The Minneapolis-based discount retailer said Monday it will adopt minimum wages ranging from $15 to $24 an hour.
Workers at Target stores and distribution centers in places like New York, where competition to find and hire staff is fiercer, could see starting wages as high as $24 an hour this year.
The Minneapolis-based discount retailer said Monday it will adopt minimum wages ranging from $15 to $24 an hour, with the higher wage going to hires in the most competitive markets. He currently pays a universal starting salary of $15 per hour.
The new starting pay range is part of a plan by the company to spend an additional $300 million on its workforce this year that will also include broader and faster access to health care coverage for its hourly workers.
“The market has changed,” Target CEO Brian Cornell said in an interview with The Associated Press. “We want to continue to have a leadership position in the industry.”
Target set a new milestone for the retail industry in 2017 when it announced it would increase hourly wages to $15 by 2020. But the dynamics of the US labor market have changed during the pandemic, with many employers facing severe worker shortages. And many of Target’s rivals now pay a minimum of $15 an hour or more.
Target, which has about 1,900 stores and 350,000 employees in the US, said the turnover rate among its employees is now lower than it was before the pandemic. The retailer also said it was able to exceed its goal of hiring 100,000 temporary workers in its stores and 30,000 in its supply chain network across the country during the 2021 holiday season.
But Target has realized it needs to take an even more localized approach to wages. He said he’s still doing his analysis and declined to name the areas that will get the highest starting salary.
When Target first announced in 2017 that it would pay $15 an hour by 2020, it was one of the first major retailers to do so. But during the pandemic, several rivals like Best Buy followed suit, with some outperforming Target. Costco raised its minimum hourly wages for workers from $16 to $17 last fall. Amazon’s starting wage is $15 per hour, and the e-commerce giant’s national average starting wage for transportation and fulfillment jobs is $18 per hour.
Walmart is still lagging behind: Last fall, it raised its minimum wage to $12, from the $11 an hour base it set in 2018. Walmart also increased the hourly wages of more than 565,000 store workers by at least a dollar.
Many retailers say they are having a hard time finding workers. According to a recent survey of more than 100 major retailers with annual revenue between $500 million and more than $20 billion, 96% said they had trouble finding employees in stores. The survey conducted by global consultancy Korn Ferry in January also found that 88% said it was difficult to find workers at distribution centers.
That demand for workers has steadily pushed up wages, particularly for low-income workers. According to the Federal Reserve Bank of Atlanta, the wages of the poorest quarter of workers increased 5.8% in January, compared to a year ago. That’s double the earnings of the highest-paid fourth party.
In January, the median wage for retail workers, excluding managers, increased 7.1% from a year earlier to $19.24 an hour. That’s faster than pre-pandemic gains. In January 2020, the salary of retail workers increased by 4.2% from the previous year. In January 2017, it was up just 1.7% from a year earlier.
But inflation has eaten up most of those gains, with consumer prices rising 7.5% last year, the biggest increase in four decades. However, that rise in inflation followed a year of moderate price increases. Over the past two years, according to research from the Dallas Fed, wage increases have been strong enough to offset inflation, leaving workers, on average, with slightly more inflation-adjusted wages. high.
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