A Blog by Jonathan Low


Feb 20, 2014

Gap Goes Above and Beyond Minimum Wage: Gives Raises to 65,000 Employees

Is there any employee in the western world taken more for granted than the retail store clerk?

Yes, there are others with dirtier, more physically demanding and even more dangerous jobs, but in terms of hours worked, often when others are off enjoying themselves, or having to be nice to people who all too frequently arent very nice to them - and with regard to the wages they are paid, we would proffer those who toil behind store counters, airport check-in desks, fast food cash registers and the like are the most put-upon.

So the news that the Gap, one of the largest casual clothing chains in the world is not just supporting an increase in the minimum wage, but is going even higher in an effort to build morale, improve performance and maybe even realize an enhanced customer response.

While some idealogues continue to maintain that raising wages has a negative impact on the economy, most of the data accumulated over time refutes that contention. Even the recent Congressional Budget Office report suggesting that some jobs will be lost if the minimum wage is increased does so in the context of ten times as many people being lifted out of poverty as a result.

The companies like the Gap taking this step will be lionized by some and vilified by others. The larger point, however, is that the company has studied the implications and believes that the benefits of doing so will far outweigh the costs. Making such important judgment calls is, after all, why they pay those executives the big bucks. JL

Susan Berfield reports in Business Week:

“Our decision to invest in our frontline employees will directly support our business, and is one that we expect to deliver a return many times over.”
President Obama has called for a new federal minimum wage of $10.10 an hour. Among those who support the increase: a majority of Americans, seven Nobel prize-winning economists, and Gap (GPS).
The retailer, with about 65,000 minimum-wage workers, joined companies such as Costco (COST), Whole Foods (WFM), and In-N-Out Burger in agreeing to raise the bottom of its hourly pay scale above the $7.25 federal minimum. Gap Chief Executive Glenn Murphy announced on Thursday that the company will set its minimum hourly rate for U.S. employees at $9 this year and $10 in 2015.
In a statement, Murphy said the company made the decision after months of consideration and pointedly avoided any discussion of the political or moral arguments about economic inequality that often animate the debate. “To us this is not a political issue,” Murphy said.
The day brought other news about the minimum wage, too. Wal-Mart (WMT) said it’s considering supporting an increase but noted that it hasn’t yet conclusively determined the impact on its business. The company has 1.3 million U.S. employees, making it the biggest private employer in the country.
An estimate released yesterday by the nonpartisan Congressional Budget Office, meanwhile, projected losses of about 500,000 jobs under a $10.10 minimum wage—along with a boost in income that would likely lift 900,000 people out of poverty.
With all these companies reconsidering low-end wages, it’s time to talk to McDonald’s (MCD), where U.S. employees at the bottom of the pay scale have received an estimated $1.2 billion a year in public assistance.


Post a Comment