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Posted: Friday, 21 February 2014 7:40AM

Gap's pay raise may come at a price says Tulane prof

People who work for one of the major national clothing outlets are in for a raise. Gap, Incorporated says it will pay its lowest-paid hourly workers no less than nine dollars an hour by this summer, with a raise to ten dollars an hour by the summer of 2015.

For those who work at The Gap and the company's other stores: Banana Republic, Old Navy, and Athleta, this is good news.  But while the company may be acting in a socially conscious manner, Tulane University business professor Mark Rosa says it may also come at a price.

Rosa says Gap brands may have succumbed to the social pressure from activists demanding "why aren't you paying people more, those types of things," but he says those activists need to realize that the ledger has another side to it: "I don't know if they're realizing the full picture of their voting in higher prices for themselves for the products of service."

Rosa says Gap, Incorporated doesn't want to show a drop in profits, so it will have to make some difficult choices.

"The price of their product is going to increase, or they're going to have to trim in some other way," said Rosa, meaning layoffs or even closing some outlets that are deemed underperforming.

WalMart is also considering raising it's lowest-paid workers' wages above the federal minimum of $7.25 an hour. President Obama wants Congress to phase in an increase of the federal minimum, to eventually reach $10.10 an hour.


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