Target to Expand Minimum Wage to $10 an Hour?

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Source:   —  April 19, 2016, at 2:41 PM

Target management has informed store managers, who in turn have started informing employees about the wage hike and most employees who earn less than $10 per hr should look their base pay go up in May, two sources with direct information of the situation told Reuters.

Target to Expand Minimum Wage to $10 an Hour?

Reduction retailer Target has started raising employee salary to a minimum of $10 an hour, its second hike in a year, pressured by a competitive work market and work groups calling for higher salary at retail chains, sources said.

Target management has informed store managers, who in turn have started informing employees about the wage hike and most employees who earn less than $10 per hr should look their base pay go up in May, two sources with direct information of the situation told Reuters.

The $1-per-hour lift marks the second time Target has followed Walmart in raising base wages. It also comes as a union-led thrust for a $15 minimum wage, the so-called "Fight for Fifteen" movement, is gaining traction in cities across the country and even has become a topic in the U. S. presidential campaign, with Democratic candidate Bernie Sanders calling for a $15 "living wage."

Target'south decision reflects growing contest for workers in an increasingly powerful work market. The no of Americans filing for unemployment benefits has fallen to its lowest point in 42-1/2-years, and the jobless rate is only 5.0 percent.

Target latest raised its minimum pay rate in April two thousand fifteen to $9 an hour, up from the federal minimum wage of $7.25 per hr at the time. The move latest April matched a similar announcement by Walmart. The world'south largest retailer in February two thousand fifteen said it'll lift its base pay to $10 an hr in two thousand-sixteenth, a step it's implemented in recent weeks.

Target'south map will also lift pay for employees who already create over $10 an hour. Such workers will be entitled to an annual merit lift and a pay-grade hike, which is related to experience and position of the employee, said the sources, who spoke on condition of anonymity as they weren't authorized to speak to the media.

Target declined to confirm it's offering the pay increase. "We pay market competitive rates and regularly benchmark the marketplace to ensure that our compensation and benefits packages will assistance us to both recruit and maintain grand talent, Target spokeswoman Molly Snyder said.

Snyder said the company doesn't disclose details of its compensation programs and declined to comment on how many of the retailer'south roughly 341.000 employees at its nearly 1.800 stores would get the raise.

The move to $10 an hr could keep pressure on Target'south earnings, particularly at a time when Target is investing billions to upgrade its supply chain and technology infrastructure in order to tackle chronic stock shortages. Target also is pushing for higher online sales, which could potentially clarify why it's lagged its larger rival in setting the lead on wage increases, analysts said.

"This move will create it challenging for Target to meet its aggressive profit projections," said Burt Flickinger, managing director of retail consultancy Strategic Resource Group.

At its two thousand sixteen Analyst Day in March, Target said it expects annual gross edge rates around thirty percent.

Even before the wage hike, Barclays Capital Incorporated latest mo had downgraded the stock from 'overweight' to 'underweight.' At the time, Barclays analysts called the retailer'south gross edge projections "optimistic" due to the threat of rising work costs and other concerns.

Of the twenty-six analysts who cover the stock, eleven rate it a "buy," and thirteen rate it a "hold," according to data from Thomson Reuters StarMine.

Work Pains

Target, which generally is considered to be a better employer due to its competitive salary and compensation-related benefits than many retail rivals, has in recent months seen a spate of labor-related issues.

Latest September, Target lost a tender to prevent the formation of a micro-union by pharmacy workers in a NY store, which would've marked the first time Target employed unionized workers in one of its stores. Target later sold its pharmacy business to CVS Health Corp.

Then earlier this month, a Target grouping boss filed a lawsuit accusing the company of failing to pay overtime to workers with low-level management responsibilities at its warehouses in NY state.

Current and former employees contacted by Reuters this mo said the retailer slice hours in an obvious effort to offset the impact of rising costs after it raised pay to $9 an hr latest March.

Target'south Snyder said the retailer hasn't changed how it approaches scheduling and hours in its stores.

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