This is a welcome gesture, particularly after yesterday's rather twisted CBO report. Retailer Gap, which owns Banana Republic and Old Navy along with other retail fashion lines, announced they are increasing their minimum wage to $10 by 2016.
While many retailers claim that they cannot afford to pay the minimum wage without firing employees or raising prices, research shows that companies paying low wages stand to benefit from the huge stimulus a wage hike would bring to poor workers who spend most of their income on basic needs like food and clothing. Even Walmart, one of the most notoriously low-paying companies, announced Wednesday it would consider supporting a minimum wage hike, acknowledging that it would generate extra pocket money for Walmart’s typically low-income customers. Additionally, employees tend to work harder andstay at their company longer after their wages increase.
Chains like Costco, Whole Foods, Boloco, and In-N-Out Burger have all embraced higher wages for these reasons. With Republicans signalling that they will scuttle any attempt to raise the federal minimum wage this year, pressure on the private sector to voluntarily raise wages could be one promising way forward. Also in the absence of Congressional action, cities and states are increasingly embracing higher minimum wages, and President Obama recently announced that federal workers and contractors would get a raise to $10.10 an hour via executive action.
It's a good first step, and it's great public relations for them. But most importantly, it speaks to the fact that raising the minimum wage is the right thing to do for workers and the economy.