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 A source this week said Target <TGT.N> will raise its minimum wage
to $9 per hour in April, matching moves by rivals Wal-Mart Stores
Inc <WMT.N> and TJX Cos <TJX.N>.
The retailers, which were targeted by labor advocates and their
allies, are also facing tougher competition for employees as
unemployment drops to its lowest level in more than six years.
Labor activists said the wage hikes by big retailers will give them
greater leverage with drugstore operators, who make up one of the
fastest-growing and most profitable areas in retail.
The United Food and Commercial Workers International (UFCW), a union
which played a key role in pressuring Wal-Mart, said it will
accelerate its efforts to organize Walgreens Boots Alliance Inc
<WBA.O> workers to demand better pay.
Walgreens is the top U.S. drug retailer, followed by CVS Health Corp
<CVS.N> and Rite Aid Corp <RAD.N>.
"Given the current momentum, we expect a faster chance of success in
hiking minimum wage within the retail space which includes drug
chains, than say the fast food sector," said Marc Goumbri, a
spokesman for the UFCW.
Another labor group, The New York-New Jersey Joint Board of Workers
United, an affiliate of the Service Employees International Union
(SEIU), is planning to start wage negotiations this summer with the
management of Duane Reade, a local subsidiary of Walgreens.
"What jumps out at me is that drugstores are not only reporting
strong profits but expanding at a rapid pace and making
multi-billion dollar acquisitions," said the group's President Julie
Kelly.
"That puts them in a position to lead here and raise the wages they
pay," said Kelly. The recent moves by large retailers raises the
chances of success, she added.
Kelly said her union has not decided on wage demands, although it
broadly supports the $15 an hour "living wage" backed by labor
groups nationwide.
Twelve percent of Walgreens employees earn less than $9 an hour,
with a typical cashier earning about $8.60 per hour, compared to
$8.70 per hour at CVS Health Corp, according to compensation
analytics firm Payscale.com, which usually collects pay data from a
sample of a company's employees.
Walgreens spokesman Michael Polzin said the company meets or exceeds
all wage ordinances and its pay scale varies as it seeks to remain
competitive in local markets. He declined to comment on the prospect
of wage hikes or the number of employees who earn less than $9.
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Payscale data showed 10 percent of CVS employees' hourly earnings
and 16 percent of Rite Aid Corp workers' are below $9.
CVS declined comment while Rite Aid did not respond to requests
seeking comment.
A BETTER SHOT AT SUCCESS
Drugstores are a good target in part because of relatively high
employee retention rates, which make organizing easier than in other
sectors, including fast food, analysts say. Annual worker turnover
at fast food chains is as high as 50-100 percent in some areas, they
said. Some analysts last year put the turnover at drugstore chains
as low as 11 percent.
With drugstores moving into 24 hour operations and employees
demanding better benefits, the opportunity to organize the workforce
has improved, said Burt Flickinger, managing director of retail
consultancy Strategic Resource Group and a lecturer at Cornell
University.
Flickinger said even regional drugstore operators like Fred's
Pharmacy, part of discount retailer Fred's Inc <FRED.O>, New York-
and Vermont-based chain Kinney Drugs could see their workers
organize and press for higher wages. Another target could be
Florida-based Navarro Discount Pharmacies Inc, which was acquired by
CVS last year, he said.
The companies did not respond to requests seeking comment.
"It will take 6-8 months for the results to start coming in," he
said. "But drugstores most certainly appear to be the ones next in
line for a wage hike."
(Reporting by Nandita Bose in Chicago, editing by Peter Henderson
and Christian Plumb)
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