February 16, 2026
wolterke/Depositphotos.com
Should Target Be Holding the Line on Store Pay?
Target’s store employees won’t soon see an increase in the chain’s minimum wage — but will likely receive more hours to boost their take-home pay — as the discounter steps up investments in store staffing to revive sales.
A Target spokesperson confirmed to the U.S. Sun that Target isn’t planning any changes to its store pay structure. The chain last week announced it was laying off about 500 office and supply chain jobs, and reinvesting the money toward frontline store employees.
As first reported by CNBC, the retail giant indicated it will reduce the number of store districts to shift funding for more store workers and hours, also focusing on more store-staff training. The layoffs will impact about 100 employees at the store district level, and about 400 across supply chain sites.
The change “fuels our ability to put significantly more payroll in our stores — primarily in additional labor and hours where needed most, but also in new guest experience training for every team member at every store,” wrote Chief Stores Officer Adrienne Costanzo and Chief Supply Chain and Logistics Officer Gretchen McCarthy in a memo.
Target Continues Labor Restructuring as Part of Turnaround Effort
Target last October cut about 1,800 corporate roles to streamline “too many layers and overlapping work” in a move that marked its first major layoff in nearly a decade.
Michael Fiddelke, formerly COO, took over as CEO at the start of the year with a goal of “elevating the guest experience” as Target’s sales have been flat or declining for 11 straight quarters.
The increased hours and training for store workers could help Target overcome some in-store challenges, such out-of-stocks, long checkout lines, messy displays, and shrink. The extra bodies may also reduce stress for in-store workers, with Target in December establishing a controversial “10-4” rule requiring associates to acknowledge an in-store shopper within 10 feet and engage within 4 feet.
Target’s employee morale has also reportedly been impacted by boycotts due to pullback of its DEI commitments in 2024 — and recently the chain’s perceived inaction after immigration officials detained two Target employees during their shift in a Minnesota store.
Target has been ahead of most competitors in lifting its minimum wage. In late 2017, it raised its minimum wage to $11 and set a goal to gradually increase it to $15 by the end of 2020. In 2022, Target set its target wage to between $15 to $24 for hourly store and warehouse workers, with the pay rate dependent on the job and local market factors. As of late 2025, the average wage for a frontline employee was over $18.50 per hour.
Among competitors, Walmart’s minimum starting hourly wage for U.S. store employees is $14 per hour, with rates ranging between $14 and $19 per hour depending on region and role. The average U.S. hourly field associate at Walmart makes $18.25 an hour. Costco’s minimum pay rose last year to $20 an hour, bringing its average pay across North America to $31.
BrainTrust
Tom Ryan
Managing Editor, RetailWire
Recent Discussions
Discussion Questions
Did Target make the right move in investing in hours and training rather than pay for in-store associates?
Does Target likely have a staff morale problem that needs addressing?
Poll
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Target is in a tight financial spot. Over the past 20 years, its operating margin has averaged 7.2%. Last fiscal year, it was 5.2%. Last quarter, it was just 3.8%. Against this backdrop, Target needs to invest more in many things – including in-store staffing numbers – but it has to do this without driving down profit further. This means there will be a lot of give-and-take in what the firm spends money on. One of the current compromises is on store pay. While it would be nice to increase this, it would take a huge chunk of the money Target has to invest – and it would not necessarily improve much for the customer. The danger is that Target loses talent, but as there is flexibility on wage rates and Target still pays somewhat above the retail average, the business can likely mitigate this.
Driving sales is about driving in-store conversion and adding and properly directly these store-level labor hours should deliver a meaningful conversion lift. Investing in staff hours and training is the right move, notwithstanding the unfortunate job cuts that helped fund the additional hours. But this isn’t just a ‘Target’ thing. Headlines are littered with major corporations shedding jobs, including high flying tech firms. Target has been through some especially challenging times, including issues it created itself, but it still generates over $100B a year in sales. That doesn’t happen by accident. Transformation, change and tumult – including layoffs – make employees feel insecure, and this must be impacting morale. However, Target needs to show progress on the financial performance front. As success builds (assuming it does), morale should improve. The opposite is also true.
Pay rates don’t exist in a vacuum: it sounds like Target pays comparably to (what is perceived as) its main competitor, so yes, “just right” sounds liike an apt description. Large rises over the past decade – or what seemed to be such (it’s hard to tell as the comparison was a minimum vs. an average) – may have have raised hopes they’d continue, but that’s all they were, I’m afraid.
