Gap to raise hourly wages; other chains to feel pressure

Gap announced Thursday that it will set the minimum wage for workers at $9 an hour this year and $10 an hour in 2015. That may cause big store chains from Walmart to Sears to feel the pressure. Those retailers said they will continue to evaluate their wages.
Published: February 20, 2014
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— Gap’s decision this week to raise the hourly wages of workers at its stores nationwide puts pressure on other major U.S. retailers to do the same.

Following Gap’s announcement that it will set the minimum wage for workers at $9 an hour this year and $10 an hour in 2015, big store chains from Walmart to Sears said Thursday that they will continue to evaluate their wages.

But ultimately, industry watchers say whether they follow Gap’s move will depend greatly on whether or not they decide that they need to in order to remain competitive.

“I think more people will wait on the sidelines and not take on additional expenses,” said Ken Perkins, president of RetailMetrics, a retail research firm. “It’s a gamble on Gap’s part.”

Gap’s move comes at a time when the plight of hourly workers has made headlines. Protests by fast food workers asking for higher pay last year in cities across the country made headlines. Several states are considering raising their minimum wages. And President Barack Obama is endorsing a bill in Congress that includes a proposed increase in the federal minimum wage to $10.10 an hour by 2016.

There’s no question that whatever the major players in the U.S. retail industry decide to do will have a big impact on the job market. In fact, the industry supports one in every four U.S. jobs, representing about 42 million workers.

Still, the industry has mostly shunned the idea of higher wages. The National Retail Federation, which represents some of the nation’s largest retailers, is fighting President Obama’s proposal, saying the financial burden could force them to raise prices or reduce workforce.



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