Target employees can expect more.

The big box retailer announced Monday it would raise its minimum wage to $11 an hour in October at all U.S. stores, and up to $15 by 2020. The pay hike will apply to the 100,000 seasonal employees its hiring for the holidays this year.

Paying workers more is a way to attract new employees and retain current ones on the payroll, according to Target, which employs around 323,000 people. The retailer quietly raised entry-level hourly pay from $9 to $10 last year, and increasing it to $15 an hour could lead to a major wage war among some of its competitors.

“It puts a little more pressure on its rivals,” Peter Cappelli, an economist at the Wharton School of Business at University of Pennsylvania, tells Moneyish. “You can get a real benefit by paying [employees] a little bit more than others are paying. This is part of Target’s general move. They don’t want to see themselves competing with Walmart. It makes sense for them to do this.”

Last year, Walmart increased its minimum wage to $10 per hour. Chains like Lowes Home Improvement and The Gap have also upped wages to around $12 an hour, and states like Washington and Massachusetts have set the minimum wage at $11 an hour for all workers.

Still, the federal minimum wage of $7.25 hasn’t changed since 2009 and Cappelli says he suspects that “a lot of the retail competitors and fast food chains are not going to follow because they’re not after the same level of customer service.”

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Over the last several years, many city and county governments have voted to raise their local minimum wage and so far, dozens of states including California ($10.50), Connecticut ($10.10), Massachusetts ($11), New York City ($13.50), and Vermont ($10) have been passing laws requiring cities to abide by the statewide minimums. About 20.6 million Americans are “near minimum wage workers,” according to Pew Research Center.

Though some of the entry level jobs paying above minimum wage may be temporary, they provide a vital source of skills and income for workers who are looking for full-time employment.
“One of the big differences now is that a lot of people are trying to live on these jobs as opposed to a generation ago when we thought it was mainly students or part-time people in retail,” notes Cappelli.

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Increasing the minimum wage at retail stores like Target could mean a slight price hike on products for customers. “It’s more likely to get passed on on to consumers. Say you’re raising their wages 10%, you might see a 1% increase in the cost of the things you’re buying,” he says. “I think that’s not such a bad thing that we have to pay slightly more for retail products. Higher wages means more consumption, that’s good for the economy,” he adds.

Here are five other companies that pay above minimum wage for entry-level jobs:

Ben & Jerry’s: $17.26 per hour

The Gap: $11.86 per hour

The Home Depot: $11.09 per hour

Nordstrom: $14.96 per hour

Amazon: $14.65 per hour

Costco Wholesale: $13.14 per hour


Lowe’s Home Improvement:
$12.95 per hour