Sources: Target increases minimum wage to $10 an hour

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Target Reportedly Increasing Minimum Wage for Workers to $10 an Hour

CHICAGO, April 18 (Reuters) - Discount retailer Target Corp has started raising employee wages to a minimum of $10 an hour, its second hike in a year, pressured by a competitive job market and labor groups calling for higher wages 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 hour should see their base pay go up in May, two sources with direct knowledge of the situation told Reuters.

SEE ALSO: CEO who promised $70K salaries: 'I wasn't ready for the surge of attention

The $1-per-hour raise marks the second time Target has followed Wal-Mart Stores Inc in raising base wages. It also comes as a union-led push 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."

Also learn ways to save money at Target:

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Ways to save money at Target
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Sources: Target increases minimum wage to $10 an hour

Look at what number price of an item ends in
It may seem overly attentive, but it's worth it. If the price of an item ends in $0.06 or $0.08, the item will be marked down again at some point in the future. If the price ends in $0.04, the item is marked for final clearance and the price will not change again.

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Trade in electronics for gift cards
If you bring your old electronics to the electronics department, they'll quote you on how much your stuff is worth and compensate you in Target gift cards to spend around the store.

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Be aware of the weekly markdown schedule
Different departments in Target mark down items depending on the day of the week:
Monday: Electronics, accessories, kids' clothing, books, baby, and stationery
Tuesday: Domestics, women's clothing, pets, and market 
Wednesday: Men's clothing, health and beauty, lawn and garden

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Thursday: Housewares, lingerie, shoes, toys, sporting goods, decor, and luggage
Friday: Auto, cosmetics, hardware, and jewelry

Strategically utilize holiday clearance sales
Target has consistently scaled markdowns on themed items after the holidays:
Day after holiday: 50% off
Three days after holiday: 75% off
One week after holiday: 90% off

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Sign up for mobile coupon alerts
By signing up, a new set of coupons will be sent to your phone each month (you can even specify the exact time you want them delivered.) The coupons are scannable and can be redeemed at the register. 

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Shop the end caps
The end caps are the shelves that sit at the end of each aisle, seeming somewhat misplaced. However, most clearance items are usually placed here--make it your go-to place to check if you're looking for discounted items.

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Check online for current deals  
Each week, Target updates its current promotions and weekly sales pages--you'll be able to scout out deals you want to take advantage of and know how much you can save before you even get in to store.

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BYOB (bring your own bag)
Target offers a five-cent discount for every reusable bag you bring in to use at checkout. Every cent adds up!

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Opt for store-brand items
A general rule of thumb when shopping at any major retailer, but its especially worthwhile at Target. Target has several top-quality store-brands that produce everything from food to beauty products at a much lower price than name brands. 

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Hit the dollar section first
Target's dollar aisle is like no other--you never know what you can find when you really look! 

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Utilize "Target Cartwheel"
Cartwheel is a social coupon program that Target created that allows you to set up an account to earn and receive deals. You can use each deal up to four times, as well as stack your deals with other coupons. 

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Target's decision reflects growing competition for workers in an increasingly strong labor market. The number 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 last raised its minimum pay rate in April 2015 to $9 an hour, up from the federal minimum wage of $7.25 per hour at the time. The move last April matched a similar announcement by Wal-Mart. The world's largest retailer in February 2015 said it will lift its base pay to $10 an hour in 2016, a step it has implemented in recent weeks.

Target's plan will also raise pay for employees who already make over $10 an hour. Such workers will be entitled to an annual merit raise 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 were not authorized to speak to the media.

Target declined to confirm it is offering the pay increase. "We pay market competitive rates and regularly benchmark the marketplace to ensure that our compensation and benefits packages will help us to both recruit and retain great talent, Target spokeswoman Molly Snyder said.

Snyder said the company does not disclose details of its compensation programs and declined to comment on how many of the retailer's roughly 341,000 employees at its nearly 1,800 stores would receive the raise.

