Target is raising its minimum hourly wage for the third time in three years and plans to offer $15 per hour by the end of 2020.
The company announced on Monday that it would pay employees a starting wage of $11 per hour beginning in October. Last year, Target‘s minimum wage was raised to $10 and the year before that to $9, keeping competitive with Walmart’s wage increase.
Videos by PopCulture.com
With this strategy looking to 2020, the retailer would meet a union-led push for the “Fight for Fifteen” which urges companies across all industries to offer a $15 minimum hourly pay. Currently, the federal minimum requires employees must earn $7.25 as hourly base pay.
This increase also comes as the retailer puts in motion a plan to maintain quality employees as it looks to improve sales performance. Rival company Walmart credits its increase in wages for employees for its 12 quarters of sales increases in the U.S. and for improving customer services scores.
Aside from wage increases, other facets of Target’s $7 billion improvement plan include rolling out new boutique-style clothing and furniture brands in the company’s inventory, remodeling stores, expanding online services and opening smaller stores in cities and college towns.
“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,” Target CEO Brian Cornell told reporters during a media call last week, Daily Mail reports.
The proposed raises will effect “thousands” of the company’s current 323,000 workers and will also apply to this year’s 100,000 hired holiday employees, a 43 percent increase over last year.
As some improvements have already been put into effect at Target, company leaders says they are already reaping the benefits. Target’s most recent quarter of sales rose 1.3 percent after four consecutive quarters of declining earnings. Shopper visits rose and e-commerce grew 32 percent.
Though such a drastic wage increase by the conclusion of 2020 may impact the company’s profit, Target maintains that this trailblazing effort will improve customers’ satisfaction and employee performance. It plans to address potential hits to its bottom line at its next analyst day for Wall Street later this year.
