In a surprising move, Gap Inc. informed its employees on Wednesday that it would set $9 as the minimum hourly rate for its United States work force this year and then establish a minimum of $10 next year.
Gap said this move would ultimately raise pay for 65,000 of its 90,000 American employees, including those at Banana Republic, Old Navy and other stores.
Gap is making this move as many states consider raising their minimum wage, and as Republicans and Democrats debate a bill that includes a proposed increase in the federal minimum wage to $10.10 an hour by 2016.
This is particularly interesting to me because I worked at Gap’s baby store in high school at the minimum wage of $6.25 an hour, which adjusted for inflation would be between $8 and $8.50 today. It’s notable that Gap is also based in San Francisco, which has a city-wide minimum wage of $10.74. California is set to raise its state minimum wage to $10 by Jan. 1 2016, and as the Times points out, by raising it’s hourly wage higher now, “Gap will help avoid a checkerboard of different wages in different states in which workers with several years’ experience might be earning $8.50 or $9 an hour and wondering why they earn less than new hires in California who will be earning a minimum of $10 an hour.” Gap CEO Glenn Murphy said this move would also go to support the company’s founders promise “to ‘do more than sell clothes.’”
The state of Washington has the highest minimum wage in the country at $9.19 an hour, and voters in a small city south of Seattle named SeaTac may soon push it up to $15 an hour if voters pass a referendum known as Proposition 1. Many of the people who live in SeaTac work at Seattle-Tacoma International Airport and its nearby hotels earning an estimated $11 an hour for airline related jobs (in comparison, the minimum wage at San Francisco International Airport is $12.93 an hour), and if the proposition passes, it would double the federal minimum wage of $7.25. The editorial board at the New York Times writes:
All of which makes $15 an hour sound too high. Hardly. Over the last half-century, American workers have achieved productivity gains that can easily support a $15-an-hour minimum wage. In fact, if the minimum wage had kept pace over time with the average growth in productivity, it would be about $17 an hour. The problem is that the benefits of that growth have flowed increasingly to profits, shareholders and executives, not workers. The result has been bigger returns to capital, higher executive pay — and widening income inequality.
Efforts by the states and the federal government to raise the minimum wage are an important way to counter that dynamic.
It’ll be interesting to see if the referendum passes at SeaTac, and if so, what kind of difference raising the minimum wage in a mostly blue-collar community makes.
Photo: Spencer Thomas