Workers at Target stores and distribution centers in places like New York, where competition to find and hire staff is fiercest, could see starting wages as high as $24 an hour this year.
The Minneapolis-based discount retailer said Monday it would adopt minimum wages ranging from $15 to $24 an hour, with the highest pay going to hires in the most competitive markets. He currently pays a universal starting wage of $15 an hour.
The new starting salary range is part of a company plan to spend an additional $300 million on its workforce this year, which will also include broader and faster access to healthcare coverage. healthcare 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 hold a leading position in the industry.”
Target set a new marker for the retail industry in 2017 when it announced it would raise hourly wages to $15 by 2020. But the dynamics of the U.S. labor market have changed during the pandemic, with many employers facing severe labor shortages. And many Target competitors now pay a minimum of $15 an hour or more.
Target, which has about 1,900 stores and 350,000 employees in the United States, noted that its employee turnover rate is now actually lower than before the pandemic. The retailer also said it was on track to exceed its goal of hiring 100,000 seasonal workers in its stores and 30,000 in its supply chain network across the country throughout the 2021 holiday season. But Target realized it needed to take an even more localized approach to salaries. He said he was still doing his analysis and declined to name the areas that will receive 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, a number of rivals like Best Buy have followed suit, with some overtaking Target. Costco raised its minimum hourly wage for workers from $16 to $17 last fall. Amazon’s starting salary is $15 an hour, and the e-commerce giant’s national average starting salary for transportation and fulfillment jobs is $18 an hour.
Walmart continues to lag: Last fall it raised its minimum wage to $12, up from the hourly base of $11 it set in 2018. Walmart has also increased wages by at least a dollar. schedules of more than 565,000 store employees.
Many retailers say they are struggling to find workers. According to a recent survey of more than 100 large retailers with annual revenues between $500 million and more than $20 billion, 96% said they had trouble finding store employees. The survey conducted by global consultancy Korn Ferry in January also found that 88% said it was difficult to find workers in fulfillment centres.
This demand for workers has steadily pushed up wages, especially for low-income workers. According to the Federal Reserve Bank of Atlanta, wages for the poorest quarter of workers jumped 5.8% in January from a year ago. That’s double the earnings for the highest-paid quarterback.
In January, average pay for retail workers, excluding managers, jumped 7.1% from a year earlier to $19.24 an hour. That’s faster than pre-pandemic gains. In January 2020, the compensation of workers in retail trade increased by 4.2% compared to the previous year. In January 2017, it only increased by 1.7% compared to the previous year.
But inflation has eroded most of those increases, with consumer prices rising 7.5% over the past year, the biggest increase in four decades. Yet this spike in inflation followed a year of moderate price increases. Over the past two years, according to a study by the Dallas Fed, wage increases have been strong enough to offset inflation, leaving workers, on average, with slightly higher inflation-adjusted wages.