Dollar Stores Reap 'Super-Profits' By Exploiting Their Own Workers

Abel Lopez was a busy man. The El Paso resident’s job with Family Dollar, Inc. averaged 60-80 hours a week. A former graphic designer and ad man from neighboring Ciudad Juarez, Mexico, Lopez spent his days unloading trucks, processing freight, scouring toilets, running cash registers, cleaning, shelving, changing prices, doing inventory, and covering for other employees. As a bonus, he was even held up by armed robbers.

Like others at Family Dollar who wind up spending most of their time doing grunt work, Lopez bore the title of manager. He contends that the company routinely classifies regular workers as managers in order to categorize them as exempt employees and in doing so ensure they are not subject to the overtime provisions of the 1938 Fair Labor Standards Act (FLSA).

Family Dollar is one of a growing group of chain-store corporations that cater to America's poor by selling cheap goods, many imported from sweatshops in low-wage countries including China and Mexico.

Critics of the two largest dollar store chains, Family Dollar and Dollar General, contend that the companies extract super-profits from the uncompensated labor of overworked store “managers” and other employees. 

“It’s corporate theft,” asserted Alabama attorney Lance Gould, whose firm represents some of  [Dollar General’s] managers. “All these dollar stores, their company structure is the same. Their largest controllable expense is their labor budget.”

Last April, after more than seven years on the job, Abel Lopez was fired. Family Dollar blamed him – unjustly, the worker says -- for bad upkeep of the store. Recently, he and a small group of supporters conducted roving pickets at different Family Dollar stores in El Paso. One day he stood outside a store wearing a T-shirt that read: “Family Dollar: Exploited Manager,” while an El Paso police officer warned the group not to leaflet on company premises.

“We’re being misclassified as store managers to avoid paying overtime,” Lopez charged. “I think the profit is made out of the hours they don’t pay the managers. ...They give you a payroll, and actually most of the time the payroll doesn’t cover you,” Lopez said, adding that managers were forced to do the jobs of workers they could not afford to staff.

Stout and straight-talking, Lopez resumed picketing as the mid-day traffic picked up and the hot sun blazed the pavement of the border city.

Pennies on the Dollar

Pay for Family Dollar managers like Lopez starts off around $550 per week but the long hours required result in some employees barely earning above minimum wage, Lopez says. At the opposite end of the company’s income spectrum, Family Dollar CEO Howard Levine enjoyed an annual compensation package of $5.38 million in 2010--part of a five-year bundle valued at $14 million, according to Forbes.

Based in North Carolina, Family Dollar began in 1959 with one store in Charlotte. More than 40 years later, the chain has more than 6,700 stores in 44 states with 45,000 employees. Earning nearly $7.9 billion in revenues for fiscal year 2010, Family Dollar recorded nine consecutive quarters of double-digit earnings per share growth through the summer of this year. The chain “significantly expanded operating margins and improved inventory productivity” while continuing to return “excess cash” to its shareholders, according to a company statement.

For the first three quarters of fiscal year 2010, Family Dollar paid out approximately $58 million in dividends.

While Family Dollar raked in profits, Lopez scrambled to make ends meet. With mortgage payments, as well as a wife and three young daughters to support, he did what so many other workers are forced to do by the Great Recession: dip into his 401(K)3.