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Gap Raises Minimum Wage as Walmart Mulls a Hike of Its Own

Gap Raises Minimum Wage as Walmart Mulls a Hike of Its Own
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Employees who have fallen into the Gap are about to see their wages rise.

The company’s chairman and CEO, Glenn Murphy, confirmed that it would increase the minimum hourly rate for stateside employees from $7.25 to $9 in June 2014 -- and then to $10 exactly one year later.

Gap said that 65,000 employees would benefit from the hike by 2015 -- but clarified that not all of those workers are currently earning minimum wage.

“A majority of our frontline employees in the U.S. currently earn more than the federal minimum wage of $7.25,” a company spokesperson told Entrepreneur.com, explaining that the raise would affect a total of “65,000 U.S. employees who currently earn under the $10 threshold.”

Related: CBO Says Raising Minimum Wage Will Lead to Job Cuts

Though Gap is the first major retailer to raise wages on the heels of President Obama’s executive order, Murphy vowed that “this is not a political issue.” Rather, he views the move as an investment in frontline employees to further enhance an in-store experience that will keep customers coming back.

Founded nearly 45 years ago, Gap counts 135,000 employees across 50 countries and currently owns six brands, including Banana Republic, Old Navy, Piperlime, Athleta and Intermix.

At the same time that Gap hatched its plan, the nation’s largest retailer, Walmart, threw its hat into the polarizing dialogue -- but has thus far remained neutral.

Related: Stop Pressuring Companies to Raise Wages

Company spokesman David Tovar told Bloomberg that Walmart was “looking” at a wage raise -- noting that it could stand to benefit if the 140 million people who shop at the chain each week had more disposable income.

“Would increased consumer spending offset and maybe even exceed whatever impact you pay out to associates?” It’s hard to predict, Tovar said.

As argument surrounds the issue on both sides of the aisle, the nonpartisan Congressional Budget Office just released a report stating that increasing wages to $10.10 would result in the loss of 500,000 jobs.

Meanwhile, President Obama applauded the Gap in a statement, noting that a minimum wage increase would lift the incomes of more than 16 million American workers.

Related: Obama to Bypass Congress, Raise Minimum Wage for Federal Contracts on His Own

Geoff Weiss is a staff writer at Entrepreneur.com.

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