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Gap Increases Minimum Pay

Gap employees just got a pay raise.

In a statement from Gap Inc. Chief Executive Officer Glenn Murphy, the San Francisco–based specialty retailer and owner of Gap stores, Old Navy and Banana Republic will raise the minimum wage for its U.S. employees to $9 this year and $10 in 2015. Murphy said that there are 65,000 store employees in America.

“To us, this is not a political issue,” Murphy stated. “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.”

However, the minimum wage has been a big issue on the American political scene recently. President Obama urged Congress during his State of the Union address last month to “give America a raise.” He also has supported legislation to raise the federal minimum wage from $7.25 to $10.10 per hour.

Prominent trade group National Retail Federation made a statement last month that a minimum-wage hike would result in minimum opportunities. “Raising the minimum wage would place a new burden on employers at a time when national policy should be focused on removing barriers to job creation, not creating new regulations or mandates,” NRF President Matthew Shay said.

Gap’s pay raise probably will not have a big effect on the fashion business in the short run, said Ilse Metchek, president of the California Fashion Association, the Los Angeles–based apparel-industry organization. But she wondered how the largess will play out. “If Gap raises its prices to the consumer using the additional minimum wage as an excuse, then it remains to be seen if the consumer will absorb it,” she said.