Last Year, Target Gave Holiday Workers A Bump In Pay. This Year: Raffle Tickets

Last year, TargetTGT
made a big deal out of bumping up the pay of holiday employees working the busiest shifts by an extra $2 an hour.

This year, some of the same workers will have to settle for raffle tickets.

Only workers at select stores will receive the extra pay, according to people familiar with the matter. In the stores left out, employees may get a chance to win small prizes for taking on the more demanding shifts.

Target didn’t dispute the plan. In response, the company told Forbes it has raised starting wages to $15 to $24 an hour and that team members, including seasonal workers, have access to perks such as flexible scheduling and well-being benefits.

The change in the retailer’s approach to holiday staffing is just one sign of how much has changed in the retail labor market in 12 short months.

In 2021, the Covid-19 Omicron variant was spreading rapidly, and workers were calling in sick in droves. With their pockets still bulging from government stimulus checks, consumers were spending. The two trends collided during the holiday season.

“It seems like forever ago,” Edward Yruma, a senior research analyst at Piper Sandler, told Forbes. “What retailers had to do was effectively overstaff. The absenteeism was off the charts. Holiday work is tough, and attracting seasonal workers was particularly difficult last year.”

The crunch and the uncertainty it brought wasn’t confined to Target. To ensure enough people were operating the registers and stocking shelves, WalmartWMT
hired more workers than it needed. Despite a record holiday season, with year-over-year sales growth clocking in at 14.1%, the decision to swell the ranks and pay bonuses weighed on company earnings.

“More of our associates that were out on Covid leave came back to work faster than we expected,” Walmart CEO Doug McMillon told analysts and investors in May. “We hired more associates at the end of last year to cover for those on leave, so we ended up with weeks of overstaffing.”

Walmart said in September that it would hire 40,000 associates in preparation for the holidays, down from 150,000 last year.

But overstaffing wasn’t the only drag on earnings among big-box retailers.

Target reported a nearly 90% year-over-year drop for its most recently reported quarter. That was largely the result of slashing prices to clear shelves of things like grills and patio furniture that people no longer needed now that going to restaurants once again became a thing.

“If we hadn’t dealt with our excess inventory head on, we could have avoided some short-term pain on the profit line, but that would have hampered our longer-term potential,” Target CFOCFO
Michael Fiddelke said on the company’s latest earnings call in August. “While our quarterly profit took a meaningful step down, our future path is brighter.”

Unlike Walmart, however, Target has kept its goal for seasonal hiring constant this year. The company said it would again hire 100,000 seasonal workers.

That’s a good sign for those worried that high inflation will bring spending to a screeching halt.

“It’s been a set of circumstances that’s been unprecedented,” Piper Sandler’s Yruma told Forbes. “But by and large, the consumer is still in good shape. It’s not going to be the holiday we had last year, but on a relative basis, it should be decent.”