Target is raising starting wages to as high as $24 an hour

The hot labor market continues…
The hot labor market continues…
Image: Reuters/Rick Wilking/File Photo
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Target is raising its wages up to $24 an hour for some workers.

The retailer, which employs some 350,000 people, said today that starting wages will now range from $15 to $24 an hour for workers in stores, supply chain facilities, and at headquarters. The specific pay increase will depend on the position and local job market. Previously, the minimum starting pay was $15 an hour.

Target also said that it dropped the minimum average hours employees need to work per week to receive healthcare benefits from 30 to 25. About 20% of Target’s workforce is newly eligible for benefits, according to the company.

Target is not the first large company to increase wages to recruit and retain employees in a tight US labor market in recent months. Amazon, the second largest employer in the US, raised its minimum wage to $18 an hour, putting pressure on other low-wage employers to increase pay. But what do wage gains look like when inflation is at its highest in four decades?

Higher wages in an era of high inflation

In January, the average pay for retail workers, excluding managers, jumped 7.1% from a year earlier to $19.24 an hour, while consumer prices rose 7.5%, according to US Bureau of Labor Statistics data. As of Feb. 28, gas prices in the US had soared to $3.61 a gallon, up 30% from a year ago, driven in part by the ongoing Ukraine-Russia crisis.

“Inflation is definitely blocking some of the gains that would otherwise accrue to workers stemming from today’s pretty hot labor market, and that definitely includes any raise Target is giving,” said Josh Bivens, an economist at Economic Policy Institute, a left-leaning think tank.

Low-wage workers have seen the biggest wage gains over the past year and are beating inflation, for now, says Bivens. In general, employers like Target determine wages based on some idea of what inflation would look like in the next year or two, he said.