Target raises minimum wage to $12, with hopes of hitting $15 by 2020

Target is hiking its minimum hourly pay for workers to $12 this spring, part of its multi-year strategy that’s meant to modernize and expand the company to become a major competitor in the era of Amazon.

That strategy includes raising the minimum pay to $15 by 2020, but also offering free two-day shipping, increasing the availability of its in-store delivery options and remodeling more than 300 stores around the country. In October, the discount retailer raised its minimum wage to $11 from $10.

“We’re making Target America’s easiest place to shop,” Brian Cornell, Target’s chairman and CEO said in a statement. “That means blending the best of our physical and digital assets to create new experiences for our guests and reimagining our network of stores into hubs for commerce and community.”

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TGT TARGET CORP. 167.78 -0.60 -0.36%

The company’s plan -- which was announced Tuesday during its investor meeting in Minneapolis -- comes in the midst of a national conversation about the minimum wage. Beginning in 2018, 18 states and 20 cities raised the minimum wage, ranging from $8.60 in New Jersey to $11 in California.

The campaign for a $15 minimum wage has been divisive. A study conducted by the Employment Policies Institute (EPI), which analyzed employment trends from 1990 through 2017, found that every 10% increase in the minimum wage in California has resulted in a corresponding 2% decline in employment for affected employees.

By those estimates, the EPI projects that the pending $15 minimum wage hike would cost California 400,000 private sector jobs, with heavy losses in both the foodservice and retail sectors. Conversely, a study by the Institute for Research on Labor & Employment at U.C. Berkeley found that a higher minimum wage could contribute a small amount of jobs to the state economy by 2023. The minimum wage increase would raise employment by 0.1%, equal to about 13,000 jobs, by 2023, according to the group’s study.

Target’s quarterly profits just barely missed expectations at $2.02 per share (adjusted for one-time gains and costs, they were $1.37). Revenue grew by 10% to $22.8 billion, compared to last year’s $20.7 billion.

or $2.02 a share, in the fourth quarter, compared with $817 million, or $1.45, a year earlier. Earnings, adjusted for one-time gains and costs, were $1.37 a share,

Earlier this year, Walmart -- the largest discount store in the U.S. and perhaps Target’s biggest competitor -- announced it would raise entry-level wages to $11 in February. On the same day, the company said it would lay off thousands of employees.

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