On Monday, big box leader and cheap chic extraordinaire Target Corp. (TGT - Free Report) announced that it will be upping its minimum hourly wage over the next few years, increasing it to $11 starting next month and committing to $15 by the end of 2020.
Target has previously raised its minimum wage to $10 last May, and before that to $9 an hour in April 2015. The federal minimum wage is $7.25 per hour, which has not increased since July 2009.
"Target has always offered market-competitive wages to our team members," CEO Brian Cornell said in prepared remarks. "With this latest commitment, we'll be providing even more meaningful pay, as well as the tools, training, and support ... that set Target apart."
The pay initiative is another part of Target’s reinvention strategy that includes remodeling stores, growing its smaller store footprint (dubbed City Targets), and expanding and bettering its online presence. The company also hopes to use a higher minimum wage to “recruit and retain” top-level team members.
Target said that the wage increase beginning in October will also apply to the 100,000 temporary employees the retailer plans to bring aboard ahead of the holiday season, a 43% increase from last year. The company also reiterated its sales and earnings outlook for the third-quarter and full year; this means that these new wage expenses “aren’t expected to impact the retailer's bottom line, as Target baked the wage hike into its $7 billion investment plan,” notes CNBC.
Cornell went on to say that Target will address any potential impacts to company profits from the $15 wage at the retailer’s next analyst day for Wall Street this upcoming winter.
Many other retailers have offered competitive minimum wages over the years. Rival Walmart (WMT - Free Report) recently increased its own minimum hourly wage, raising entry-level hourly pay to $10 last year; the company, which is the country’s largest private employer, also raised wages to $9 an hour in 2015. Additionally, Costco (COST - Free Report) , Amazon (AMZN - Free Report) -owned Whole Foods, Swedish giant Ikea, and even apparel retailer Gap Inc. (GPS - Free Report) have all boosted their own hourly pay for workers.
But how many will follow in Target’s $15-an-hour footsteps? That number gained serious traction during the last presidential campaign, and Democrats recently introduced a $15 minimum wage bill that is backed by Sen. Bernie Sanders. And, the city of Seattle is gradually increasing its hourly pay to $15, with many cities across the nation proposing similar legislation.
However, it is much different for a private company to instill a minimum wage than it is for a city or a federal government. $15-an-hour, though, is hot right now, and there is no doubt Target is using it to help set it apart from other retailers.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana. Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>