Tuesday, January 26, 2021

Major Sign of Wage Inflation?

All hourly employees working at Target will receive $500 bonuses as a “thank you,” the company announced Monday. 

 Additionally, all store directors, executive team leaders and salaried distribution center leaders — all 12,000 of them — will receive a bonus ranging from $1,000 to $2,000. 

“We’re so proud of our team,” a statement said. “They’re the heart and soul of Target, showing up for one another and our guests—and making Target a safe and easy place to shop and work. And never has their dedication, resiliency, care and compassion been more appreciated than during the pandemic.”

This sure looks to me like an attempt to hold onto employees.

According to Target, the surprise bonuses are a “$200 million investment.”

Yeah, an investment in not losing employees.

Is that the gods of inflation whispering in my ear "wage-price inflation," which is really Fed money pump inflation?



  1. I work at one of the largest financials. They have been doing similar for three years now. Small cash bonus for earners under $100k. Small amount of restricted stock for 100-500k.

    I think it's partly a strategy to retain staff while keeping wages down. I.e. less need to offer big raises and bonuses when you can keep pointing to this type of generosity. In fact, most of peers and directs took a yoy earnings loss this year due to reduced bonus pool and very low salary increases.

    There may be wage inflation, but it appears tactics like this are used to try to suppress wages.

    There are may also be a tax benefit I dont know about that they are exploiting.

    David B.

  2. The Keynesians tell us that wages are inflexible, especially downward, as an empirical matter. They suggest the money illusion method to solve this (price inflation). Bonus pay is a better way to solve the problem and, supposedly, was a big deal in Japan in the glory days.

  3. It's what we in the corporate world call "the velvet prison". The best means an employer has is to provide a large quantity of perceived perks so that the employee remains comfortable that his life is going nowhere.

  4. If you raise wages, you're stuck from then on. If profits go down, you have to go into debt to meet payroll, or layoff. With bonuses, you can reward when profits are good, and reduce bonuses when profits fall. You're sharing the goodies without locking in to higher costs if economy goes south.

  5. I was actually just shopping at Target 30 minutes ago and walked past a team meeting where they were telling the employees about this bonus.