Retail

Activist firms call on Dollar General, Dollar Tree to improve worker safety, wages

Key Points
  • Two activist investment firms have proposed resolutions before Dollar General's and Dollar Tree's shareholders to improve worker safety and wages.
  • Dollar General is considered a "severe violator" of workplace safety by federal regulators, and employees of Dollar Tree say they aren't paid a livable wage.
  • The companies' boards have asked shareholders to vote "against" the proposals.

In this article

Dollar General and Dollar Tree stores
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Two activist investment firms are calling on Dollar General and Dollar Tree shareholders to approve a pair of resolutions aiming to improve worker safety and wages, the firms said Tuesday. 

Dollar General Proposal 7, led by Domini Impact Investments, calls for an independent audit into worker safety and well-being. It will be voted on during the company's annual shareholder meeting May 31. 

Dollar Tree Proposal 7, led by United Church Funds, calls for the creation of a wages and inequality report. It will go before shareholders during the retailer's annual meeting June 13. 

The resolutions aim to address longstanding workplace safety and wage concerns that have plagued employees of the growing discount chains, which are increasing store counts faster than any other retailer. Collectively, they employ more than 377,000 employees nationwide, company filings show. 

Dollar General is currently facing more than $16 million in fines from the federal Occupational Safety and Health Administration for safety hazards, including blocked fire exits, blocked electrical outlets and dangerous levels of clutter. 

"It's far too dangerous in the stores that we work in," David Williams, a Dollar General stocker, said during a panel event Tuesday. "It's a dire need and it makes no sense to always look behind your back and always try to do your job but at the same time always trying to make sure you're safe as well."

Federal regulators have repeatedly found similar violations at Dollar General stores across the country, prompting OSHA to label it a "severe violator" of workplace safety rules. It's a designation considered "unprecedented" and "rare" for a company of its size and stature, said Debbie Berkowitz, a former chief of staff and senior policy advisor at OSHA. 

"[It's] a program for the worst safety violators in the nation. It is totally rare for a large employer with many work sites to be in the severe violator program. Most companies in their program are small construction companies," said Berkowitz, who is also a fellow at the Kalmanovitz Initiative at Georgetown University.

"OSHA rarely finds the same hazards or cites the same company so many times and for the same violation. Usually companies try to correct safety hazards that endanger workers," she said.

Berkowitz pointed out that OSHA fines are notoriously low. Considering the $37.84 billion in sales Dollar General posted in fiscal 2022, the penalties are unlikely to have a major impact on its balance sheet

The retailer didn't respond to a request for comment. It is currently in settlement negotiations with OSHA. Its board has called on shareholders to vote "against" Domini's resolution, proxy filings show.

A shopper walks by a sign displaying $1.25 price, posted on the shelves of a Dollar Tree store in Alhambra, California, December 10, 2021. The store is known for its $1 items, but due to inflation raised prices to $1.25.
FREDERIC J. BROWN | AFP | Getty Images

Dollar General previously told CNBC it "regularly review[s] and refine[s] our safety programs, and reinforce[s] them through training, ongoing communication, recognition and accountability."

"When we learn of situations where we have failed to live up to this commitment, we work to timely address the issue and ensure that the company's expectations regarding safety are clearly communicated, understood and implemented," a spokesperson said. 

Kenny, a Dollar Tree employee, said he's only allowed to work 15 hours a week and brings in about $600 a month. The low wages and the inability to get full-time hours caused him to lose his housing and move in with his parents.

"You can't expect most working adults, even teenagers, to make that little money, because it's not going to help in the grand scheme of things," said Kenny, who didn't disclose his last name. 

Matthew Illian, the director of responsible investing at United Church Funds, said Dollar Tree doesn't have a minimum-wage commitment, unlike some of its peers. 

Costco, Target, Best Buy, Amazon, IKEA and Starbucks all have a guaranteed wage of at least $15 an hour, while Walmart has committed to $14 an hour. However, dollar stores in general differ from many of those retailers because of their heavy footprint in rural communities, which tend to have lower costs of living.

Still, in many of those locales, the dollar store is one of the few retailers in town, so there is less competitive pressure to improve wages, safety and even quality of goods.

Illian argued investors benefit from income equality — and pointed to a study conducted by the Economic Policy Institute that found income inequality drags on GDP by 2% to 4% a year. 

"The economy overall would be doing better. That means more people with more money in their pockets, spending that money in more places," said Illian. "So we're asking for Dollar Tree to look at how their compensation practices are impacting the returns of a diversified investor."

Dollar Tree declined to comment. Its board has called on shareholders to vote "against" United Church Fund's resolution, according to proxy filings.

— Additional reporting by CNBC's Melissa Repko