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Why Gap is Raising Its Minimum Wage to $10
Clothing retailer Gap, Inc. announced Wednesday that it will raise its hourly minimum wage to $10, a change that will affect 65,000 U.S. employees. GAP employees who are now earning the minimum wage will make $9.00 in June of 2014 and $10 in June of 2015. GAP, which also owns Banana Republic, Old Navy, Piperlime, Athleta, and Intermix, operates in more than 50 countries and employs 135,000 people around the world.
“To us, this is not a political issue,” GAP Chairman and CEO Glenn Murphy said. “Our decision to invest in frontline employees will directly support our business, and is one that we expect to deliver a return many times over.” In a release, the company argues that increasing the minimum wage will help “attract and retain great talent” and improve customers’ experience.
While many retailers claim that they cannot afford to pay the minimum wage without firing employees or raising prices, research shows that companies paying low wages stand to benefit from the huge stimulus a wage hike would bring to poor workers who spend most of their income on basic needs like food and clothing. Even Walmart, one of the most notoriously low-paying companies, announced Wednesday it would consider supporting a minimum wage hike, acknowledging that it would generate extra pocket money for Walmart’s typically low-income customers. Additionally, employees tend to work harder andstay at their company longer after their wages increase.
Chains like Costco, Whole Foods, Boloco, and In-N-Out Burger have all embraced higher wages for these reasons. With Republicans signalling that they will scuttle any attempt to raise the federal minimum wage this year, pressure on the private sector to voluntarily raise wages could be one promising way forward. Also in the absence of Congressional action, cities and states are increasingly embracing higher minimum wages, and President Obama recently announced that federal workers and contractors would get a raise to $10.10 an hour via executive action.
Paying American employees a higher wage is a good first step for GAP, but the company still has a long way to go to align its social responsibility mission with its actual labor practices — particularly for its foreign workers. The company has refused to sign on to a legally binding plan to improve contracted Bangladeshi garment factories after multiple deadly disasters, instead offering a watered down, self-regulated plan. Its lax auditing of its supply chain also led to revelations in 2007 that GAP was inadvertently subcontracting child labor in India.
GAP’s announcement comes just one day after the Congressional Budget Office released an analysis arguing that raising the minimum wage could reduce total employment by about 500,000 workers.