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Boston Public Radio Podcast
Tue February 25, 2014
Is The Gap's Minimum Wage Hike Good Retail Politics? Harvard Historian Nancy Koehn Weighs In
Today the federal minimum wage is $7.25 per hour, which translates to just over $15,000 a year for a full-time employee. Trying to stretch these kinds of earnings to cover the basics such as housing, food, utilities, and transportation seems impossible. For President Obama, trying to get Republicans and Democrats to increase the minimum wage probably seems equally insurmountable.
Since January, President Obama has quadrupled down on boosting the minimum wage. He kicked off his campaign to raise wages in his State of the Union Address. From there he took his message to the road, going to steel plants and strip malls across the county. Obama's third major nudge happened earlier this month when he increased the minimum wage for a few hundred thousand federal contractors. He used this move as another opportunity to prod Congress to pass broader legislation that would apply to all workers. Most recently during a dinner with U.S. Governors-- either as a conversation stopper or starter-- he charged Republican governors with being “out of touch” with their constituents on raising the minimum wage.
While Congress has yet to budge on this issue Gap Inc. is doing its part. Last week the company announced that they would hike wages across their five chains (Old Navy, Gap, Banana Republic, Piperlime, and Athleta) to $10 an hour by 2015.
Is this good retail politics? Is Gap getting ahead of the proposed Congressional bill because it’s great PR or because they know that paying a better wage means running a better business?
Today Harvard Business School historian Nancy Koehn weighed in on what it means when the private sector furthers important policy initiatives before the public sector does.