Target just boosted its minimum hourly wage to $13 in the latest salvo in the war for retail talent

Target is bumping its wages yet again.

The retail chain just announced that it is raising its minimum starting pay to $US13 an hour, up from $US12 an hour. The new minimum wage will take effect in June.

This pay increase demonstrates that the retailer is on track to fulfil its promise to raise starting wages to $US15 an hour by 2020.

And it’s not just good news for store workers and prospective hires. Target’s chief human resources officer Melissa Kremer said in a statement that the company’s previous wage increases have given the company a major boost.

“Take this past holiday, when we set out to hire 120,000 seasonal team members to support our teams during the big shopping rush,” she said in a statement. “We were able to start them all at $US12 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. It made a big difference, and our holiday results clearly show what an excellent job they did.”

Bob Phibbs, CEO of New York-based retail consulting firm The Retail Doctor, said that Target is taking the right approach to attracting top talent in a tightening labour market: “The desire is to become the employer of choice, not the employer of desperation.”

Read more: Inside the career of Brian Cornell, who ran Sam’s Club before becoming Target’s first-ever outsider CEO

Phibbs said that the trend of retailers upping their minimum wage isn’t a matter of companies mimicking Amazon’s $US15 minimum wage. In the wake of Amazon’s wage hike, Target and Costco have announced pay bumps, while fast-food giant McDonald’s recently declared that it would stop lobbying against minimum wage raises, according to the New York Times.

According to Phibbs, this phenomenon has more to do with retailers’ success with investing in both stores and in employees.

“The future is still going to be being more human in an increasingly technological world,” he told Business Insider. “That’s going to take people – and it’s going to take the right people. Not someone who just shows up for a shift.”

In this tight labour market, unhappy, underpaid employees will most likely lead to increased turnover within the stores.

“If you can’t keep your employees in the store, how are you going to keep shoppers?” Phibbs said.

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