The move to $10 an hour could put pressure on Target's earnings, especially 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 explain why it has lagged its larger rival in setting the lead on wage increases, analysts said.

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

At its 2016 Analyst Day in March, Target said it expects annual gross margin rates around 30 percent.

Even before the wage hike, Barclays Capital Inc last month had downgraded the stock from 'overweight' to 'underweight.' At the time, Barclays analysts called the retailer's gross margin projections "optimistic" due to the threat of rising labor costs and other concerns.

Of the 26 analysts who cover the stock, 11 rate it a "buy," and 13 rate it a "hold," according to data from Thomson Reuters StarMine.

LABOR PROBLEMS

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

Last September, Target lost a bid to prevent the formation of a micro-union by pharmacy workers in a New York store, which would have 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 group leader filed a lawsuit accusing the company of failing to pay overtime to workers with low-level management responsibilities at its warehouses in New York state.

Current and former employees contacted by Reuters this month said the retailer cut hours in an apparent effort to offset the impact of rising costs after it raised pay to $9 an hour last March.

Target's Snyder said the retailer has not changed how it approaches scheduling and hours in its stores.

A current part-time employee, who spoke on condition of anonymity as she was not authorized to speak to the media, said she averaged about 25-26 hours every week before March 2015, but has progressively seen her hours cut. She now averages at about 18-19 hours per week.

Related: Also see fast food workers protest for a higher minimum wage:

