EDITORIAL: The free market at work: Target to raise wages

Progressives prefer government edicts, but the fairest, most efficient means of setting wages is to allow the market to determine how much a job is worth relative to the profit that job generates. If companies are wrong, the market will let them know, be it through good employees leaving for higher-paying jobs or profits suffering due to overly generous compensation.

Giant retail chain Target Corp. gets that, and it is raising wages of its own will, rather than at the command of heavy-handed central planners.

As The Associated Press reported Monday, Target is raising its minimum hourly wage for workers to $11 starting in October, then to $15 by the end of 2020. The company says the move will help it hire and keep the best employees and make shopping a better experience for customers. Indeed, if employee retention is important to a company’s bottom line, pay must be commensurate to that ideal.

Jazz Shaw, writing for HotAir.com, explains: “As unemployment continues to fall, the available labor pool shrinks. … Offering the sort of wages normally reserved for people with considerably higher level skills in the trades, the company will draw resumes from far and wide, allowing them to pick the cream of the crop. The most desirable workers currently employed by their competitors will have to consider jumping ship and putting in an application.”

There is certainly a tipping point. There is no way that every business relying on low-skilled labor — the fast-food/restaurant industry, for starters — could survive a widespread jump to $15 an hour. But Target has decided its shoppers’ enhanced experience will make this a worthwhile investment. The AP reported that the chain also intends to remodel stores, expand online services and open up smaller urban locations.

The benefit is clear, through a free-market lens. “What do they get in return?” asks Mr. Shaw. “Better performance and employee loyalty, leading to better service for the public and, possibly, more customer loyalty. If this raise had come about because of an across-the-board government mandate, there would be no reason for anyone to change jobs, since the pay is all the same anyway.”

Public-sector regulators already have far too much negative impact on businesses large and small and on the citizens for whom politicians and the bloated bureaucracy are supposed to work. Target is making a free-market choice — and that decision will be validated or repudiated by the marketplace, as it should be.