Great ResignationInflationSupply ChainsLeadership

Target’s $15 minimum wage is now permanent

June 17, 2020, 1:58 PM UTC

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Target announced today it will raise its internal minimum wage for hourly workers to $15 an hour in early July, making permanent what had been a temporary raise to compensate workers during the coronavirus pandemic and reaching the wage goal it had set years ago a few months ahead of schedule.

In 2017, Target, which had been looking to improve customer service and hold on to good workers in a tight labor market, said it would boost its minimum wage to $15 by the end of 2020. Amazon hit that level in late 2018, while Walmart’s is currently $11, excluding temporary incentives.

But with a surge in business as shoppers have stocked up on essentials since March when the pandemic hit the U.S. in earnest, Target, like other retailers, boosted its starting pay temporarily from $13 an hour to $15. Improved benefits and pay were designed to entice workers in what have often been difficult and even dangerous conditions in stores and warehouses.

Walmart—which has ramped up staffing by hundreds of thousands of people, many on temporary assignment, to cope with the surge in business—spent $675 million in the first quarter alone on things like bonuses and extra benefits. Some 270,000 of its 1.5 million U.S. employees have taken coronavirus-related leave in recent months. Other retailers, notably Kroger, have ended their so-called hero pay, a $2 an hour raise, as shopping patterns have begun to return to normal.

Target, which reported stellar first-quarter sales results, is spending $1 billion more this year on things like wages, paid sick leave, and safety equipment (such as masks) than it did last fiscal year.

While the fact that 20.9 million Americans are currently receiving unemployment benefits could suggest retail talent is plentiful, chains like Target rely on motivated employees doing work in stores that is more complex than that of even just a few years ago in part because of the integration of e-commerce. Prior to the pandemic, Walmart and Target had been gradually improving compensation for hourly workers to lift motivation and the quality of customer service. Both chains have been among retail’s best performers in recent years.