The clothing retailer Gap Inc. will raise its minimum hourly rate by next year, a divisive move from other U.S. retailers that have urged legislators to maintain a federal wage of $7.25 an hour.
The company will increase the amount to $9 by June and $10 in 2015, CEO Glenn Murphy said on Wednesday. The change will benefit about 65,000 workers.
“To us, this is not a political issue. 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,” Murphy said in a statement.
His decision comes amid a national debate about the minimum wage. President Obama last week mandated all federally contracted employees earn $10.10 per hour – effective Jan. 1, 2015 – a move met with opposition from some lawmakers on the other side of the aisle. The bill currently awaits approval from the House and Senate.
“In my State of the Union Address, I asked more businesses to do what they can to raise their employees’ wages. Today, I applaud Gap, Inc. for announcing that they intend to raise wages for their employees beginning this year,” Obama said.
Hiking the federal minimum wage from the current $7.25 to $10.10 would lift 900,000 Americans out of poverty and raise incomes for 16.5 million citizens who currently make less than $10.10, msnbc previously reported. Additionally, though, there would be 500,000 fewer jobs because employers would cut back on hiring to compensate for increased labor costs.
Among Muphy’s reasons for the change included attracting and retaining talented workers who enhance the in-store and digital experiences for customers.
“Our employees are our most important ambassadors, and we believe that investing in our frontline talent will strengthen and deepen relationships with our customers,” he said.
The decision follows the envision of founders Doris and Don Fisher to “do more than sell clothes,” he added.
Gap employs 135,000 employees in more than 50 countries around the world. The company was established almost 45 years ago, and the brand now includes Old Navy, Banana Republic, Athleta, Piperlime, and Intermix.