39 PHOTOS
U.S. fast food worker protests for $15 minimum wage
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Sources: Target increases minimum wage to $10 an hour
NEW YORK, NY - NOVEMBER 10: Low wage workers and supporters protest for a $15 an hour minimum wage on November 10, 2015 in New York, United States. In what organizers are calling a National Day of Action for $15 and hour minimum wage, thousands of people took to the streets across the country to stage protests in front of businesses that are paying some of their workers the minimum wage. Home care workers, employees in retail and fast food restaurants say that the current minimum is not a living wage. (Photo by Spencer Platt/Getty Images)
NEW YORK, NY - NOVEMBER 10: New York City Mayor Bill de Blasio makes an appearance in support of low wage workers, many in the fast-food industry, as they join with supporters to demand a minimum wage of $15 an hour on November 10, 2015 in New York, United States. In what organizers are calling a National Day of Action for $15 and hour minimum wage, thousands of people took to the streets across the country to stage protests in front of businesses that are paying some of their workers the minimum wage. Home care workers, employees in retail and fast food restaurants say that the current minimum is not a living wage. (Photo by Spencer Platt/Getty Images)
NEW YORK, NY - NOVEMBER 10: Low wage workers and supporters protest for a $15 an hour minimum wage on November 10, 2015 in New York, United States. In what organizers are calling a National Day of Action for $15 and hour minimum wage, thousands of people took to the streets across the country to stage protests in front of businesses that are paying some of their workers the minimum wage. Home care workers, employees in retail and fast food restaurants say that the current minimum is not a living wage. (Photo by Spencer Platt/Getty Images)
NEW YORK, NY - NOVEMBER 10: Low wage workers and supporters protest for a $15 an hour minimum wage on November 10, 2015 in New York, United States. In what organizers are calling a National Day of Action for $15 and hour minimum wage, thousands of people took to the streets across the country to stage protests in front of businesses that are paying some of their workers the minimum wage. Home care workers, employees in retail and fast food restaurants say that the current minimum is not a living wage. (Photo by Spencer Platt/Getty Images)
NEW YORK, NY - NOVEMBER 10: Low wage workers and supporters protest for a $15 an hour minimum wage on November 10, 2015 in New York, United States. In what organizers are calling a National Day of Action for $15 and hour minimum wage, thousands of people took to the streets across the country to stage protests in front of businesses that are paying some of their workers the minimum wage. Home care workers, employees in retail and fast food restaurants say that the current minimum is not a living wage. (Photo by Spencer Platt/Getty Images)
NEW YORK, NY - NOVEMBER 10: Low wage workers and supporters protest for a $15 an hour minimum wage on November 10, 2015 in New York, United States. In what organizers are calling a National Day of Action for $15 and hour minimum wage, thousands of people took to the streets across the country to stage protests in front of businesses that are paying some of their workers the minimum wage. Home care workers, employees in retail and fast food restaurants say that the current minimum is not a living wage. (Photo by Spencer Platt/Getty Images)
NEW YORK, NY - NOVEMBER 10: Low wage workers and supporters protest for a $15 an hour minimum wage on November 10, 2015 in New York, United States. In what organizers are calling a National Day of Action for $15 and hour minimum wage, thousands of people took to the streets across the country to stage protests in front of businesses that are paying some of their workers the minimum wage. Home care workers, employees in retail and fast food restaurants say that the current minimum is not a living wage. (Photo by Spencer Platt/Getty Images)
FORT LAUDERDALE, FL - SEPTEMBER 10: Laura Rollins joins with others to protest in front of a McDonald's restaurant in support of a $15 an hour minimum wage on September 10, 2015 in Fort Lauderdale, Florida. Seattle, San Francisco and Los Angeles are among cities that have adopted a $15 an hour minimum wages. (Photo by Joe Raedle/Getty Images)
FORT LAUDERDALE, FL - SEPTEMBER 10: Laura Pierre joins with others to protest in support of a $15 an hour minimum wage on September 10, 2015 in Fort Lauderdale, Florida. Seattle, San Francisco and Los Angeles are among cities that have adopted a $15 an hour minimum wages. (Photo by Joe Raedle/Getty Images)
CHICAGO, IL - JUNE 22: Marie Gasaway protests with fast food workers and community activists outside a McDonald's restaurant in the Loop on June 22, 2015 in Chicago, Illinois. The protestors were calling for an increase in the minimum wage to $15-dollars-per-hour. The demonstration was staged to coincide with the 4th hearing of the Wage Board in New York City as it debates the $15-dollar-per-hour increase for its workers. (Photo by Scott Olson/Getty Images)
