Gap raises minimum wage for 65,000 U.S. employees

Gap Inc. will raise its minimum hourly rate by next year, taking a stand in the growing debate in which several retailers have urged legislators to maintain a federal wage of $7.25 an hour.

The minimum wage for workers at all Gap (NYSE:GPS) brands will be raised to $9 an hour in 2014, and $10 an hour in 2015. Gap said the increases will affect about 65,000 store employees across Gap, Banana Republic, Old Navy, Piperlime, Athleta and Intermix stores.

Gap joins a small group of companies including Costco (NASDAQ: COST) and In-N-Out Burger, who have agreed to raise the hourly pay scale above the $7.25 federal minimum. H&M said it, too, would pay what it termed "a fair living wage" to approximately 850,000 textile workers by 2018.

On the opposing side of the issue is the National Retail Federation, which has vehemently opposed wage hikes.

"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. It's simple math – if the cost of hiring goes up, hiring goes down," the NRF wrote in a statement.

The Gap wage hike follows news that President Obama raised the minimum wage for federally contracted workers to $10.10 starting on Jan. 1, 2015. Gap CEO Glenn Murphy said in a statement that his company's decision to raise wages wasn't prompted by politics, but is in the best interest of its workers.

"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," Murphy stated.

President Obama praised Gap on Wednesday after the company made the wage announcement.

"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 for announcing that they intend to raise wages for their employees beginning this year," Obama said in a statement.

Obama is pushing Congress to pass legislation that would lead to the minimum wage being gradually increased to $10.10 for all workers by the end of his presidency.

For more:
-See this Gap Inc. press release
-See this White House statement
-See this National Retail Federation statement

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