Target to Raise Minimum Wage to $9/ Hour

The US economy is starting to get good news out of its labor market. Not only are they adding jobs at a solid pace, but wages are starting to move higher as well. This will help the Federal Reserve (Fed) to make a decision to raise rates and normalize policy sooner than later.

Target (TGT: NYSE) has announced to raise its minimum wage, that it pays employees, to $9 per hours in April. This comes on the heels of similar wage hikes from retailers like Walmart (WMT: NYSE). Groups, like UltraViolet, a leading woman’s advocacy group, has been putting pressure on retailers to raise its minimum wage. Other advocacy groups have also joined in, and the pressure seems to be having a positive effect.

Target has always had a competitive wage policy, but often does not announce wage policy to the news outlets. On the other hand, Target is getting ready to lay off 1,700 employees and close 1,400 positions as it is trying to save up to $2 billion dollars.

This move, by Target, will follow Walmart’s decision to raise its minimum wage from $9 to $10 per hour by January 2016.  T.J. Maxx (TJX: NYSE) and its Marshall’s affiliate will also wage its minimum wage to nine dollar per hour by this June.

The US Federal minimum wage is currently at $7.25 per hour but many states have a higher wage floor. Target’s wage rate will go into effect for its employees in all 1,800 US operated stores. The company has always had a policy to pay above the minimum Federal wage. After the news, shares of Target were slightly higher overnight. It is expected shares will be in play again today as after-hours trading has moved slightly, currently down 0.1 percent.