Target Stock Is Getting a Boost From Company’s Employee Benefits

Will Ashworth

Wed, Jun 12, 2019, 6:55 AM

The U.S. is currently operating in one of the tightest employment markets in the history of corporate America. To attract and retain talent in this challenging HR environment, Target (NYSE:TGT) is providing additional benefits to its employees so that they can be more productive and happy at work.

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That’s excellent news if you own Target stock. Here’s why.

The Sandwich Generation

If you’re in your late 40s or early 50s, it’s possible that you are taking care of kids and aging parents. possibly all under one household. The strain that takes on people’s physical and mental well-being is highly documented.

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The Washington Post published a guest column in May by a woman named Aimee Christian, who wrote about what self-care looks like for people in their late 40s and early 50s. Christian is married with two kids, one of whom has a significant disability; not only does she work full-time, but she also helps her mother deal with her father’s various ailments, both in and out of the hospital.

That’s not an unusual situation these days.

So, when a country finds itself in one of the tightest employment markets it’s ever experienced, companies either step up and meet the needs of their employees or they risk losing them to companies that will.

Target’s Bid to Keep Employees Happy

Target recently rolled out several benefits for its employees that will make it easier for its staff to take care of their loved ones.

As an investor, you might not think that these things are an essential part of your decision-making process, but they ought to be because if companies don’t take care of people working on their front lines, they’re bound to lose market share to those that will.

Many retailers, including Amazon (NASDAQ:AMZN) and Costco (NASDAQ:COST) have already tried to help their workers by raising their minimum wage to $15. Others, like TGT, are in the process of raising it. Target’s minimum wage is currently at $13 and will hit $15 by 2020.

While Target’s wage hikes are a good start, the fact that it’s fallen behind Costco and Amazon in this area is troubling. If you own Target stock, I wouldn’t sell the shares, but you might want to write a letter to the company’s investor relations department if you feel it’s not doing enough on the minimum wage front.

A Bigger Issue

The biggest issue for corporate America isn’t the minimum wage, but gender equality.

Until women are paid the same wages as men, from the bottom rung to the top, and are given an equal opportunity for career advancement, American companies are going to have trouble attracting and retaining employees.

The fact that Target won the Network of Executive Women’s William J. Grize 2019 award for gender diversity and inclusion is a sign that TGT is working hard to level the playing field.

“Today almost half of Target’s store managers are female, each overseeing up to 500 employees and responsible for maximizing profitability, guest experience and sales. Women make up 36 percent of Target’s board and 45 percent of its executives,” stated the January press release announcing Target’s win.

In 2016, Target signed the White House Equal Pay Pledge, showing its commitment to ensuring women working at the company are equal in every way.

While TGT has a ways to go on the minimum wage, in most respects, it’s doing a pretty decent job taking care of its employees.

The Bottom Line on Target Stock

If this seems like a commercial for TGT, it ought to.

Every time the American economy heats up, companies get serious about benefits. Then, as in 2008, when unemployment spikes, companies forget that people are what makes them successful.

If you own Target stock, you can feel good that you don’t hold Walmart (NYSE:WMT) shares; WMT only pays $11 an hour to start for its front-line staff.

As long as the economy remains strong, Target’s efforts to help its employees cope will be positive for its top-and bottom lines, and good for TGT stock, over the long-term.

At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.