Retail company Target is raising the minimum wage for its employees to $10 an hour. According to a source, Target is under pressure from rival company Walmart, which has gone ahead to increase its minimum wage in an attempt to retain talent and at the same time hire new competitive employees amidst the tight job market.
Walmart announced its move to increase the minimum wage in January this year. The move is part of the company's $2.7 billion-worth investment to improve their customer service and retain top-performing employees. According to Fortune, the need to remain in good standing with employees stems from the integration of e-commerce that has made in-store tasks all the more complicated. For instance, store workers are now required to facilitate online shopping orders.
"Our team is a huge part of what makes Target, Target," the company said, via Wall Street Journal. "We pay market competitive rates and regularly benchmark the marketplace to ensure that our compensation and benefits packages will help us to both recruit and retain great talent."
The increase will be implemented in May.
However, the minimum wage implemented by the retail giants does not meet the rate demanded by labor groups. In California, lawmakers and labor groups reached a tentative deal that will lift the state's minimum wage to $15 an hour in the next six years, SF Gate reported. A similar agreement has been approved in New York.
Under the agreement, the minimum wage would increase by 50 cents in the first two years of implementation. After that, the increment will be increased to $1 per year until the minimum wage hits $15 by 2022. The agreement also provides a safety clause, in which the wage increase would be stopped if the state faces economic downturns.
Walmart and Target warn that the salary increase will cut into the investors' profits this year.
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