The owner of Gap, Old Navy, Banana Republic, Athleta, Piperlime and Intermix, said it will raise the current $7.25 minimum wage for its workers to $9 this year and to $10 in 2015. Gap’s CEO says: “To us, this is not a political issue. 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.”
Gap Inc. said today that it's raising the minimum wage for American workers across its six chains, just as the government's battle to mandate a similar increase at the federal level heats up.
The company, which employs more than 65,000 people in the U.S., will raise the minimum rate to $9 in June 2014 and $10 in June 2015. It's currently $7.25 an hour, though Gap says most of its employees make more than that . The decision is significant — Gap is America's biggest specialty retailer, with more than 2,600 namesake, Old Navy, Banana Republic, Piperlime, Athleta and Intermix stores domestically.
Raising the minimum wage is a hot button issue right now, with President Barack Obama and Senate Democrats pushing for a federal increase to $10.10 an hour over three years, to opposition from the Republican-led House. But Gap says its decision, which follows "months of consideration," is not politically-motivated, and has more to do with maintaining a strong workforce as e-commerce grows.
"To us, this is not a political issue," Chief Executive Officer Glenn Murphy said in a statement on the company's website. "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."
Even so, Obama took the time to weigh in on Gap's move.
"I applaud Gap, Inc. for announcing that they intend to raise wages for their employees beginning this year," he said in a statement. "As a chief executive, I've required federal contractors to pay their employees a wage of at least $10.10 an hour, and more states are taking steps to raise their minimum wage as well. But only action from Congress can make a difference nationwide."
Gap said retail has changed rapidly in the past five years and that it's stayed ahead of competitors by investing in technology. "And yet, a customer's lasting impression is often shaped by the interactions with the people in our stores," Gap said. "To connect and enhance the in-store and digital experience for our customers even more, we must attract and retain great talent."
The retailer said it will not publicly quantify the financial impact of the decision but it is "confident" it can increase wages while continuing to post strong results for shareholders. Gap said its own analysis determined the $10 target as best for allowing the company to "strengthen our ability to attract and retain a skilled, enthusiastic and engaged workforce," ultimately resulting in deeper relationships with shoppers.
Companies, for the most part, haven't been taking a strong, public stance on the issue, and projections for how much a change would help or hurt the economy have been mixed. A report from the nonpartisan Congressional Budget Office on Tuesday said raising the federal minimum wage to $10.10 an hour would boost earnings for 16.5 million Americans and lift 900,000 people out of poverty — but it also projected that such a measure might slash 500,000 jobs by 2016. The National Retail Federation, the industry's biggest trade group, and the Chamber of Commerce have both opposed a wage increase, saying it would reduce employment.
Gap says it has the opportunity to "do more" for employees and announced its wage-hike plans with the hashtag #letsdomore.
"After many months of consideration, we've made a business decision that's right for our brands, good for our people and beneficial to our customers," Murphy said in today's statement.
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