FORT LAUDERDALE, FL - SEPTEMBER 10: Protesters in support of a $15 an hour minimum wage march together on September 10, 2015 in Fort Lauderdale, Florida. Seattle, San Francisco and Los Angeles are among cities that have adopted a $15 an hour minimum wages. (Photo by Joe Raedle/Getty Images)
CHICAGO, IL - JUNE 22: A woman begs for change as fast food workers and community activists protest outside a McDonald's restaurant in the Loop on June 22, 2015 in Chicago, Illinois. The demonstrators were calling for an increase in the minimum wage to $15-dollars-per-hour. The demonstration was staged to coincide with the 4th hearing of the Wage Board in New York City as it debates the $15-dollar-per-hour increase for its workers. (Photo by Scott Olson/Getty Images)
CHICAGO, IL - JUNE 22: Juan Hernandez, 8, protests with his mother, who works for McDonald's, and other fast food workers and community activists outside a McDonald's restaurant in the Loop on June 22, 2015 in Chicago, Illinois. The protestors were calling for an increase in the minimum wage to $15-dollars-per-hour. The demonstration was staged to coincide with the 4th hearing of the Wage Board in New York City as it debates the $15-dollar-per-hour increase for its workers. (Photo by Scott Olson/Getty Images)
CHICAGO, IL - JUNE 22: Fast food workers and community activists protest outside a McDonald's restaurant in the Loop on June 22, 2015 in Chicago, Illinois. The protestors were calling for an increase in the minimum wage to $15-dollars-per-hour. The demonstration was staged to coincide with the 4th hearing of the Wage Board in New York City as it debates the $15-dollar-per-hour increase for its workers. (Photo by Scott Olson/Getty Images)
CHICAGO, IL - JUNE 22: Fast food workers and community activists protest outside a McDonald's restaurant in the Loop on June 22, 2015 in Chicago, Illinois. The protestors were calling for an increase in the minimum wage to $15-dollars-per-hour. The demonstration was staged to coincide with the 4th hearing of the Wage Board in New York City as it debates the $15-dollar-per-hour increase for its workers. (Photo by Scott Olson/Getty Images)
Demonstrators march past a McDonald's Corp. restaurant during a rally in Oak Brook, Illinois, U.S., on Wednesday, May 20, 2015. Labor activists seeking $15-an-hour wages marched on McDonald's headquarters on Wednesday, marking the second straight year of protests ahead of the fast-food chain's annual meeting. Photographer: Daniel Acker/Bloomberg via Getty Images
CHICAGO, IL - JUNE 22: Fast food workers and community activists protest outside a McDonald's restaurant in the Loop on June 22, 2015 in Chicago, Illinois. The protestors were calling for an increase in the minimum wage to $15-dollars-per-hour. The demonstration was staged to coincide with the 4th hearing of the Wage Board in New York City as it debates the $15-dollar-per-hour increase for its workers. (Photo by Scott Olson/Getty Images)
Demonstrators march during a rally near a McDonald's Corp. restaurant and the headquarters in Oak Brook, Illinois, U.S., on Wednesday, May 20, 2015. Labor activists seeking $15-an-hour wages marched on McDonald's headquarters on Wednesday, marking the second straight year of protests ahead of the fast-food chain's annual meeting. Photographer: Daniel Acker/Bloomberg via Getty Images
A demonstrator holds a sign that reads 'People and Planet over Profit' during a rally near a McDonald's Corp. restaurant and headquarters in Oak Brook, Illinois, U.S., on Wednesday, May 20, 2015. Labor activists seeking $15-an-hour wages marched on McDonald's headquarters on Wednesday, marking the second straight year of protests ahead of the fast-food chain's annual meeting. Photographer: Daniel Acker/Bloomberg via Getty Images
Demonstrators march during a rally near McDonald's Corp. headquarters in Oak Brook, Illinois, U.S., on Wednesday, May 20, 2015. Labor activists seeking $15-an-hour wages marched on McDonald's headquarters on Wednesday, marking the second straight year of protests ahead of the fast-food chain's annual meeting. Photographer: Daniel Acker/Bloomberg via Getty Images
Demonstrators march during a rally near McDonald's Corp. headquarters in Oak Brook, Illinois, U.S., on Wednesday, May 20, 2015. Labor activists seeking $15-an-hour wages marched on McDonald's headquarters on Wednesday, marking the second straight year of protests ahead of the fast-food chain's annual meeting. Photographer: Daniel Acker/Bloomberg via Getty Images
Home health care workers and other protesters hold signs at a rally in support of minimum wage increase in New York, U.S., on Wednesday, April 15, 2015. Fast-food workers held rallies in 236 U.S. cities Wednesday in their biggest protest yet for higher pay and union rights. Photographer: Victor J. Blue/Bloomberg via Getty Images
Home health care workers hold signs at a rally in support of minimum wage increase in New York, U.S., on Wednesday, April 15, 2015. Fast-food workers held rallies in 236 U.S. cities Wednesday in their biggest protest yet for higher pay and union rights. Photographer: Victor J. Blue/Bloomberg via Getty Images
