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May 19, 2003
Target Cuts Part-Timers' Benefits

Target, the national discount-store chain, has informed employees who work an average of 20 hours a week or less that beginning in March, their paid vacation and health care coverage will be eliminated, according to the Star-Tribune newspaper of Minneapolis.

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Currently, employees can work just a few hours a week and become eligible for the company's basic health-care plan. Such benefits have given Minneapolis-based Target a reputation as a benevolent employer.

But Target, like other retailers, finds itself in a difficult climate. The discounter's year-to-date same-store sales - a key indicator measuring sales at stores open at least a year - have increased just 1.1 percent, the Star-Tribune reports.

Target spokeswoman Carolyn Brookter declined to discuss specifics about the changes or the number of people affected. With 1,000-plus stores nationwide, Target's discount store division employs about 245,000.

Brookter told the Star-Tribune that while some workers will see benefits eliminated, others will receive an improved package - though she again declined to give specifics.

"This is not a cost-savings measure," Brookter said. "This is a way to remain competitive in the industry and to make sure we can cover people with our future growth. The majority of employees will receive increased benefits."

The other employees will have the option of increasing their weekly hours beyond the 20-hour benchmark in order to receive health care, dental, vacation and other benefits, she added.

The news has left some Target store employees, both full-and part-time, confused about how their benefits will change, according to the Star-Tribune.

The newspaper also reports that such cuts at the low-end come at a time when Target Corp. Chairman and CEO Robert Ulrich's salary has made him the highest paid CEO in Minnesota.

The disparity between the two will be a rallying point for the United Food and Commercial Workers union as it attempts to organize SuperTarget grocery/discount stores in the Twin Cities metro area. "What [Ulrich] makes in a year, we could provide health care for 6,000 workers for a year and a half. . . . People are getting hosed," said Bernie Hesse, an organizer for UFCW Local 789.

Citing documents filed with the Securities and Exchange Commission, the Star-Tribune reports that Ulrich received total compensation of $19.2 million for the fiscal year ended Feb. 1, which included a $4.6 million bonus. In 2001, he received $16 million in total compensation, including a $3.7 million bonus, the newspaper reported.

Nationwide, just 12 percent of part-time retail workers receive health care benefits through their employer. That number is not likely to climb anytime soon, as employers react to double-digit increases in health care premiums.

Eliminating some benefits, like those for part-timers, will help Target control the rate of increase in its health-care premiums, said Dallas Salisbury, president and CEO of the Employee Benefit Research Institute in Washington, D.C.. "What the company can afford and to the degree that there is any paternalism left, it is being squeezed out of the workplace by the continuing challenges of the economy combined with continuing health care inflation," he said.


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