Target employees seemed to have won big in the “Fight for Fifteen” in 2017 when the giant retailer announced that it would raise its minimum wage to $15 by 2020.
Employees and minimum wage activists proclaimed victory.
But was it a big win? Reason’s Eric Boehm takes a look:
Two years later, the story is pretty different.
"I got that dollar raise but I'm getting $200 less in my paycheck," a Target employee named Heather told CNN. Heather's hours have been cut from about 40 per week to around 20, she explained.
And she's hardly alone. CNN Business (which withheld employees' last names) has interviewed 23 Target employees in the past month. Many tell the same story: They are working fewer hours and have lost some employment benefits as a result. Target only provides health insurance benefits to workers who average at least 30 hours of work a week.
The left often assumes that minimum wage hikes occur in a vacuum. But there are lots of moving parts. Reason explains:
[T]he bottom line is that wage increases do not exist in a vacuum. And that's not just true at Target. Minimum wage increases are "not a net good, and zero-sum at best," according to a recent analysis from the Competitive Enterprise Institute (CEI), a free market think tank. In a report released earlier this month, CEI found that mandated wage increases include a wide number of trade-offs, including reduced non-wage compensation, fewer job openings, reduced hours, increased automation, higher insurance co-pays, less vacation and personal time, and reduced employee discounts.
"The negative economic trade-offs for minimum wage workers, unfortunately, cancel out most of the paycheck gains," says Ryan Young, CEI senior fellow and author of the report.
That sounds like exactly what's happened at Target.
The subhead to the Reason story is ironic:
Workers say they've had their hours cut and lost other benefits, such as health insurance. If only someone could have predicted that.
Of course, many did predict just this.