Target raises its minimum wage to $13 an hour, with goal of reaching $15 by end of 2020

  • Target is increasing its minimum hourly wage by a dollar to $13 in June.
  • The increase is part of a goal to hit $15 an hour by the end of 2020.
  • Target's new $13 an hour minimum is well above the federal minimum $7.25, which was last increased in 2009.
A Target employee prices merchandise and stocks shelves at a Target store in Framingham, Massachusetts.
Ann Hermes | The Christian Science Monitor | Getty Images
A Target employee prices merchandise and stocks shelves at a Target store in Framingham, Massachusetts.

Target said Thursday it is increasing its minimum hourly wage by a dollar to $13 in June for all current and new employees as part of its goal to hit $15 an hour by the end of 2020.

It is the latest step in a series of annual increases it has made since it announced in September 2017 a plan to raise its minimum starting hourly pay from $10 to $15 over three years.

Target's new $13 an hour minimum is well above the federal minimum of $7.25, which was last increased in 2009, and all 50 states' minimum wages. (Some cities, including Washington, New York and San Francisco, have higher wages.)

Target's rate is higher than rival Walmart's $11 an hour minimum, set in January 2018, but is still below Amazon, which raised its hourly minimum to $15 an hour in November.

"We'll continue to invest in learning and development resources for our existing team members to help them grow their careers," Chief Human Resources Officer Melissa Kremer said in a post on Target's Bullseye View blog.

While Target's starting wage was $3 an hour below Amazon's this past holiday season, CEO Brian Cornell credited the company's wage and career options as part of the reason it hit its seasonal holiday hiring goals ahead of schedule.

"We hired over 120,000 seasonal team members in the fourth quarter, and I know there were some questions about, could we do that, and we did," Cornell said in an interview with CNBC last month. "I think that investment we made in wages had made us an employer of choice, so we are seeing a great reaction to our offering, we're getting a great response from team members. They recognize we're investing in their futures."

The U.S. unemployment rate continues to hover at historically low levels, most recently just 3.8 percent in February, making competitive wages even more critical for recruiting and retaining workers. Retailers and logistics companies, including Target, Walmart, Macy's, UPS and FedEx, are also expanding career development and training programs as well as other benefits like parental leave, to attract candidates and lower turnover. During the most recent holiday season, retailers got even more creative, offering things like giveaways like $5,000 vacations, charity donations and gift cards.