San Francisco-based Gap Inc. told employees Wednesday that it will raise its minimum hourly wage to $9 this year and $10 in 2015.
The retailer owns Gap stores as well as Old Navy and Banana Republic, and its move will benefit some 65,000 workers by next year.
President Barack Obama, who has been on a campaign to raise the national minimum wage of $7.25 to $10.10, praised the retailer’s move.
Gap Inc. is already paid better than many retailers, but this move throws down the gauntlet during a heated debate on the nation's minimum wage. Most retailers have opposed any move to legislate higher hourly pay — and it’s unclear that Gap Inc. itself would want its own new minimums inked into law. But the company is calling the move a strategic one that is good for business. This may be in line with new thinking among some retail experts, based on research, that better paid employees bring in better profits.
The wage increase on the level proposed by President Obama and now adopted by Gap could endanger some 500,000 jobs by 2016, but could also raise income for millions of folks, according to a Congressional Budget Office report released this week. In fact, the report said, an hourly minimum wage of $10.10 could help one million Americans out of poverty. Getting that many Americans out of the gap could send them into The Gap.