Photographer: Mark Kauzlarich/Bloomberg

Target Will Raise Minimum Hourly Wage to $11 to Counter Wal-Mart

  • Retailer will also boost minimum rate to $15 an hour by 2020
  • Strategy contrasts with its low-key pay increase last year

Target Corp. is giving thousands of its employees a pay raise next month, hoping to stay ahead of Wal-Mart Stores Inc. and other rivals in the war for talent.

The retailer announced plans Monday to boost its minimum hourly wage to $11 an hour in October. Target will later up the rate to $15 by the end of 2020.

The increase will apply to the 100,000 seasonal employees it’s hiring for the holidays, but the company declined to say how many of its 323,000 regular employees would see a lift. It also wouldn’t disclose how much the plan will cost, saying that more details would be disclosed at next spring’s investor conference.

The move is the latest volley in a wage war that Wal-Mart kicked off two years ago by raising its minimum wage to $10 in two steps, affecting over 1 million workers. The retail industry is the largest private-sector employer in the U.S., and competition for staff has heated up as the job market improves. Chains such as Costco Wholesale Corp. also have boosted wages, while states like Massachusetts and Washington have established $11 an hour as the going rate for all workers.

Target’s latest announcement contrasts with how it responded in recent years to Wal-Mart’s wage hikes. The company raised its minimum hourly wage last year to $10 an hour, but without making a formal announcement.

‘More Vocal’

Chief Executive Officer Brian Cornell declined to address the shift on a teleconference with reporters, although a spokeswoman said later that the company was making a bigger deal out of the new wage floor as it marked “a much bolder and more vocal investment in our team.”

“This is something that will help set Target apart,” spokeswoman Jenna Reck said.

The size of that investment is known only to Target for the moment, but it comes on top of the $7 billion that the company is already spending to refurbish stores and open new locations in cities and on college campuses. The company also is lowering prices to compete against Wal-Mart, Amazon.com Inc. and others.

“We thought the timing was right as we move into the holiday season,” Cornell said.

Target’s new wage of $11 an hour puts it higher than the minimum wage in 48 states. Hourly employees who work in some departments, such as electronics or health and beauty, are typically paid more than that, the company said. About 90 percent of the chain’s employees work in its 1,800 stores, or about 160 jobs per store on average.

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