Target Corp. is raising the minimum wage for its hourly workers next month to at least $9 an hour as it has faced mounting pressure following a similar decision by rival Wal-Mart last month.
Wal-Mart, the nation’s largest employer, garnered much attention when it said it would raise entry-level wages to $9 an hour in April and then to $10 an hour by February 2016. The move was expected to have a domino effect among other companies and soon after it spurred TJX Cos., the parent company of T.J. Maxx and Marshalls, to follow suit.
Analysts have said that Target would have to match those wages in order to hang on to employees amid a tightening labor market. After all, retailers are not duking it out just on price and the specific products they sell, but also on the customer service inside their stores.
“It’s the people,” said Craig Johnson, a retail analyst with Customer Growth Partners. “Anytime you invest a little bit more in your people, that’s a good thing, particularly where the people are a big part of the store experience.”
On Wednesday, Target officials declined to disclose what it pays hourly employees now or how many currently fall below $9 an hour.
“We make sure we’re competitive in every marketplace in which we do business,” said Molly Snyder, a Target spokeswoman.
“As part of that, we regularly and continually evaluate the marketplace to make sure our wages are competitive.”
She added that pay raises often happen in the spring as part of a merit process.
The company has said in the past that it pays above the federal minimum wage of $7.25 in all of its stores.
A recent review of wages by the firm Payscale, which studies compensation, found that the median pay for Target’s entry-level cashiers was $8.30 an hour, compared with $8.40 at Wal-Mart and $10.90 at Costco. Target paid slightly more than McDonald’s and grocery chain Kroger’s, according to the study.
Target already is paying at least $9 an hour in states like California that have higher minimum wages.
In those places, analyst Johnson said, “It’s a little bit like giving away the sleeves out of your vest.”
As it raises the minimum that guides wages for most of its 350,000 employees, Target also is in the midst of downsizing its corporate staff in the Twin Cities and closing its Canadian stores.
Last week, it laid off 1,700 people at its headquarters, a move that will cost it $100 million in severance. It also is spending hundreds of millions more to close the 133 stores in Canada, where 17,600 are losing their jobs.
UltraViolet, an advocacy group, said nearly 25,000 people have signed an online petition asking Target to raise its minimum wage. The group also ran online ads near a handful of Target stores highlighting Wal-Mart’s recent wage announcement.
On Wednesday, the group cheered Target’s move and urged the retailer to go further by raising its minimum wage to $10 an hour.
“This is a huge victory for hundreds of thousands of women living at near-poverty levels nationwide, but it is far from a living wage,” Nita Chaudhary, the group’s founder, said in a statement. “Women working full-time deserve to be able to feed their kids and pay their rent.”
After a meeting with analysts in New York earlier this month, Target chief executive Brian Cornell said the company was planning to raise wages in 2015 as part of a regular annual review.
He declined then to give a specific figure and noted that the company pays different amounts depending on the living costs and minimum wages in regional markets.
“The wages we pay in the Northeast — or in New York and New Jersey — are very different from what’s competitive in Kansas or Missouri,” he said.
He also added that the company is committed to training employees to move into leadership positions, noting that about 60 percent of Target’s store managers started out as hourly employees.