In New York, where it is toughest to hire and find employees, starting wages will reach $24 an hour this year at Target stores and distribution centers, CBSNews reported.
According to the report, the discount retailer said it would set its minimum wage between $15 and $24 an hour, with the highest salaries going to new hires in competitive markets. At present, the $15 hourly wage is universal.
Besides providing broader, faster access to health care coverage for its hourly workers, the new wage range is part of the company’s $300 million plan to invest in its labor force this year.
“The market has changed,” Target CEO Brian Cornell told The Associated Press. “We want to continue to have an industry-leading position.”
Back in 2017, Target announced it would raise its hourly wages to $15 by 2020, setting a new benchmark for the retail industry. However, during the pandemic, the labor market has changed in the United States, with many employers facing severe staffing shortages. In addition, many of Target’s competitors now pay at least $15 per hour.
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With more than 1,900 stores in the U.S. and 350,000 employees, Target has seen its turnover rate drop. Over the course of the holiday season of 2021, the retailer hired 100,000 seasonal workers at its stores and 30,000 in its supply chain network across the country. Companies such as Amazon, Walmart, and Macy’s offered unprecedented wages and signing bonuses, health care benefits, and even tuition reimbursement.
Target did realize, however, that it has to pay attention to wages even more locally. As of now, it has not identified the areas that will receive the highest starting wage.
As a result of the pandemic, some of Target’s rivals followed its practices, this includes market giants such as Best Buy. Last fall, Costco increased its minimum hourly wage for workers from $16 to $17. Starting wages at Amazon are $15 per hour, and the average starting wage for the company’s jobs in fulfillment and transportation is $18 an hour. Crafts chain Hobby Lobby on January 1, increased the hourly wage for full-time workers to $18.50 on January 1. In October 2020, the company, which was founded in 1949, raised its minimum hourly pay to $17 for full-time employees and $13 for part-timers. As of last fall, Walmart raised its minimum wage to $12 per hour from the $11 it established in 2018. Over 565,000 store workers also saw their hourly wages increase by at least $1.
A Labor Shortage Persists
Retailers have reported difficulty finding workers. More than 96 percent of retailers with annual revenues between $500 million and $20 billion said they were having difficulty finding store employees, according to a recent survey. According to a survey conducted by global consulting firm Korn Ferry in January, 88% of employers said it is challenging to find workers for distribution centers.
In response to this demand for workers, wages have steadily risen, especially for lower-income workers. Pay for the poorest quarter of workers rose 5.8% in January, according to the Federal Reserve Bank of Atlanta.
The average hourly wage for retail workers, excluding managers, rose 7.1% from a year earlier to $19.24 in January 2022. This is faster than pre-pandemic increases. As of January 2020, retail workers earned 4.2% more than a year earlier. Meanwhile, the increase in January 2017 was just 1.7%.