NEW YORK – A decision by Gap 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 others follow Gap’s move will depend greatly on whether 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 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 1 in 4 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 Obama’s proposal, saying the financial burden could force them to raise prices or reduce workforce.
Retailers just wrapped up an abysmal holiday shopping season. Earnings for the fourth quarter are expected to be down by 5 percent compared with a year ago – the worst since the second quarter of 2009.
Gap has been one of the bright spots in the clothing industry, enjoying a turnaround that started in early 2012. The company owns the Gap, Old Navy, Banana Republic and Athleta chains, and it employs 90,000 hourly and salaried workers in the United States.
The nation’s largest clothing chain said the vast majority earn more than the federal minimum wage. The company said the raise will affect 65,000 hourly workers.
Nancy Green, general manager of Gap’s Athleta brand, said she believes that some competitors can’t afford to raise wages but that “others will be inspired.”
Target Corp. spokeswoman Molly Snyder declined to comment on the average pay for a Target hourly worker but said in an email that Target is “considering how best to balance the needs of working Americans while maintaining a healthy business environment conducive to job creation.”
Walmart, the nation’s largest private employer with 1.3 million U.S. workers, said Thursday that less than 1 percent of its workforce is paid the minimum wage. It said its average wage for both full- and part-time hourly workers is nearly $12 an hour.
“Our wages are determined on a market-by-market basis, and we continually look at them in order to remain competitive,” said David Tovar, a Walmart spokesman.
Sears Holdings, which operates Kmart and Sears, said that while it offers “competitive compensation packages,” it plans to “continually monitor and evaluate our pay and benefit programs in light of business and market conditions.”