Kudos to executives at Gap, Inc. for doing right by both their employees and their shareholders:
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.
... Glenn K. Murphy, Gap’s chief executive, said in a letter to the company’s employees, “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.”
Industry analysts suggest that Gap really will realize many returns, including lower turnover, happier, more committed, higher-quality employees, and thus more satisfied customers. And no doubt there's a PR advantage to voluntarily embracing a higher minimum wage—wildly popular with voters—while one's competitors appear to be dragging their feet if not actively opposing it. But despite Murphy's protestations, it is clearly a political issue as well.
Minimum wage campaigns like the one being fought in Seattle and elsewhere are both raising public consciousness about the issue and applying political pressure in both legislatures and board rooms. Again, I'm not questioning management's decision to do the right thing by its employees, but Gap's decision to voluntarily raise minimum wages by 38 percent over two years did not happen in a vacuum. It was influenced by two years of smart, dedicated political activism.
As for the rest of the retail industry, they have a choice. They can follow the lead of companies like Gap and Costco and get out in front of the minimum wage—securing better, more dedicated employees now, while reaping the benefits of good will—or they can get out of the way and save their pennies as they wait for lawmakers and voters to force a higher minimum wage upon them. But within this current political climate, allowing oneself to become a poster child of the minimum wage opposition can be very bad for business, something even the fast food industry has apparently learned:
Seattle McDonald's owners and operators say they're discussing raising minimum wages at their Seattle restaurants and the are not fighting wage hikes. The statement comes from Derek Morrison, spokesman for the local restaurant owners.
The opposition has already lost the minimum wage battle; the only question is by how much? And smart executives are already adjusting their business models to the new political and economic reality.