Target workers may begin to see a pay rise of up to $ 24 an hour this year, the company said on February 28.
The Minneapolis-based retailer said it would accept minimum wages ranging from $ 15 to $ 24 an hour, with the highest pay for employees in the most competitive markets such as New York.
The pay increase is part of a plan in which Target will spend $ 300 million next year on employees, which includes signing more workers for health benefits. Employees per hour who work at least 25 hours a week will be eligible for health benefits, which means that about 20% more employees will have access.
In the last few months, wages have risen the fastest in certain sectors, said Elise Gould, a senior economist at the Institute for Economic Policy. Areas such as leisure, retail and hospitality are “where workers with lower wages see some increase in opportunities and have seen wage growth”.
Despite the fact that Target is one of the largest retailers in the world, his decision to increase wages does not necessarily mean that other employers will follow his example, says Gould, adding: “I have some concerns that this kind of lever that workers have right now will not be sustained in the long run. “
Why do some employers raise wages?
Especially in retail, employers face “high levels of turnover, and if you can raise wages and create a lower-turnover workforce, this can certainly lead to higher productivity and lower costs in the long run. “Gould says.
Another reason some employers are encouraging employees with higher pay and better benefits is that the number of candidates has shrunk, Gould said. “There are so many workers removed that I think because the pandemic is behind us, they will return.”
Shortage gives employees leverage
Workers want to make more money overall, Gould says. “They have had so low wage levels for so long and they have had so little leverage to raise their wages that it often takes a very low level of unemployment, a much stronger economy to get something out of that leverage. “.
The best leverage that many employees currently have is a shrinking set of candidates. “Indeed, their scarcity gives them leverage, because employers have to work a little harder to attract and retain the workers they want, and that’s the lever these workers use,” Gould said.
Federal intervention could lead to higher wages
Without federal intervention, workers’ benefits may not last long. “Employees will not be able to lock in these wages if we do not have a federal policy that strengthens with a higher minimum wage, or if it is not made easier for some workers to form a union to lock up some of these wages.” says Gould.
In his first address on the state of the Union on Tuesday, President Joe Biden called for an increase in the federal minimum wage to $ 15, something Democrats have long demanded.
Video by Stephen Parkhurst
The federal minimum wage is currently $ 7.25 and has not been updated for more than a decade, although many states have set their own minimum wages higher.
As of this year, Biden has managed to raise the minimum wage for all federal workers to $ 15, but there is little movement on the total federal minimum wage. When the US rescue plan was drafted, Democrats initially included the measure, but it was dropped when the bill reached the Senate.
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