Target Corp is raising its minimum hourly wage for workers to $11 starting next month and and vows to raise it to $15 by the end of 2020.
The initiative, announced on Monday is part of the chain store’s overall strategy to improve its business, which includes remodeling stores, expanding its online services and opening up smaller urban locations.
Target quietly raised entry-level hourly wages to $10 last year from $9, following initiatives by Walmart and others to hike pay in a very competitive marketplace.
But Target’s increase to $15 per hour far exceeds not only the federal minimum of $7.25 but the hourly base pay at Walmart, the nation’s largest private employer.
Target Corp announced on Monday it was raising its minimum hourly wage for workers to $11 starting next month and and vowed to raise it to $15 by the end of 2020 (Pictured, a Target store in Hialeah, Florida)
‘We see this not only as an investment in our team but an investment in an elevated experience for our guests and the communities we serve,’ Brian Cornell, CEO of Target, told reporters on Friday.
The changes come as thousands of workers have protested to call attention to their financial struggles and to fight for $15 an hour.
The election of a Republican-controlled Congress dampened hopes of an increase in the federal minimum wage, but advocates have continued to press at the state and local level.
At the same time, competition for lower-skilled workers has heated up. As shoppers get more mobile-savvy, retailers want staffers who are more skilled at customer service and in technology such as using iPads to check out inventory.
Target says its minimum hourly wage of $11 is higher than the minimum wage in 48 states and matches the minimum wage in Massachusetts and Washington.
It says the pay hike will affect thousands of its more than 300,000 workers, but it declined to quantify the percentage of its workforce. It said the increase to $11 per hour will apply to the more than 100,000 hourly workers that Target will be hiring for the holiday season.
Target is spending $7 billion over three years to remodel old stores, open small ones in cities and college towns and offer faster delivery for online orders. It is also adding more clothing and furniture brands (Pictured, Target CEo speak to investors in New York in March 2016)
Ken Perkins, president of research firm Retail Metrics LLC, called Target’s decision ‘astute.’
‘Target is really trying to gain market share in an environment where there is tremendous upheaval,’ Perkins said. But he believes only a few dozen healthy retailers, such as Best Buy, Home Depot and Walmart, could mirror what Target is doing.
Target is seeing signs that its turnaround efforts are starting to win back shoppers.
In August, it reported that a key sales figure rose in the second quarter, reversing four straight quarters of declines, and its online sales jumped 32 percent. The company also boosted its earnings expectations for the year.
Target is spending $7 billion over three years to remodel old stores, open small ones in cities and college towns and offer faster delivery for online orders. It is also adding more clothing and furniture brands.