Gap, Inc. has taken a stand in the debate about the effect of raising the minimum wage (See NYT, “Gap to Raise Minimum Hourly Wage”) to $9 this year, and $10 by next year (New York State’s minimum hourly wage is $8 as of December 31, 2013). Their belief is that raising the minimum wage for 60,000 of their 95,000 American-based workers is a step toward reducing turnover, and recognizes the value of front-line service staff. In his State of the Union address, President Obama spoke about raising the minimum wage across the nation, sparking discussions throughout the media about its effect on poverty rates, employment, the price of food and other goods, etc. While some members of Congress point to studies that indicate an increased minimum wage will lead to job losses (projections the White House contests), it is hard to argue with a major retailer’s willingness to push forward absent legislation (or an executive order). It will be interesting to see if other major retailers, foodservice operations, and other companies that depend on large numbers of minimum wage workers, will join Gap, Inc. and raise their minimum wage. For the millions who depend on these wages, this is a welcome shift. For policy makers, it will be an interesting case study, an invitation to watch and see whether there are accompanying reductions in jobs, rising revenues, or ???
Along with a dozen other states, New York is set to increase the minimum wage on January 1st from $7.25/hr to $8.00/hr (with plans to raise to $9.00/hr by 2015). While national discussion is largely focused on a possible federal increase, on a local level, this increase will have a significant effect on thousands of New Yorkers. Since 2009, the last wage increase for the state, the cost of living in New York has steadily increased: rent stabilized apartments have risen each year, between 2.5 and 8% (depending on 1- or 2-year leases); the cost of a single ride on the subway has increased by $0.50, not counting the steep increases to unlimited cards and the addition of a fee for every new metrocard purchase; and basic grocery items continue to rise. According to the Fiscal Policy Institute, the upcoming wage increases will significantly effect on younger adults with hourly-paid jobs who clock in 20+ hours a week and don’t currently have a college degree. In addition to the overall economic boosts that come from wage increases (people putting that extra money back into the economy by way of spending), we can’t help but think that a portion of the population might use those extra funds towards either valuable skills training or higher education.
Are you one of the thousands that will be effected by this increase? Have you decided where your extra money will go?