One of the most popular clothing stores, the Gap, Inc. (NYSE: GPS) announced on Wednesday that it will raise it’s hourly wage to $9 for their US employees this year and up to $10 in 2015.
The San Francisco based company said the raise will affect 65,000 of their 90,000 American employees at their Banana Republic, Old Navy, and other stores.
GAP is one of the first major firms to raise it’s minimum hourly wage ahead of a federally mandated bill that would affect all companies.
Lawmakers are debating a bill that would raise the minimum hourly wage to $10.10 by 2016 and even though President Obama is for the increase, a recent report suggested it could have a negative effect in employment.
The non-partisan Congressional Budget Office (CBO) says that raising the hourly wage to $10.10 an hour would reduce total employment by about 0.3 percent, or 500,000 workers, however this figure could be as low as zero and as high as 1 million over all.
Republicans agreed with the assessment from the CBO, while those supporting the measure argue that an hourly wage increase like the one the GAP enacted would benefit about 16 million people.
In a letter to Gap employees chief executive officer Glenn K. Murphy said:
“To us, this is not a political issue. Our decision to invest in front-line employees will directly support our business, and is one that we expect to deliver a return many times over.”
President Barack Obama applauded Gap’s decision to raise their hourly minimum wage and urged lawmakers to do the same nationwide adding:
“Right now, there is a bill in front of both the House and the Senate that would boost America’s minimum wage to $10.10 an hour, and lift wages for more than 16 million workers — all without requiring a single dollar in new taxes or spending. It’s time to pass that bill and give America a raise.”
The Gap did not say how it will pay for the raise in hourly wages for their employees, but Murphy says, “We have very good people today but to attract and retain the best talent we have to make sure we invest in them.”
Gap’s home city of San Francisco has a minimum hourly wage of $10.74 and California recently passed a law that requires all workers to be paid $10 by 2016.
With this move, the Gap will avoid employees in different areas of the country from wondering why their hourly wage is different than those working in California.