Whether Target made the right move depends on how we define competitiveness in today’s labor market. Retail store pay shouldn’t be judged in isolation — it should be measured against the competitive marketplace and the alternatives available to the highest-quality workers. If the best associates can earn more elsewhere with comparable flexibility and advancement opportunities, wages will inevitably become part of the equation. Pay can also be judged pragmatically by retention and turnover rates: if churn remains high, that’s often a signal that compensation and opportunity aren’t aligning with market expectations. Investing in hours and training is meaningful—particularly if it creates more stable schedules and clearer career paths—but it cannot fully substitute for competitive wages in a tight labor market.
There’s also a longer-term economic lesson here. Walmart learned a few years ago what Costco has demonstrated for decades: you can often save money by paying more and retaining the best talent over time. Lower turnover reduces recruiting and onboarding costs, preserves institutional knowledge, and strengthens execution on the selling floor. When experienced associates stay, customer service improves, operational errors decline, and sales performance typically follows. That virtuous cycle is difficult to replicate with a constantly rotating workforce.
As for morale, it’s less about a single policy decision and more about whether associates feel valued, supported, and fairly compensated relative to their effort and the competitive landscape. Training and hours matter—they signal investment in people—but morale ultimately comes down to the overall employment proposition: pay, stability, growth opportunities, and culture. Retailers that strike the right balance across those levers tend to see stronger retention, better service, and more durable financial performance.
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Target is in a tight financial spot. Over the past 20 years, its operating margin has averaged 7.2%. Last fiscal year, it was 5.2%. Last quarter, it was just 3.8%. Against this backdrop, Target needs to invest more in many things – including in-store staffing numbers – but it has to do this without driving down profit further. This means there will be a lot of give-and-take in what the firm spends money on. One of the current compromises is on store pay. While it would be nice to increase this, it would take a huge chunk of the money Target has to invest – and it would not necessarily improve much for the customer. The danger is that Target loses talent, but as there is flexibility on wage rates and Target still pays somewhat above the retail average, the business can likely mitigate this.
Driving sales is about driving in-store conversion and adding and properly directly these store-level labor hours should deliver a meaningful conversion lift. Investing in staff hours and training is the right move, notwithstanding the unfortunate job cuts that helped fund the additional hours. But this isn’t just a ‘Target’ thing. Headlines are littered with major corporations shedding jobs, including high flying tech firms. Target has been through some especially challenging times, including issues it created itself, but it still generates over $100B a year in sales. That doesn’t happen by accident. Transformation, change and tumult – including layoffs – make employees feel insecure, and this must be impacting morale. However, Target needs to show progress on the financial performance front. As success builds (assuming it does), morale should improve. The opposite is also true.
Pay rates don’t exist in a vacuum: it sounds like Target pays comparably to (what is perceived as) its main competitor, so yes, “just right” sounds liike an apt description. Large rises over the past decade – or what seemed to be such (it’s hard to tell as the comparison was a minimum vs. an average) – may have have raised hopes they’d continue, but that’s all they were, I’m afraid.
Whether Target made the right move depends on how we define competitiveness in today’s labor market. Retail store pay shouldn’t be judged in isolation — it should be measured against the competitive marketplace and the alternatives available to the highest-quality workers. If the best associates can earn more elsewhere with comparable flexibility and advancement opportunities, wages will inevitably become part of the equation. Pay can also be judged pragmatically by retention and turnover rates: if churn remains high, that’s often a signal that compensation and opportunity aren’t aligning with market expectations. Investing in hours and training is meaningful—particularly if it creates more stable schedules and clearer career paths—but it cannot fully substitute for competitive wages in a tight labor market.
There’s also a longer-term economic lesson here. Walmart learned a few years ago what Costco has demonstrated for decades: you can often save money by paying more and retaining the best talent over time. Lower turnover reduces recruiting and onboarding costs, preserves institutional knowledge, and strengthens execution on the selling floor. When experienced associates stay, customer service improves, operational errors decline, and sales performance typically follows. That virtuous cycle is difficult to replicate with a constantly rotating workforce.
As for morale, it’s less about a single policy decision and more about whether associates feel valued, supported, and fairly compensated relative to their effort and the competitive landscape. Training and hours matter—they signal investment in people—but morale ultimately comes down to the overall employment proposition: pay, stability, growth opportunities, and culture. Retailers that strike the right balance across those levers tend to see stronger retention, better service, and more durable financial performance.