In March, I wrote about Gap’s efforts to raise the minimum wage for its employees. As a former employee of Gap, I thought this was a bold move that showed how the company values its employees, especially those on the front lines. When I worked there, minimum wage was $5.25. I remember getting my paycheck after a few 4-hour shifts and feeling so defeated having put in hours of work and not seeing much payoff. But the discount was good!
It’s been a few months since Gap took this initiative, and they are already seeing results. The company shared that “employment applications at the Gap and Old Navy chains have surged by at least 10 percent from a year earlier.” Not only have the effects impacted recruiting, they are also touching the brand as a whole: “Gap’s stock has gained 6.5 percent this year, outpacing a 5.5 percent advance by the Standard & Poor’s 500 Index.” While there are other factors that contribute to a rising stock price, this one certainly didn’t hurt it. Gap’s efforts have also sparked a trend. Ikea pledged to increase hourly pay by 17% in certain cities.
While the early indicators are showing positive results, the jury is still out on the long-term effects. Looking ahead, there are a few other indicators for Gap to look at after making a move like this:
These are all things to consider for the long-term. Either way, kudos to Gap on taking a stand and experiencing early success. Hopefully the long-term impacts will prove that you can compensate your employees well and thrive as a business.
Lexi Gordon is a Lead Consultant for exaqueo, a workforce consultancy that helps startups and high-growth companies build their cultures, employer brands and talent strategies. Contact exaqueo to learn more about how we can help you build a workforce that’s aligned with your company culture and develop an employer brand that will allow your business to scale the right way.