Gap Inc. is one of the first U.S. companies to heed the call to raise minimum wages for its 65,000 U.S. store employees.
On Wednesday, chairman and chief executive officer Glenn Murphy said in a letter on Gap’s Web site that the company will make a strategic investment to increase the minimum hourly rate for employees to $9 in 2014 and $10 in 2015.
The move comes as there is growing pressure nationwide to raise the federal and state minimum wage rates. President Obama urged Congress in his State of the Union address to pass an existing bill increasing the national minimum wage to $10.10 an hour from $7.25 and indexing it to inflation by the second half of 2016. He also signed an executive order last week to require federal contractors pay federally funded employees a “fair wage” of at least $10.10 an hour. RELATED STORY: Minimum Wage Debate Becomes Global Issue >>
A bill that would raise California’s minimum wage to $10 an hour by 2016 was approved in September by the state legislature and subsequently signed by Gov. Jerry Brown. The measure would increase the wage from $8, the current minimum, to $9 an hour on July 1 and to $10 on Jan. 1, 2016.
The nonpartisan Congressional Budget Office said in a report released Tuesday that an increase in the federal minimum wage to $10.10 by 2016, a legislative proposal supported by President Obama and Congressional Democrats, but opposed by some retail groups, could lead to a loss of 500,000 jobs.
Gap said its decision had less to do with the California time frame than its desire to “do more for employees,” adding that it had been contemplating the move for some time.
Explaining the move to raise hourly rates, Gap said that over the last five years, “we’ve stayed ahead of others by investing in technology. And yet, a customer’s lasting impression is often shaped by the interactions with the people in our stores. To connect and enhance the in-store and digital experience for our customers even more, we must attract and retain great talent. As a result, we’re raising the minimum hourly rate for people who work in our U.S. stores.”
The increases will impact all of the company’s brands, including Gap, Old Navy, Banana Republic, Athleta, Piperlime and Intermix. Gap said 75 percent of its employees work on the front line serving customers.
The company said the majority of employees in stores and distribution centers earn more than the $7.25 minimum wage, but did not specify how much they earn.
“To us, this is not a political issue,” said Murphy. “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.
“The people in our company who engage directly with our customers carry an incredible responsibility,” he added. “Our success is a result of their hard work, love of fashion and commitment. We hope this decision provides them with some additional support as they grow their careers with Gap Inc.”
Murphy said the decision reflected the values set by Gap founders Doris and Don Fisher. “They invented specialty apparel retail, but Don also challenged us to live up to our promise to ‘do more than sell clothes,’” Murphy said.
From overseeing America’s fastest-growing speciality retailers to codifying cool, WWD talked to the women who are leading the way for the future of beauty. Check out our Instagram Stories to see how these women built today and are creating tomorrow. (📸: @hannah_khymych) #wwdbeauty
For @laperlalingerie's spring 2018 show, the brand chose to host their event at @thevenetianmacao. With Chinese megastars @bingbing_fan and @hubing in attendance, La Perla debuted a rock ‘n’ roll-inspired collection. The show marked the start of Sands Macao Fashion Week, which runs from October 19 to 24 — the city’s first such event. Pictured here are models backstage with glimmering eyes. #wwdfashion (📷: Cheuk-Yin To)
Trending for spring 2018: top stitch design. Gone are the days of stitch just for seams — designers are using the once-minimal detail to create strong decorative elements. (📷: Paola Testa; Styled by @andrew_shang) #wwdfashion
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)