Target bumps minimum hourly wage to $13

Target Corp. said Thursday it is bumping its base pay by one dollar so that its lowest-paid workers will earn at least $13 an hour starting in June.

It is an incremental boost on the way to Target's pledge to pay all of its workers a minimum of $15 an hour by the end of 2020.

The company declined to say how many front-line workers would be affected by the pay hike, saying only that it would be in the "tens of thousands." The new policy applies to employees at stores, distribution centers and the Minneapolis headquarters.

Retailers are competing for labor as the economy stays relatively strong. Job requirements are shifting as retailers process more online sales and stores become shipping hubs and pickup spots for customers who don't want to wait for their online orders to arrive in the mail.

Other retailers have already begun offering a $15 base wage. Amazon hit the mark last October ahead of the holiday hiring. In early March, warehouse retailer Costco announced its second wage hike in less than a year to raise base hourly pay to $15.

Walmart's minimum wage is $11. Last month the nation's largest company offered an attendance bonus for workers who limited unplanned absences. An entry-level worker could earn an additional $550 at the end of the quarter under the program.

The federal minimum wage is $7.25 an hour, while Minnesota's requirement for a large employer like Target is $9.86.

This is the third modest wage increase since October 2017, when the Minneapolis-based retailer announced its intention to hit the $15 minimum by the end of next year. At the time, Target raised its base hourly pay by one dollar to $11.

The discount retail chain lifted it to $12 a year ago, which executives said made it easier to hire 120,000 temporary workers for the holidays, more than any other retailer.

"We were able to start them all at $12 or more — and that helped us reach our seasonal hiring goal ahead of schedule, which gave our teams a lot of extra time to train and prepare for our busiest season of the year," Melissa Kremer, Target's newly appointed leader of human resources said in an interview published Thursday on a corporate blog. "It made a big difference, and our holiday results clearly show what an excellent job they did."

In an interview with the Star Tribune in February, Target Chief Executive Brian Cornell was asked about the need to accelerate efforts to reach the $15 an hour mark in a tight labor market.

Cornell said he planned to stick with the late-2020 timetable, saying the company would "stay right on course."

Target is in the third year of a $7 billion overhaul of its store operations. The effort includes renovations and technology to handle consumers' shifting preferences to buy more merchandise through Target.com as well as in stores. Investors continue to press the company about the impact of rising labor costs on profits.

Jackie Crosby • 612-673-7335 Twitter: @JackieCrosby