An interesting development this week has been America's eighth largest retailer (by sales), Target Corp, announcing that they will increase their minimum wage to $13 per hour. This is especially important considering that the US unemployment rate has been at its lowest in half a century and retailers are having difficulty in attracting workers. There has been increased political pressure in the nation to raise the minimum wage to at least $15 per hour, and massive companies such as Amazon Inc and Costco Wholesale Corp have followed that exact route in the past year. In the midst of all this, Target has decided to go from an hourly minimum wage of $12 to $13, after just raising it from $11 to $12 early last year.
In contrast, the world's largest retailer, Walmart, has stuck to paying entry-level workers an hourly wage of $11. While their spokespeople have said that workers end up making over $15 when their wages and benefits are combined, this announcement from Target will undoubtedly have at least a minor effect on Walmart's labor activity. A possible issue that has been raised about this news is whether the Target workers already earning $13/hour will see an equal rise in their wages or not. This could be problematic since $13/hour earning experienced workers would be motivated to earn more than new hires and not receiving an increase would lower their motivation. Moreover, there have been reports in the past about similar companies raising minimum wages but then cutting the hours of their workers to keep the average payroll cost the same relatively. However Target decides to proceed, this could be a crucial moment for America's labor market in realizing their values and possibly standing up to corporations such as Walmart.
Article link: https://www.reuters.com/article/us-target-wages/target-raises-minimum-wage-to-13-an-hour-in-tight-labor-market-idUSKCN1RG1F9
2 comments:
Hi Ahmed - thanks for sharing this article! I think it is definitely interesting that target has been upping their hourly salaries for their workers for the past few years. I think this is definitely a signal to the market in terms of the successful revenues that the company is incurring as well as their investment in human capital. While the majority of the retail sector is doing quite poorly where online sales sites like amazon are taking more market share, it is interesting to me that target is making this corporate decision instead of investing their funds in more technological advancement. I wonder if workers at Walmart or other large retailers will try to encourage their respective companies to stay competitive with wages as well.
The minimum wage talk in recent months has been very interesting. Especially as companies who are not the leader in their industry decide to raise wage, I always see this as a game. Target, who undoubtedly brings in less revenue than Walmart will pay their employees more, possibly in hopes of seeing Walmart do the same here soon. Regardless, in a time where the FED has to be extremely careful with their monetary policy, the raising of minimum wage will only increase the chance of inflation. I hope that this sweeping raising of wages across the country wont affect price levels too much, but I can only hope.
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