June 24 (Bloomberg) -- Gap Inc.’s pay pledge has gotten the attention of job seekers.
After announcing plans in February to increase hourly wages to $10 by 2015, employment applications at the Gap and Old Navy chains have surged by at least 10 percent from a year earlier, the San Francisco-based company said yesterday.
The clothing seller has seen applications increase across all of its brands -- including Banana Republic and Athleta -- though the effect has been especially striking at the lower-end Old Navy chain, where the number of job seekers had been declining. That’s giving the retailer a better selection of potential workers, said Lynn Albright, vice president for Old Navy stores.
“That we’d be able to be more competitive and attractive in getting the best talent we can find -- that’s where the benefit will come,” Albright said in a interview yesterday after speaking at the White House Summit on Working Families. “The more choices you have, the better selection you can make. It’s so important to have the best brand ambassadors we can find.”
Gap Chief Executive Officer Glenn Murphy announced the plan to boost hourly pay for U.S. employees to $9 in 2014 and then $10 the following year during an employee conference call in February. The move will benefit about 65,000 store employees by 2015, the company said. While Gap already typically pays more than the minimum wage in most markets, the move was called a strategic investment to “do more than sell clothes.”
The effort also added fodder to a national debate on whether the federal government needs to raise the minimum wage. President Barack Obama, who praised Gap’s decision, wants to increase the rate to $10.10 an hour from $7.25, saying it will bolster the economy and reduce income inequality. Most Republican lawmakers oppose the idea.
Gap’s stock has gained 6.5 percent this year, outpacing a 5.5 percent advance by the Standard & Poor’s 500 Index. The shares slipped 0.4 percent to $41.61 at the close of trading today in New York.
New associates are now coming to Old Navy with more experience, often from other retailers that don’t pay as well, Albright said. In the long run, Gap expects the more qualified associates to help drive sales by improving customers’ experiences.
More than 70 percent of shoppers across Gap’s brands do research online before they come to the store, and they expect employees to know the products, Albright said.
“It’s still really important our store associates are just as engaged,” she said. “The customer is more educated, so the store associate has to be more knowledgeable.”
To contact the reporter on this story: Lindsey Rupp in New York at firstname.lastname@example.org
To contact the editors responsible for this story: Nick Turner at email@example.com