Gap Raises Minimum Wage Ante To $10

Walmart considers a similar move

Gap Art Decó store (Miami Beach)
Flickr/Alberto Cabello Mayero
Gap Inc. -- a retail operation that owns such store chains as GAP, Banana Republic, and Old Navy -- announced that it would raise the minimum hourly rate it pays its employees to $9 an hour this year and $10 by next year, as the company's website states.

In a written statement, CEO Glenn Murphy said that the increase wasn't a "political issue" but an investment decision "that we expect to deliver a return many times over." The increase will affect upwards of 65,000 store employees at the company.

It's a big move for the company, given that federal minimum wage remains at $7.25 an hour -- and could remain there for some time. But a combination of growing pressure from workers and concerns about income inequality among influential people in business has pushed Gap and other companies as well as individual states to take action and not wait for Congress.

Careful support from businesses
Even Wal-Mart, the largest private employer in the U.S. and often a target of labor actions, is "looking" at supporting a minimum wage increase, according to Bloomberg. According to seldom reported numbers, as provided to AOL Jobs, Wal-Mart's average hourly wage for full-time employees is $12.83, while the average for part-time workers, who make up 40 percent of the company's U.S. employees, is $10.76 per hour.

Some companies have embraced higher working pay for years. Costco, for example, has a starting wage of $11.50 an hour, as the Huffington Post reports. Back in 2005, the average pay at the company was $17 an hour, according to the New York Times, which got Wall Street analysts complaining about the extra money not going to shareholders.

The world has changed significantly since then. The Great Recession leveled the economy, which is only managing a limping recovery. There's been a growing recognition that average people have been left behind. "Almost all of the gains, certainly since the recession, but really most of the gains over the last 30 years, have gone to the very top," said former Secretary of Labor Robert Reich to CBS MoneyWatch. Pope Francis has decried the "idolatry of money," according to CBS News, and called "trickle-down theories" of economics a "new tyranny."

Pressure builds
Over the last two years, organized fast food workers have held a series of strikes, demanding that the federal minimum wage increase to $15 an hour. There have also been strikes at Wal-Mart stores. And most Americans support a higher minimum wage, according to an ABC News Poll.

But criticism has also appeared in the business community. In a conversation with the Wall Street Journal, the global managing director of business consulting firm McKinsey & Co. called "rising and persistent income inequality" the biggest challenge to capitalism in the next 20 years. In speaking about the problems that computer-driven efficiency can cause to job creation and wages, Google chairman and former CEO Eric Schmidt recently said, "We're in a race between computers and people--and we need to make sure the people win," according to Time Magazine.

It's a great deal of ongoing pressure to resist. Although a hike in the federal minimum wage might offer cover for businesses trying to avoid Wall Street's ire, short-term action doesn't seem to be in sight. Discussions over a higher minimum wage are mired in continued debate in Congress, as the Los Angeles Times reports. Political realities suggest that a hike would have a difficult time passing the House.

Alternative solutions
So various groups have had to find their own way. Companies like Gap -- and Wal-Mart, should it fall into line -- will put pressure on other businesses, because higher wages will give them an advantage in obtaining workers. That, in turn, will drive other companies to increase wages or operate at a disadvantage.

President Obama, who has supported a $10.10 federal minimum wage proposal, has raised the minimum wage for new federal contract numbers to that level, according to the Associated Press.

At the state level, 21 states already have a higher minimum than the federal's $7.25. Last year, California, Connecticut, New York, New Jersey, and Rhode Island all approved new increases in their state minimum wages. Another five states -- Hawaii, Massachusetts, Maryland, Minnesota, and South Dakota -- seem likely to do so this year.

But even then, the highest state minimum wage, in Washington state, is still $9.32 an hour, below Gap's plan. As of now, it seems that private industry may be workers' best bet for better pay.

Add a Comment

*0 / 3000 Character Maximum

17 Comments

Filter by:
buffalokandravi

The wage gap is decided by the Company , if Obama takes over all the companies with his allowance he would be broke and hurt many others, but he is already broke or so in debt that if you took all the Presidents since the first President and combined all there debt together , Obama still hands down has made more debt than all Presidents combined before him. The USA Treasury Building in New York City which has the US GOLD VAULT NEXT TO IT IS NOW OWNED BY CHINA, THE NEW YORK CITY ROCKEFELLER LANDMARK WAS PUT UP FOR SALE FOR 1.5 Billion$ Dollars but China bought it for 750,000 MIL. $ WHICH WAS 1/2 PRICE AND ARE REMODELING IT INTO CONDO'S THAT ARE PRE SOLD TO CHINA, I wonder if that will be in the history books, an AMERICAN ICON would have never let our history be bought by another country with interest payments, so RED CHINA will have a bigger China Town in New York City, I wonder if the Statue of Liberty has a price tag. THAT SHOULD BE FRONT PAGE NEWS as the people are moving out of the city that just gave a 20 Million $ Dollar tax break to get the tonight show back . Sounds like shovel ready jobs somebody promised , what was his name . If you forgot just see if you can see your Doctor or maybe you could get accupunture they must have inspectors from the 14 person panel for health that where not elected.

