Will Target’s wage hikes be a differentiator?
Target Corp. announced on Monday plans to raise its minimum hourly wage to $11 in October and to $15 by the end of 2020.
Target said the higher wages will allow the retailer to better recruit and retain employees with the aim of supporting “an elevated experience” for its shoppers. The $11 rate next month also applies to the more than 100,000 seasonal temps it expects to hire. Entry-level hourly wages were raised to $10 last year from $9 previously.
“Target has always offered market competitive wages to our team members,” said Brian Cornell, CEO and chairman, in a statement. “With this latest commitment, we’ll be providing even more meaningful pay, as well as the tools, training and support our team needs to build their skills, develop professionally and offer the service and expertise that set Target apart.”
The move to $11 puts Target well above the $7.25 per hour federal minimum wage and past Walmart’s base rate of $10.
According to Glassdoor, starting wages for cashiers are $9.17 at Walmart and $12.56 at Costco. Amazon fulfillment center workers start at $12.42.
The move comes amid heightened competition for workers in a strengthening labor market and recent wages hikes by competitors. Walmart made waves for raising its entry-level hourly pay for its associates to $9 in 2015 and then to $10 in 2016. Management has said such moves have improved its scores on customer service surveys.
Several liberal leaning U.S. cities also recently raised their wages, and ongoing petitions for minimum wage hikes at McDonald’s, Starbucks and other places continue.
Target has been investing in hip private label brands and reducing prices to be more competitive with Walmart and Amazon. Staying a step ahead of competitors with wage hikes may gain some goodwill with consumers ahead of the holiday selling season. Reducing turnover may also support better in-store service and reduce the costs of employee training.
Target said the wage increases would not hurt its previously announced full-year and quarterly earnings forecasts.
- Target Raises Minimum Hourly Wage to $11, Commits to $15 Minimum Hourly Wage by End of 2020 – Target
- Target to raise its minimum hourly wage to $15 by the end of 2020 – Los Angeles Times/Associated Press
- Target raises minimum hourly wage to $11, pledges $15 by end of 2020 – Reuters
- Target Raises Base Pay to $11 an Hour Heading Into Holidays – New York Times
DISCUSSION QUESTIONS: To what extent will increased starting wages improve Target’s ability to recruit and retain good workers? Do you see the higher wage battle continuing among top chains?