News Brief

Wages, Incentives on the Rise for Retail Workers

April 12, 2019
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Trends and Forecasts

2019 is an employee’s market —

Target employees are celebrating in stores across the nation this week after the discount retailer announced that it will be raising its minimum hourly wage for the third time in less than two years.

Effective in June, all Target workers will receive a starting hourly wage of $13 or more, a move that keeps the retail chain on track to fulfill its promise of raising their lowest pay rate to $15 an hour by 2020.

The announcement comes as part of a national retail trend intended to attract and retain quality employees in a tight labor market, with retail giants like Amazon and Costco currently leading the pack of companies dedicated to bringing their hourly minimum wages up by the turn of the decade.

The current federal minimum wage has been stuck at $7.25 since 2009, although states like Arizona, California, Maine and New York have set higher minimum wage standards of $11 and $12 an hour, respectively.

The state-issued wage hikes are a result of recent industry wage pressure brought on by progressive politicians and labor activists advocating for the “Fight for $15.”

Such shifts have had a ripple effect on the retail and fast food industries as entry-level associates and food service workers begin to reframe the way they view their jobs — a rising social trend that has led to greater public demand that corporations pay more for the value service workers bring to their businesses.

And the payouts are certainly paying off: Last year’s holiday season was especially profitable for Target, with a fourth quarter sales growth of 5.7 percent compared to 3.4 percent the previous year.

Target has directly attributed those results to bringing on an additional 12,000 seasonal team members to their already “diverse, high-performing and engaged team.”

“We were able to start them all at $12 or more — and that helped us reach our seasonal hiring goal ahead of schedule, which gave our teams a lot of extra time to train and prepare for our busiest season of the year,” Target’s Chief Human Resources Officer (CHRO) Melissa Kremer said in a company statement.

“It made a big difference, and our holiday results clearly show what an excellent job they did!”

Other retailers are catching on the U.S. workforce’s call for a fair economy and have begun to sweeten their employee’s benefit packages by offering better health and family leave incentives as well as larger contributions to their 401ks.

But with the increase of non-wage incentives, some retailers are failing to keep up with Amazon and Target’s generous payouts — a move that could deter or entice employees, depending on who you ask.

Take Walmart, for example: The big box retailer raised its starting pay to $11 an hour in early 2018 but has so far not made any announcements on whether or not their employees can expect a similar raise to that of their competitors.

But, in lieu of higher wages, Walmart has made strides to offer employees better incentives, specifically with its roll out of a paid parental leave policy for new mothers and fathers.

While only a mere 14 percent of U.S. businesses have family leave programs in place for hourly workers, Walmart now offers its employees up to 10 weeks of paid time off for new mothers and 6 weeks for fathers — one of the most generous corporate parental leave policies in the country.

In addition to paid parental leave, Walmart has introduced a cash incentive for good attendance and a Protected PTO program that gives hourly associates up to a 48-hour bank of time to use for unexpected emergencies.

"We’re constantly testing, learning and seeking feedback to improve our stores for associates and customers," Drew Holler, Walmart’s Vice President of Associate Experience said in company statement. "This change, along with previous wage investments, parental leave, adoption and other benefits, is another important step on our journey to be the employer of choice."

“Our associates told us they wanted to be rewarded for their dedication and we couldn’t agree more.”

By GABRIELLA BOCK | Managing Editor

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