In 2017, the retail giant Target made headlines for announcing plans to gradually increase its minimum wage to $15 an hour. Naturally, the company won widespread liberal plaudits for its supposedly pro-worker stance. Years later, though, the wage rise has led to nothing short of a disaster.
New reporting from CNN Business reveals that many of the Target employees who were supposed to benefit from the minimum wage increase have actually suffered from reduced hours and increased automation. This is, of course, what conservative critics of the #Fightfor15 have often predicted — and in line with basic economic theory, to boot.
Two years ago, Target said it would raise its minimum wage to $15 an hour by the end of 2020.
But some store workers say the wage increases are not helping because their hours are falling, leaving them struggling. https://t.co/00WsiojdwI pic.twitter.com/AprXLHgPor
— CNN (@CNN) October 14, 2019
Maybe pro-labor liberals will finally take note, now that Target offers ample real-world examples of how their well-intentioned policies can quickly backfire. CNN Business interviewed dozens of Target employees, who “say hours have been scaled back even as Target has increased starting wages. Many of these workers say the cuts, which come as Target’s business is in its strongest position in more than a decade, have hurt them financially.”
How could a wage increase hurt workers? Well, it’s actually simple enough: An hourly wage increase isn’t worth much if your overall hours get cut, because your weekly paycheck actually decreases.
This is what happened to Heather, a Target employee who spoke to CNN. After having her hours slashed from full-time to 20 hours a week, she says, “I got that dollar raise but I’m getting $200 less in my paycheck.” Now, she continued, “I have no idea how I’m going to pay rent or buy food.”
Some other employees indicated that before the wage increase, they were able to work 30 or more hours weekly, thus qualifying for Target’s health insurance benefits. But afterwards, their hours were cut to the point where they lost their health insurance — not exactly a boon to workers.
Additionally, one former store manager told CNN that “older cashiers were used to getting 30-some hours and they were getting less and less. They really cut those hours back from them with the introduction of self-checkout.”
This is another problem with big minimum wage increases. The more expensive you make it to employ humans, the more incentive businesses have to embrace the automation revolution.
All things considered, this wage increase clearly backfired on Target employees it was supposed to help. And they aren’t some outlier either. In fact, they chose to take on this increase voluntarily. Even more severe consequences would likely emerge if a government mandate forced even financially struggling businesses (Target is doing well) to increase their minimum wage to $15.
Plus, study after study has documented the unintended consequences of artificially high minimum wages. With the latest example of Target added to the mix, the evidence against the big-government policy is overwhelming. The lesson here is pretty clear. Sometimes, the best thing the government can do to help workers is nothing at all.
