“There is no choice but to match this,” Gerald Storch, CEO of Storch Advisors and former CEO of Toys R Us, told CNBC’s “Squawk on the Street” Tuesday morning on the heels of Amazon’s announcement. “It will increase the growing chasm between the winners who can afford to match this and the losers who can’t.”
Walmart earlier this year announced its plans to boost its starting wage to $11 (up from $9), thanks in large part to the passage of new tax laws that reduced corporate rates. Target, meanwhile, has said it plans to raise its minimum wage to $15 by 2020. This past spring, most entry-level Target employees were already receiving $12 per hour. Costco raised its minimum wage to $14 an hour earlier this year in June.
Walmart, Target and Costco didn’t immediately respond to CNBC’s request for comment.
“If the market is driving the [minimum] wage to $15, I have no doubt Walmart will be able to get there,” former Walmart U.S. chief Bill Simon told CNBC’s “Squawk on the Street” on Tuesday morning. “They have been moving in that direction for a while.”
Retailers are having an especially difficult time finding extra help around the holidays with the U.S. unemployment rate near record lows. Companies have announced plans to hire hundreds of thousands of temporary workers this holiday season to meet peak traffic in their stores and online.
A new study by Korn Ferry found that roughly 23 percent of retailers weren’t able to hire all the temporary workers they wanted for the 2017 holiday season.
Amazon said Tuesday that it’s looking to hire about 100,000 people this holiday season, 20,000 less than it’s planned for the past two years. Target, however, hopes to hire as many as 120,000 workers, a 20 percent increase from 2017. Walmart hasn’t announced its holiday hiring plans, yet. In 2017, the big-box retailer gave its existing employees the option to work extra hours, instead of relying on a temporary workforce.
The companies already struggling to stay afloat and shuttering stores, like Sears and J.C. Penney, are the ones that won’t be able to keep pace with Amazon’s wage hike, Storch said. “It’s the noose tightening around the neck of these retailers that are already on the edge of the cliff.”
Amazon said it will start advocating for an increase to the federal minimum wage, which is still $7.25 in the U.S.