Target Is Raising Wages to Refresh Business and Set New Standard in Retail

Target plans to raise its hourly pay in another effort to attract more employees and keep those who already work at its stores. On Monday, the company said it would raise its minimum hourly pay range to between $15 and $24 for employees at Target stores, supply-chain facilities, and headquarters. The exact range will depend on the market, but Target wants to be a "wage leader in every market where it operates," the company said.

The Minneapolis-based retail chain will invest up to $300 million to increase pay and benefits for employees, reports the Wall Street Journal. Target will also start allowing store associates working at least 25 hours a week to sign up for a Target medical plan in April. Previously, employees had to work at least 30 hours to sign up. This decision means about 20% more employees are eligible, Target said.

In 2017, Target said it would increase hourly wages to $15 by 2020, but the changing U.S. labor market forced the company to rethink the pay range, reports the Associated Press. Retailers across the country followed Target's lead, but many are still facing labor shortages following the coronavirus pandemic. However, Walmart is still behind, with its minimum wage increased to $12 last fall. Walmart raised hourly wages for over 565,000 store employees by at least a dollar as well.

Target has about 1,900 stores and 350,000 employees in the U.S. The company hopes that the pay range increase will slow employee turnover, which is lower than it was during the pandemic already, Target said. Target also hired more seasonal workers at stores and at supply-chain facilities during the 2021 holiday season.

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Although retailers are increasing their pay ranges, many are still reporting labor shortages. A survey conducted by consulting firm Korn Ferry in January found that 96% of the 100 major retailers surveyed reported difficulty finding new employees. The same survey found that 88% said it was difficult to find new employees for distribution centers. In January, the average pay for retail workers climbed 7.1%, which was faster than pre-pandemic trends, notes the AP. However, the spike in inflation, leading to a jump in prices for consumer products, offsets the increases for workers.