TJ Maxx, Marshalls to follow Wal-Mart in raising pay

AP News
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Posted: Feb 25, 2015 4:49 PM
TJ Maxx, Marshalls to follow Wal-Mart in raising pay

NEW YORK (AP) — The owner of T.J. Maxx, Marshalls and HomeGoods stores became the latest retailer to boost pay for its U.S. workers, putting pressure on other chains to do the same.

TJX Cos. said Wednesday that it will increase pay for its U.S. workers to at least $9 an hour starting in June. The announcement came a week after Wal-Mart Stores Inc. said it would increase starting wages for its U.S. employees to at least $9 per hour by April and by at least $10 by Feb. 2016. Home furnishings retailer IKEA and Gap clothing chain also have raised pay recently.

John Challenger, CEO of global outplacement firm Challenger, Gray & Christmas Inc., said the moves could create a domino effect in which other companies follow suit in order to compete for top talent.

"Other retailers may have no other choice but to follow," he said. "The pool of available labor is starting to shrink and it will take more than a store discount to attract the best of available candidates."

The moves by the major retailers to raise wages come at a pivotal time when the plight of hourly workers has made national headlines.

Protests by fast food workers asking for higher pay have increased. Labor-backed groups have taken aim at Wal-Mart, the nation's largest private employer with 1.3 million workers, to start entry wages at $15 per hour. And President Obama is endorsing a bill in Congress that includes a proposed increase in the federal minimum wage from $7.25 to $10.10 an hour, while several states are considering raising their minimum wages.

At the same time, there's much national debate about what is a "living wage," or enough money for a worker to make in order to make ends meet. Most retail workers already make more than the federal minimum wage but not much more. In fact, more than half of retail workers make $10 or less, according to David Cooper of The Economic Policy Institute.

According to the most recent government data, the average that hourly retail workers in a non-supervisory role earn is $14.65, but that includes people who work at auto dealers and other outlets that pay more than traditional retailers. The average hourly pay is $9.93 for cashiers and low-level retail sales staff, according to Hay Group's survey of 140 retailers with annual sales of $500 million.

Whatever the major players in the U.S. retail industry decide to do will have a big impact on the job market as a whole. In fact, the industry supports one in every four U.S. jobs, representing about 42 million workers.

Still, the industry has mostly shunned the idea of higher wages. The National Retail Federation, which represents some of the nation's largest retailers, is fighting President Obama's proposal, saying the financial burden could force them to raise prices or reduce workforce.

Target Corp. executives weighed in on the issue Wednesday during the company's earnings conference call, saying that it is always assessing the marketplace to determine competitive wages. But they said the recent announcements from Wal-Mart and others haven't changed their views on wages. Executives declined to comment on Target's average hourly wage rate, but they did say all of Target's workers make more than the federal minimum wage. A Credit Suisse report estimates Target pays $9.06 per hour, based on a sample size of 985 workers.

"Our goal is to make sure we have the very best team in retail," Target's CEO Brian Cornell told investors Wednesday. "And we're going to continue to invest in their development and make sure ... we're very competitive with the wages we provide."

TJX spokeswoman Doreen Thompson declined to say what its workers currently earn, but a recent Credit Suisse report estimates TJX's current hourly pay at about $8.24, based on a sampling of 116 workers.

In addition to higher starting wages, TJX, which has 191,000 workers globally that restock shelves, greet customers and ring up purchases, said that in 2016, the company plans to pay all workers who have worked at its stores for more than six months at least $10 per hour.