In a move the company said would boost its service levels – and will likely introduce further pressure on wages for competitors — Target Corp. said Monday that it would increase its minimum hourly pay to $11 in October and to $15 an hour by the end of 2020.
Target’s current minimum pay is $10 per hour, which was implemented in May of 2016. An $11 minimum is higher than the minimum wage in 48 states, and matches the minimum wage in Massachusetts and Washington, the Minneapolis-based company said. The company said the investment would allow Target to continue to recruit and retain strong team members and provide an elevated experience for guests and in the communities it serves.
“Target has a long history of investing in our team members. We care about and value the more than 323,000 individuals who come together every day with an absolute commitment to serving our guest,” said Brian Cornell, CEO and chairman of Target. “Target has always offered market competitive wages to our team members. 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.”
Target said the increase would result in “thousands” of workers receiving a pay raise next month, and would include more than 100,000 hourly team members Target intends to hire for the holiday season. The commitment to move to a minimum hourly wage of $15 will be implemented between now and the end of 2020.
Scott Mushkin, an analyst with Wolfe Research, told SN Monday the move provides “another example of increasing wage pressures in the market.”
That could prove to be one way of reeling in runaway growth by competitors that don’t pay as well, while reducing turnover as Target executes its ongoing initiatives to rebuild sales.
Target did not provide details of the financial considerations of the move, but it did reiterate previously disclosed sales and earnings guidance for the current quarter and fiscal year. Target employs around 323,000 workers overall and operates more than 1,800 stores.
A wage increase and associated initiatives to fund better training and scheduling was seen as a critical element behind Walmart’s rebound since 2015, helping concurrent store cleanliness and service initiatives succeed. Walmart’s initiative included a minimum wage bump to $10 per hour, which Target and other retailers shortly thereafter matched.
Kroger Co. in June said it was also making investments in higher wages for certain store employees, but it did not announce a minimum pay increase. Most of Kroger’s hourly workers are covered by collective bargaining agreements.