Wal-Mart has company.
T.J. Maxx, Marshalls and other chains owned by TJX Cos. will be increasing the pay of U.S. workers to at least $9 an hour beginning in June. That matches the level adopted by Wal-Mart Stores Inc. earlier this month. TJX, which also runs HomeGoods and Sierra Trading Post Associates, will boost wages to $10 by in 2016 for workers with at least six months of employment.
The move signals that the labor market is getting more competitive after a slow recovery from the recession. Pay hikes will help employers lower turnover and reduce hiring and training costs, said Brian Yarbrough, an analyst at Edward Jones in St. Louis. It’s an approach Costco Wholesale Corp. and other successful retailers have already adopted.
“This is the way retailers need to go,” said Yarbrough, who has a buy rating on TJX’s shares. “Some of the best performers already pay higher wages.”
TJX rose 3.3 percent to $69.38 at the close of trading in New York, marking its biggest one-day gain in six months. Shares of the Framingham, Massachusetts-based company had climbed 7.6 percent last year.
Chief Executive Officer Carol Meyrowitz announced the move after a holiday quarter that exceeded the company’s sales growth and profit estimates.
“This pay initiative is an important part of our strategies to continue attracting and retaining the best talent in order to deliver a great shopping experience for our customers, remain competitive on wages in our U.S. markets and stay focused on our value mission,” she said in a statement on Wednesday.
The company could also benefit from the slowdowns at the West Coast ports. TJX buyers look for inventory that didn’t sell or is out of season at deep discounts. The retailer is already seeing an increase in that type of product because of the ports slowdown and is staying open to buy more inventory, Meyrowitz said on the company’s earnings conference call.
“Chaos tends to be our friend,” she said. “We are assuming that there will probably be some pretty incredible deals.”
TJX’s wage announcement comes a year after Gap Inc. said it would boost hourly pay to $9 an hour in 2014 and $10 in 2015. Gap, the largest U.S. apparel-focused retailer, said in June that it saw a jump in job applications after taking the step.
Wal-Mart said last week it will bump pay to at least $9 an hour by April and $10 by next February. It took the step after CEO Doug McMillon vowed to stop paying any of its workers minimum wage. President Barack Obama called McMillon on Wednesday from Air Force One to commend him on the move. The White House also cited TJX as a sign that support was growing for increasing wages.
Starbucks Corp., another major U.S. employer, said it already pays workers more than the minimum wage.
Companies that increase pay will probably look to cut their expenses elsewhere, Yarbrough said. Eventually, though, retailers will probably need to raise prices to adjust to the shift, he said.
“What they’re going to say is consumers are going to be more flush with cash because they’re getting better wages,” Yarbrough said. “If they all up their prices a little bit, what are consumers going to do?”