Target raises minimum pay to $11

MINNEAPOLIS—With a tightening labor market and a holiday hiring spree underway, Target Corp. said Monday that it will raise the minimum wage of all hourly workers to $11 starting in October.

It will bump the rate to $15 an hour by the end of 2020, becoming one of the nation’s first major employers to set a date to hit that mark.

Executives at the Minneapolisbased retailer declined to say how many of its 323,000 hourly employees at stores and distribution centers might get a raise from the current base pay of $10 an hour.

The new policy also will apply to 100,000 seasonal workers it is hiring for the upcoming holiday shopping season.

“It’s part of our overall commitment to investing in our team and making sure we’re attracting and retaining great talent,” Target chief executive CEO Brian Cornell told reporters.

An improving economy and constricting job market is putting pressure on companies to boost pay for entry-level jobs such as cashiers and shelf stockers, where turnover is high.

“Right now, labor conditions in the retail industry are tight,” said Craig Johnson, a retail analyst with Custom Growth Partners. “That’s why you see 30 people in line but only two or three checkout lines manned. That drives people nuts. That’s because much of retail doesn’t pay sufficiently for the services offered.”

Target is signaling it wants to compete more aggressively with Costco as “employer of choice,” Johnson said, noting Costco’s relatively low turnover rate, and better pay and benefits.

At a time when consumers can make easy price comparisons on similar products, retailers’ best chance of winning new business is through superior customer service, which means getting people in an out of stores quickly and making sure there are enough workers around to answer questions.

“All that means human capital,” Johnson said.

The move puts Target in step with a national movement by organized labor and anti-poverty groups to raise the federal minimum wage to $15 an hour. Minneapolis this summer joined at least three dozen other cities that have voted to raise hourly pay to at least $15 an hour in the coming years.

Cornell said Target takes a market-by-market approach to evaluating and adjusting starting pay for its front-line workers, adding that all employees earn above the federal minimum wage of $7.25.