. It's always been a con game, mainstream media, but it's been in death throes for 20 years. When is it going to die? It deserves now to die, as quickly and painfully as possible.
I would say that overall the media give much too little attention to the still-growing inequality. To some people the best way to do this is with statistics - for example the way that real wages (by the CPI) have scarcely increased since the 70's. But human-interest stories may be more effective.
Almost all the media are strongly biased in favor of big-money and employer interests and against labor. They depend on those interests for their income and the main writers and talking heads certainly belong to the upper economic classes. Kevin gives mixed messages about which side of the class divide he is on - to put it charitably.
The media can't create stories they don't understand. You whine about a bubble, but don't understand debt(which is lacking right now as the massive transfers paid down debt, but will likely rise by the summer of 2026). Once the ponzi schemes end, capitalism is dead. It can't grow fast enough anymore. Doesn't matter what you do.
Given that dollar stores (which are predatory and leeching) are a real problem in poor (and rural) America, calling this the dollar store myth is... problematic.
Not sure whether to be happy or sad that I honestly though, from the title of the post, that this was going to be Kevin saying that dollar stores aren't a problem but are in fact all fine and good, and just a natural market outcome.
I live in one of those areas and see little dime store activity. The article is based in fantasy. I attacked the article and demand its retraction.
I read the story this morning and thought it seemed fishy as hell. Thank you Kevin
If dollar stores are up, could also just be due to the peculiarities of the pandemic.
Back in spring of 2020 when capacity controls were strict , there were long lines just to get into the grocery store. For me, that was a huge problem as, due to medical issues, it was very hard for me to stand ( or sit ) for very long. Going to the grocery store took all the energy I had for the day.
But no lines at the dollar store. And same for the cheap grocery store chains largely patronized by poorer Hispanic immigrants.
So some just shopped more at the dollar store than the normal grocery store just because they could get in. And then maybe, going there for the fist time, found it actually was not that bad a place to shop some.
Cmayo,
Why do you say that dollar stores are predatory and leeching ? They do provide a place for the poor and anyone else to find some products much cheaper than at the normal grocery store . For a lot of grocery items, at least here in LA, you can get the identical product at half or less of the price , just have to accept the Spanish language packaging. Such as brand name toothpaste at one dollar a tube. Same size same toothpaste as at grocery store for over twice that - just in Spanish.
Because that story won't drive clicks.
Also because journalists studied writing and have no expertise in anything. But they think journalism is generalized expertise in everything. They're about like that guy pounding the bar and declaiming loudly about the gummint.
The second chart seems to show poverty shooting down long before the pandemic. What exactly happened during the last administration to cause that?
The economy was clearly doing well before the pandemic and unemployment was near record lows. Then the worry was about overheating.
Whether or how much trump had to do with that is a separate question
Record lows???? Adjust for Demo says the economy was 5% Clinton era.
Don't know what you mean by adjust for demos.
The unemployment rate right before the pandemic was down to 3.5%. It never went quite that low in Clinton years . I think it was just below 4 right before the 2000 recession.
And I says near lows. I think it was somewhat lower at low points in 50s and 60s
The headline; unemployment rate hasn't been worth the paper it's printed on since the Reagan administration. It primarily measures the ability of bureaucrats to put the unemployed in the wrong bin. That's why the full employment rate fell from 5% to 3.5%. In the mid 90s recession they refused to include any effective way of looking for a job (netowrking, or using the internet) as actively searching for a job. Only job searching techniques, answering newspaper want ads, that had close to zero chance of working qualified one as actively looking for a job and thus unemployed.
Re: In the mid 90s recession they refused to include any effective way of looking for a job (netowrking, or using the internet) as actively searching for a job.
I had a short spell of unemployment at the end of the 90s. Different states may of course have different rules, but Michigan most certainly did allow for online searches and applications to fulfill the job search requirement. These days, above the level of low wage service jobs, that's about the only way there is to do job hunting. Newspaper Help Wanted ads are a thing of the past.
Also, the Labor Force Participation Rate reached an all time high in 1999 and has yet to approach that number again regardless of what the headline Unemployment rate is. There are lost of reasons for that and it does not imply anything in particular about the economy, but if LFR is high then involuntary unemployment is almost certainly not high.
Hey, I remember when toilet paper was first available last year after the drought. I was shocked, shocked I tell you to find that I was having to pay $15 for a six pack of Cottonelle mega rolls. OMG, grocery prices doubled!
What's that you say? The price of the same thing is back down to where it used to be (like $8.99)? Never mind...
Toilet paper shortages seemed to be a suburban thing where I live (Baltimore). It was never unavailable here in the city. Maybe because city houses are small with very limited storage space so people could not buy up an whole aisle's worth and take home.
Why are dollar stores predatory? Honest question. I used to buy cheap reading glasses there when I lived in Boston. I thought they had some killer deals.
I think the first chart here is probably extremely misleading - isn't the main reason the median wage has risen that people on low wages were more likely than people on high wages to get laid off as a result of the pandemic?
And the second chart says it omits data for 2020, and only has a projection for 2021, so I'm not sure how reliably it's capturing information about the pandemic.
Story also ignores, at least where I live, that many things at dollar stores are cheaper than at grocery stores. Spices are about 1/4 the price. I'm just not sure that off brand food at the dollar store isn't going to be toxic.