Target will increase the hourly wage for entry-level employees to $9 starting in April 2015, according to a report from Reuters. Although Target has not made a formal statement, this news comes shortly following both Wal-Mart Stores and TJX announcing that they would raise their minimum wages during 2015.
The wage raise will affect its approximately 1,800 Target stores nationwide. It is not clear how many of the retailer’s 347,000 employees will see a pay bump.
Previously, the retailer paid employees more than the federal minimum wage of $7.25 per hour. But similar to Walmart, Target felt pressure from advocacy groups, particularly UltraViolet, who ran an online campaign aimed at shoppers who live near select Target stores. Banner ads read, “Did you know there’s a Walmart near you that pays higher minimum wage than Target?”
However, Target has made an effort to tailor salaries and wages based on the cost of living. The retailer already pays workers at least $9 an hour in areas with higher living costs such as New York or North Dakota, which has the highest wages, according to John Mulligan, CFO at Target. When addressing the topic at a March conference call with analysts, Mulligan said a flat minimum wage was “just not reasonable. It’s about being competitive locally at a store level within a marketplace.”
Earlier this month, Target revealed a cost-cutting plan designed to save $2 billion by restructuring its corporate workforce and streamlining internal technology and processes. As part of the plan, Target said it would eliminate “several thousand positions over the next two years,” mostly from its corporate headquarters in Minneapolis, Minn. Thus far, Target has laid off 1,700 employees and permanently closed 1,400 open positions.