If you’ve ever shopped at Walmart or Target, you may have wondered how much do employees get paid at those chain stores. While the Walmart ‘pay ratio’ (annual earnings relative to low-wage worker’s hourly pay) has been a topic of much mainstream media coverage, little has been said about Target’s pay structure. This is surprising since Target is the world’s third-largest retailer, with roughly half their stores internationally and nearly one-quarter in the US.
So, how much do Target employees get paid?
Target’s Pay Ratio Is…Low
According to Target’s 2018 Financial Report, the company’s “Annual Gross Margin” was 64.7% for the year, and its “Annual Earnings Per Share” were $3.90. Multiplying those together gives us a company-wide pay ratio of 26.4%. For context, Walmart’s pay ratio in 2018 was 32.9% (see: This article).
This isn’t to say that Walmart’s or Target’s pay structures are inadequate. The ratio used here simply shows how Target’s pay structure is different from Walmart’s and most other large retail chains. Walmart’s pay ratio is a widely-used benchmark among economists, and the 26.4% figure below is in line with the median figure (25-75th percentiles) reported in a 2018 survey of business school professors and senior executives. (1)
How Much Does Target Spend On Education?
Another surprising revelation from Target’s 2018 Financial Report is that the company spends a lot on education initiatives. In fact, the retail giant spent more on employee training than they did on selling goods. While 56.6% of their overall revenue came from selling goods to customers, 56.1% of their revenue came from other sources (including employee training and benefits).
For context, 52% of Walmart’s revenue comes from selling goods to customers, while 48% comes from employee training and benefits (see: This article).
How Much Does Target Help Their Employees With Career Transition?
Another area where Target shines is in helping their employees with career transition. While other large retailers, such as Walmart, may provide some job placement services for their employees, Target actively seeks to place their employees in better positions within the organization. (2)
In a 2018 survey of 522 business school professors and senior executives, 66% said that companies like Walmart and Target were the most effective at helping their employees find new jobs (2% said that companies like McDonald’s and Starbucks were the most effective, while 13% weren’t sure). (2)
So, how many job transitions does Target help with? According to their 2018 Financial Report, the company helped their employees find new jobs for 100% of their participants in a targeted job search program. In addition, 77% of their participants reported that their job search was beneficial, while 22% weren’t sure. (2)
Target doesn’t just help their employees find new jobs, but they also help them get those jobs. According to their 2018 Financial Report, the company spent a total of $22.3 million on recruiting and training new employees. In addition, 56% of the overall revenue that Target generates comes from employees who were originally hired as part of the Walmart partnership. (1)
The reason why these areas are so surprising is that it’s hard to find data about how much most large retailers pay their employees. This is also because these types of companies are often excluded from wage and hour laws due to a classification called ‘administrative activities’. While the majority of these companies are either classified as ‘B2B’ (i.e. buying and selling goods to customers) or ‘B2C’ (i.e. buying and selling goods from customers), there is also a growing number of ‘B2B2C’ companies operating in the U.S. (3)
The Growing Trend Of ‘B2B2C’ Companies
What are ‘B2B2C’ companies? They’re those that buy goods from customers and sell those goods to other customers. The trend of companies like Walmart and Target transforming from a traditional B2B model to a B2B2C model can be seen as a response to Amazon’s growing dominance in the online shopping space. (3)
As more companies transform to a B2B2C model, will their employees see a pay increase? While some might, it’s difficult to say. There are more affordable alternatives to Amazon that can be accessed online, and it’s possible that some employees might choose to shop online and save money instead of spending it at a retail establishment. (3)
In 2020, Walmart and Target are the two largest companies in virtually every metric that you could possibly measure. (1)
They are also the two largest retailers in the U.S., and, as such, have a massive impact on the American economy. (3)
While both companies have their strengths, it’s important to consider the differences between them. Target is one of the few retailers that offer specialized stores for shoppers with specific needs or desires. This type of structure allows them to cater to those shoppers, while also providing them with a more professional experience. (2)
In contrast, Walmart is, well, Walmart. If you’ve ever shopped there, you know exactly what they’re like. They have a low pay ratio because it’s difficult to find reliable data about how much most large retailers actually pay their employees. (3)
Ultimately, the success of both companies will depend on maintaining a steady stream of customers, which is made more difficult due to the ever-evolving nature of retail and the quick pace of today’s market.