Gap Inc. announced plans on Wednesday to raise its minimum hourly wage to $9 this year and establish a minimum of $10 by 2015. The company says the higher wage will apply to all six of its chains, including Banana Republic and Old Navy. "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," said Gap CEO Glenn Murphy in a message on the company's website.
The move from Gap comes amid debate in Congress over a bill that would increase the federal minimum hourly wage from $7.25 to $10.10. President Obama has been pushing for the passage of Sen. Tom Harkin's, D-Iowa, and Rep. George Miller's, D-Calif., bill to increase the minimum wage since its introduction last year. Obama also recently signed an executive order raising the minimum wage for workers under federal contracts to $10.10 per hour. In a statement, Obama applauded Gap, saying the decision “will benefit about 65,000 workers in the U.S.”
Gap’s decision also follows the release of a report from the Congressional Budget Office on Tuesday, which said the proposed federal wage increase would eliminate about 500,000 jobs in 2016. The report also notes that raising the minimum wage would raise the incomes of nearly 16 million people and lift 900,000 people out of poverty.
Companies such as Whole Foods and In-n-Out Burger have voluntarily raised minimum hourly pay for their employees, and last year, Costco CEO and President Craig Jelinek announced publicly his support for the Harkin-Miller bill. Proponents of a higher minimum wage argue that paying low-wage workers more could help increase spending, thereby spurring the economy. Increasing the minimum wage, however, could also make companies less likely to hire workers or could make other investments, such as in automated machinery, more attractive.
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Corrected on Feb 24, 2014:
A previous version of this article mischaracterized corporate
public support for an increase in the federal minimum wage. Whole Foods and In-n-Out
Burger have voluntarily raised their minimum hourly pay above the federal