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.
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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.”
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.