February 23 2014 at 10:45 PM Report abuse rate up rate down Reply
dracura94

Can'y help it - I am a conservative opposed to a government enforced minimum wage of 10.10. That does not mean I am opposed to a more gradual step - like maybe $8.00 to $8.50. The Federal government should play a sufficient role to protect employees, but not to encroach upon employers to the extent to damage their businesses. Obama has an obligation to consider these employers, but he has no business experiment and has already told entreprenuers that "you didn't make that" which essentially says 'you are in business because the government gave you that right'. Being fair to employees does no equate to crushing employers. Why would an intelligent 52 year old man wh is President not agree with that and speak out against those who make small businesses possible? Perhaps this explains why some of the brightest stars in the Republican Party are members of minorities who have a better understanding of escaping everuthing from mediocrity to outright poverty to achieve great things.

February 21 2014 at 12:18 PM Report abuse rate up rate down Reply
William

As an employer....when you raise wages "just because" it's politically correct, it's a slap in the face to those who actually earn the raise, and a gift to those who didn't. Raising wages does not increase productivity....most often it's the other way around. Employers who pay attention to there workers raise wages according to the employees attitude, skills and work ethic. I have some employees who are at the very bottom because they think their entire responsibility is to show up. They will never advance until they show me they are capable. If, for some reason I was forced to increase my salaries these employees will be replaced by ones who can earn what the wage will become. That's just good business. My employees have the right to fair treatment. They also have the right to find other jobs if they think they can do better.

February 21 2014 at 11:31 AM Report abuse -1 rate up rate down Reply
chauncy

its just business. when you pay more you attract better staff and you also expect better results. Wages are earned//not some right. What will happen next is the slackers will get fired , and youll hear a whole bunch of whining.

Kudos to Gap.

February 21 2014 at 10:56 AM Report abuse +1 rate up rate down Reply
Mark

Caved in to the whiners

February 21 2014 at 10:55 AM Report abuse -1 rate up rate down Reply
Robert

Way to go GAP.... BUT -- when your CEO, Glenn Murphy makes $25 million a year plus perks, and your NET income for 2012 exceeeds $1billion--------------I think you could maybe pay your employees $25 and hour without changing a thing but knocking off half of the CEO salary, and net income would probably go up for the stockholders, create a workplace that could offer a liveable wage, and remain a winner............how much money does the CEO need anyway? He'll never spend all that money in one lifetime............

February 21 2014 at 10:47 AM Report abuse rate up rate down Reply
thnkit56

A first step...........but not nearly enough. If GAP really wants to make powerful impact, they should couple it with 1) an upward mobility program, 2) bonus for all based on profitability by store year-on-year, 3) overseas manufacturing safety and living wages, 4) reinvent made in USA thrust.

GAP can either seize the moment or be a flash in the pan.................

February 21 2014 at 9:39 AM Report abuse -2 rate up rate down Reply
2 replies to thnkit56's comment
chauncy

ohh what are you talking about. upward mobility? heres an idea. a worker does their best and the company will promote them if a job becomes available. That natural The problem is the workers dont want to do that. THATS upward mobility and it exists in almost every company. Its ridiculous that yu think the company needs to do everything yet yu said ot one word about the employees. Foolish and empty headed.

February 21 2014 at 10:49 AM Report abuse rate up rate down Reply
Frank

And you know they don't do that already?

February 21 2014 at 12:10 PM Report abuse rate up rate down Reply
bdgrizcp

Funny how we all forget how this jobs mess got to where it is. We have all these low pay low skill jobs primarily because of job exportation and automation. We also have a large under educated low skill 'workforce' to fill them. If there was any shortage of labor, we would not be having this discussion. Minimum wage would, as it once was, be relegated to part-time fill-in jobs. Ask anyone in McD's human resources if they ever expected that their workforce would be what it is now. They are grappling with this issue, believe me. And they have said as much. But in trying to force corporations to pay more for labor than the market will bear we avoid the larger issues. That, at least, we arereally good at.

February 21 2014 at 9:37 AM Report abuse rate up rate down Reply
jimmyvf

If there were more unionized companys, there would not be an issue. Like, Carolina gov who wants to keep the unions out of her state. Unions keep companys honest and fair to the blue collar workers. Need more unions.

February 21 2014 at 9:14 AM Report abuse -1 rate up rate down Reply
Nick Caldarola

They raise minimum wage and then. let you go when you make too much money. They have a clause in their employer/employee agreement when your hired, that states you can be let go at anytime without reason. It has happened to members of my family and friends who worked for Gap.

February 21 2014 at 9:12 AM Report abuse +1 rate up rate down Reply

Search Articles

Top Companies Hiring

Week of Sep 28 - Oct 5
View All

Picks From the Web