Protesters hold signs at a rally in support of minimum wage increase in New York, U.S., on Wednesday, April 15, 2015. Fast-food workers held rallies in 236 U.S. cities Wednesday in their biggest protest yet for higher pay and union rights. Photographer: Victor J. Blue/Bloomberg via Getty Images
Protesters hold signs at a rally in support of minimum wage increase in New York, U.S., on Wednesday, April 15, 2015. Fast-food workers held rallies in 236 U.S. cities Wednesday in their biggest protest yet for higher pay and union rights. Photographer: Victor J. Blue/Bloomberg via Getty Images
Protesters hold up a Ronald McDonald puppet at a rally in support of minimum wage increase in New York, U.S., on Wednesday, April 15, 2015. Fast-food workers held rallies in 236 U.S. cities Wednesday in their biggest protest yet for higher pay and union rights. Photographer: Victor J. Blue/Bloomberg via Getty Images
Signs lay in the street before the start of a rally in support of minimum wage increase in New York, U.S., on Wednesday, April 15, 2015. Fast-food workers held rallies in 236 U.S. cities Wednesday in their biggest protest yet for higher pay and union rights. Photographer: Victor J. Blue/Bloomberg via Getty Images
Protesters hold signs at a rally in support of minimum wage increase in New York, U.S., on Wednesday, April 15, 2015. Fast-food workers held rallies in 236 U.S. cities Wednesday in their biggest protest yet for higher pay and union rights. Photographer: Victor J. Blue/Bloomberg via Getty Images
CHICAGO, IL - APRIL 15: Demonstrators gather in front of a McDonald's restaurant to call for an increase in minimum wage on April 15, 2015 in Chicago, Illinois. The demonstration was one of many held nationwide to draw attention to the cause. (Photo by Scott Olson/Getty Images)
CHICAGO, IL - APRIL 15: Demonstrators gather in front of a McDonald's restaurant to call for an increase in minimum wage on April 15, 2015 in Chicago, Illinois. The demonstration was one of many held nationwide to draw attention to the cause. (Photo by Scott Olson/Getty Images)
CHICAGO, IL - APRIL 15: Demonstrators gather in front of a McDonald's restaurant to call for an increase in minimum wage on April 15, 2015 in Chicago, Illinois. The demonstration was one of many held nationwide to draw attention to the cause. (Photo by Scott Olson/Getty Images)
Fast food workers, healthcare workers and their supporters shout slogans at a rally and march to demand an increase of the minimum wage to 15USD per hour, in Los Angeles on December 4, 2014. The nationwide protest is expected to reach 190 US cities. AFP PHOTO / ROBYN BECK (Photo credit should read ROBYN BECK/AFP/Getty Images)
Fast food workers, healthcare workers and their supporters shout slogans at a rally and march to demand an increase of the minimum wage to 15USD per hour, in Los Angeles on December 4, 2014. The nationwide protest is expected to reach 190 US cities. AFP PHOTO / ROBYN BECK (Photo credit should read ROBYN BECK/AFP/Getty Images)
Two women order food as striking fast food workers, home healthcare workers and their supporter shout slogans inside a MCDonalds during a rally and march to demand an increase of the minimum wage to 15USD per hour, in Los Angeles on December 4, 2014. The nationwide protest is expected to reach 190 US cities. AFP PHOTO / ROBYN BECK (Photo credit should read ROBYN BECK/AFP/Getty Images)
NEW YORK, NY - DECEMBER 04: Protesters march through the streets demanding a raise on the minimum wage to $15 per hour on December 4, 2014 in New York, United States. The movement, driven largely by fast food workers, has risen in prominence in the past year; today's protests were also joined by demonstrators angry at the Grand jury verdict to not indict the police officer who killed Eric Garner in July, 2014. (Photo by Andrew Burton/Getty Images)
NEW YORK, NY - DECEMBER 04: Protesters march through a McDonalds demanding a raise on the minimum wage to $15 per hour on December 4, 2014 in New York, United States. The movement, driven largely by fast food workers, has risen in prominence in the past year; today's protests were also joined by demonstrators angry at the Grand jury verdict to not indict the police officer who killed Eric Garner in July, 2014. (Photo by Andrew Burton/Getty Images)
WASHINGTON, DC - DECEMBER 04: U.S. Sen. Bernie Sanders (I-VT) speaks to low-wage federal contract workers during a protest where the workers demanded presidential action to win an increase to $15 an hour wage December 4, 2014 in Washington, DC. A number of workers were expected to walk off their jobs later in the day as part of the protest. (Photo by Win McNamee/Getty Images)
WASHINGTON, DC - DECEMBER 04: Low-wage federal contract workers block rush hour traffic on Independence Avenue while demanding presidential action to win an increase to $15 an hour wage December 4, 2014 in Washington, DC. A number of workers were expected to walk off their jobs later in the day as part of the protest. (Photo by Win McNamee/Getty Images)
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