Minneapolis-based discount retailer Discounts.com announced Monday that it would adopt minimum wages ranging from $15 to $24 per hour. The highest pay will go to those who work in the most competitive markets. The current starting wage is $15 per hour.
This new starting wage range is part a $300 million company plan that will increase its labor force by $300 million this year. It will also provide greater and faster access to healthcare for hourly workers.
Brian Cornell, Target CEO, stated that the market has changed in an interview with The Associated Press. "We want to maintain our industry-leading position."
Target's 2017 announcement that it would raise hourly wages by $15 by 2020 was a landmark in the retail industry. The U.S. labor market dynamics have changed since the pandemic. Many employers are now facing severe worker shortages. Target's competitors are paying $15 an hour or more.
Target, with approximately 1,900 stores and 350,000 workers in the U.S., stated that its turnover rate is actually lower than it was before the pandemic. Target also stated that it exceeded its goal to hire 100,000 seasonal workers in its stores and 30,000 workers in its supply chain network throughout the holiday season 2021. Large companies trying to attract workers during the holiday season 2021 were doing everything they could to get applicants. Amazon, Walmart, and Macy's were just a few of the many companies that offered unbeatable wages, signing bonuses and health care benefits, as well as tuition reimbursement.
Target recognized that it needed to take a more localized approach when it comes to wages. Target said that it is still conducting its analysis, but declined to identify the areas that would be receiving the highest starting wages.
Target was the first major retailer to announce that it would pay $15 per hour by 2020 when it first announced it in 2017. However, other rivals such as Best Buy followed Target's lead during the pandemic. Some even surpassing Target. Costco increased its minimum hourly wage for workers last fall from $16 to $17. Amazon's starting hourly wage is $15, while the national average starting hourly wage for jobs in fulfillment and transportation is $18.
On January 1, Hobby Lobby, a craft chain, raised its hourly wage to $18.50 per hour for full-time employees. In October 2020, the 49-year-old company raised its minimum hourly wage to $17. Part-time workers earned an hourly rate of $13.
Walmart raised its minimum wage from $11 an hour in 2018 to $12 last fall. Walmart also increased the hourly wage for over 565,000 employees by at least one dollar.
The labor shortage continues
Many retailers claim that they are having difficulty finding workers. A recent survey of over 100 major retailers with annual revenues of $500 million to $20 billion found that 96% reported difficulty finding employees. In January, global consulting firm Korn Ferry conducted a survey and found that 88% of respondents said it was difficult finding distribution-center workers.
The demand for workers has pushed up wages steadily, especially for those with lower incomes. The Federal Reserve Bank of Atlanta reported that the median wage for the poorest quarter of workers increased by 5.8% in January compared to a year ago. This is twice the gain for the highest-paid quarter.
The average retail worker's hourly pay rose 7.1% to $19.24 an hr in January from the previous year. This is faster than the pre-pandemic gains. Retail workers saw a 4.2% increase in their pay in January 2020 compared to the previous year. It rose 1.7% in January 2017 compared to the previous year.