The Gap Already Reaping Major Benefits From Minimum Wage Hike


After Gap announced in February that it will eventually raise its lowest pay to $10 an hour, job applications increased by at least 10 percent from the year before, a company vice president told Bloomberg.

While all of the company’s brands have seen an increase, she said, it was particularly notable at Old Navy, where applications had been declining.

The increased interest means the company has a better selection of potential employees. “That we’d be able to be more competitive and attractive in getting the best talent we can find — that’s where the benefit will come,” Lynn Albright, vice president for Old Navy, told Bloomberg. “The more choices you have, the better selection you can make.”

As of June, the lowest-paid Gap employees are making $9 an hour, and that will increase to $10 in June of next year. The raise will affect 65,000 employees in the United States. One of the reasons originally cited was to be able to “attract and retain great talent,” and Chairman and CEO Glenn Murphy had said, “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.”

Businesses can see a variety of benefits from higher minimum wages. It can make it easier to recruit employees, as with Gap’s experience, improve workers’ efficiency, and lower turnover. Turnover is a particularly high cost, as it can come to about 20 percent of employees’ salaries to replace them. It can also increase demand for their products when people have more money to spend.

Other companies have similarly decided to pay higher wages, arguing it benefits their businesses. A hospital in Dallas is increasing its minimum wage with money originally meant for executive bonuses. Shake Shack pays $10 an hour with benefits. Other restaurants similarly pay high wages. In retail, Costco employees make $11.50 when they start out and get benefits.