Yahoo Finance Target minimum wage hike coming
Target (TGT) looks set to follow its rival Wal-Mart.
The retail giant is reportedly planning to raise its minimum wage to $9 per hour, after similar moves by Wal-Mart (WMT) and TJ Maxx (TJX) earlier this year. According to the Wall Street Journal, the wage hike will begin at all U.S. Target stores in April.
Yahoo Finance Senior Columnist Michael Santoli points out that Target is not raising wages solely to compete with Wal-Mart.
“The only reason all the retailers are doing this is because they actually have to listen to what the labor market can give them. Essentially all of them are just following the fact…that the labor market is tight enough,” he says. “It's hard enough to find people at minimum wage, and they don't like to have a lot of employee turnover.”
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The federal minimum wage is currently $7.25 per hour, but some states have set wage floors above the federal level. Santoli adds that Target's pay raise is political move.
“So I do think now that you have companies wanting to publicly state that they're going to impose their own minimum wage,” he says. “That part of it is political, the idea that you want to be identified with this effort.”
Santoli believes the wage increases are a positive sign for the economy.
“I think it's going to help just because, in general, wages should start to lift from here,” he says. “From a total economic perspective, Target and all these other chains are going to raise their going wage, but they're not really going to be able to pass that cost through to customers… Maybe their profit margins go down a little bit… It’s a reflection of the fact that we've tightened up this labor market relatively well.”
