In a move that may pressure other retailers to lift wages, Target on Monday said it plans to raise its minimum hourly wage to $11 next month, with a goal to up that to $15 by the end of 2020.
The new hourly wage will affect thousands of Target employees in the country and also apply to the more than 100,000 hourly seasonal hires for the upcoming holiday period, the company said. Target spokeswoman Jenna Reck declined to detail the financial impact of the investment or the average hourly wage employees make. Target has more than 323,000 employees.
The move comes when overall unemployment rates are near 16-year lows, and when the industry’s turnover rate has risen. The stakes are especially high heading into the industry’s critical holiday sales season as brick-and-mortar retailers in particular are betting on better in-store customer service to fight off online sellers.
A survey of retail executives by Retail Systems Research (RSR) signaled how critically important employees are to in-store operations. The executives pointed to employee-related issues as the most significant opportunities to improve in-store shopping experiences.
Retail hourly store employees tend to have the highest turnover rate in the industry, according to the Hay Group division of executive search and recruiting firm Korn Ferry in a November 2016 study. Worse yet, the study showed the hourly store employee turnover rate last year jumped to 65%, the highest since before the Great Recession, up from 57% in 2015.
For Target, this is the third significant wage increase in recent years, and it is far from alone in pushing wages higher. The most recent move means that its new minimum hourly wage tops Walmart's by $1.
Walmart too has had multiple wage hikes in recent years, and some of those increases sparked similar moves, including hikes at Target and TJX.
In January 2016, Walmart said it was giving a pay hike to more than 1.2 million Walmart US and Sam’s Club employees, including raising minimum hourly wage to at least $10 an hour for existing employees. Walmart has also started what it called Walmart Training Academy to give employees additional training and resources.
Walmart’s two-year, $2.7 billion investment in higher wages and worker development has been cited as driving a variety of in-store improvements at the company. “These initiatives are paying off for our customers through cleaner stores, friendlier service and faster check-out times,” Walmart CEO Doug McMillon said on the company’s Q4 earnings call in February.