On Monday, the second-largest discount store retailer, Target, announced that it will be raising wages for its workers to $15 per hour by 2020. It will raise hourly minimum wage to $11 per hour by October of this year.
“This significant investment in its team will allow Target to continue to recruit and retain strong team members and provide an elevated experience for its guests and in the communities it serves,” the company said in a statement.
The move comes after Democratic politicians like Sen. Bernie Sanders (I-VT) and former Secretary of State Hillary Clinton pushed for a $15 minimum wage increase in the 2016 election. The “Fight for 15” movement successfully targeted Northwest Pacific cities like Seattle to adopt raising wages. Now, it’s coming from a private company.
The Seattle-based company, Gravity Payments, raised employee wages to a minimum of $70,000 per year. The CEO reduced his own salary, and lost a couple of employees over a disagreement with the move. However, his company is still solvent, but has to pay a total of $1.8 million to a company of 70 people total. Target is a much larger company, and while the wage increase might not seem like much, profit margins are expected to drop.
Target is a much larger company. While the wage increase might not seem like much, profit margins are expected to drop. Given what we know about raising wages, Target could reduce employee hours and benefits or even start laying off workers if the move doesn’t pan out. Another side effect is that Target could start raising prices of their products to offset the cost of paying their employees a little more.
Either way, conservatives and libertarians can criticize Target for making a poor business decision, but, at least, it’s the free market deciding and not the government.