How Target’s Minimum Wage Hike to $13 an Hour Puts Pressure on Retailers

As retailers continue to struggle with hiring, Target is looking to break the mold — starting with its very own workers.

The Minneapolis-based big-box chain announced today that it would be raising its minimum hourly wage by a dollar to $13, beginning in June, as part of a commitment to hit $15 an hour by the end of 2020. The company employs more than 300,000 workers and operates nearly 1,850 stores across the country.

“It takes a diverse, high-performing and engaged team to create experiences that make guests feel welcome and inspired, and keep them coming back,” human resources chief Melissa Kremer wrote in a blog post on Target’s website. “So investing in our team members is essential to keep our business growing and thriving.”

Target’s first major increase came in October 2017 — a month after it first unveiled plans to reach its 2020 goal — when it advanced its minimum wage to $11. Last March, it bumped that number up a dollar.

During the critical holiday shopping period, Target hired 120,000 seasonal employees, who started at $12 or more. “That helped us reach our seasonal hiring goal ahead of schedule, which gave our teams a lot of extra time to train and prepare for our busiest season of the year,” Kremer said.

(The company delivered better-than-expected fourth-quarter results, with adjusted earnings per share that came in at $1.53 — up 12.5 percent from the same period in 2017.)

In the current economy, job seekers appear to have the upper hand. With the unemployment rate still relatively low, retailers are finding themselves hard-pressed in the pursuit of qualified candidates, who can be persuaded to demand higher compensation.

Last fall, e-commerce giant Amazon boosted its employees’ minimum wage to $15 per hour and revealed that its public policy team was working with congressional members to campaign for a higher federal minimum wage, which is set at $7.25. And last January, competing chain Walmart said it would lift the starting wage to $11 from $9, as it reaped the benefits of the tax reform law that cut down corporate rates.

It remains to be seen whether Walmart will step up its efforts to raise wages and if Amazon will feel pressured to become even more aggressive, should Target meet its $15 goal next year. Rival Costco, which also hitched up its minimum wage to $14 in June, faces similar hiring challenges.

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