Gap Inc. has made a strategic investment to do more for our employees by increasing the minimum hourly rate for our U.S. employees to $9 in 2014 and $10 in 2015.
Why is Gap Inc. taking this action?
Over the last five years, retail has changed rapidly, and we've stayed ahead of others by investing in technology. And yet, a customer's lasting impression is often shaped by the interactions with the people in our stores. To connect and enhance the in-store and digital experience for our customers even more, we must attract and retain great talent. As a result, we're raising the minimum hourly rate for people who work in our U.S. stores across all of our brands - Gap, Old Navy, Banana Republic, Athleta, Piperlime and Intermix.
Our CEO and others within the company have been evaluating this for some time. Given the needs of our business, we have an opportunity to "do more" for our employees — just as our co-founder, Don Fisher, would have wanted — while investing in our growth strategy and adding value for our shareholders. Gap Inc. will increase the minimum hourly rate for our U.S. employees to $10 in 2015. Specifically, we will increase the minimum hourly rate to $9 in June 2014 and to $10 in June 2015.
How many people will benefit?
Gap Inc. is proud to offer competitive wages and benefits to our full-time and part-time employees, as well as ongoing training and career development. The majority of U.S. employees in our stores, calls centers and distribution centers currently earn more than the federal minimum wage of $7.25. About 65,000 U.S. store employees will benefit from this investment between now and 2015.
Why did you choose $10 as the minimum hourly rate?
Our analysis determined that by increasing hourly pay for U.S. employees to a minimum of $10 in 2015, we can strengthen our ability to attract and retain a skilled, enthusiastic and engaged workforce. Our employees are our most important ambassadors, and we believe that investing in our frontline talent will strengthen and deepen relationships with our customers.
Why invest in stores when online is growing?
Today, as we're building the bridge between our in-store and digital shopping experience, the people who work in our stores will be counted on more than ever. We know there's something so personal about fashion, and our store associates are important to creating a great shopping experience for our customers every day.
How will Gap Inc. cover the cost of this decision?
We're a financially strong and healthy company, and our management team has consistently demonstrated the strength and potential of our business model, as well as our discipline in managing costs. While we're not publicly quantifying the financial impact of this decision, we're confident that we can fulfill this commitment while continuing to deliver strong results for our shareholders.
Can you tell me about Gap Inc.'s core values?
Our company's values have long set us apart from others in the industry. Our promise — "to do more than sell clothes" — is a direct quote from our co-founder Don Fisher, who challenged us to be broader than a commercially-driven company. Our employees are proud to be part of a company that places a high value on giving back to the communities where we live and work; their words and actions tell us so.
How does Gap Inc. give back to the community?
Our founders modeled the practice of giving back to the communities in which we operate, and that continues to inspire us today. In 2013, more than 50,000 employees volunteered in excess of 500,000 hours of their time. Through Gap Foundation's community partners, we support thousands of underserved youth and young adults through programs such as, "This Way Ahead," "Plan Ahead," and "Camp Old Navy." Globally, we're committed to creating opportunities for women through programs such as Gap Inc. P.A.C.E. (Personal Advancement & Career Enhancement) in which more than 25,000 women have participated around the world.
Since the Feb. 19 announcement of planned increases in the hourly minimum rates for U.S. employees in 2014 and 2015, thousands of store managers and human resources professionals have been busy providing details to our store employees, particularly those who will benefit most. Outlined below is a brief overview of the program to help answer questions that have been raised by our employees. We will be providing periodic updates with additional information on program implementation, as appropriate.
- The vast majority of our part-time and full-time employees already earn above the current federal minimum wage; this program will ultimately benefit 65,000 U.S. employees by 2015.
- Consistent with the established annual salary structure for our stores, call centers and distribution centers, the new minimum hourly rate increases for U.S. employees will go into effect in June of 2014 and June 2015. This will help minimize any disruptions to the normal course of business and ensure that our store managers have sufficient time to incorporate the wage increases into their planning.
- Newly hired U.S. employees will be eligible for the higher minimum hourly rates once they have completed a six-month apprentice period. During the apprentice period, the vast majority of these employees will be paid above the current federal minimum wage. This structure allows time for the business and the employee to evaluate performance and commitment to the company, as well as an opportunity for coaching and training. At Gap Inc., we recognize that there's a learning curve for new employees, particularly for those applying for their first job or with limited experience. After all, since our first store opened in 1969, we've given millions of Americans their first jobs, and a number of our company's most successful executives got their start in our stores.
- New minimum hourly rate increases will apply to part-time and full-time regular employees. Most seasonal employees will be eligible for the higher wages once they convert to regular status and complete the six-month apprentice period (while accounting for their time as a seasonal employee).
- One of the most important objectives of this strategic investment is to help us strengthen our ability to have the best people in retail join our company and stay with us. To help ensure that our business remains competitive, some new employees may be immediately eligible for higher hourly pay rates, based on factors such as location or experience level.