Article Analysis: Gap Inc.'s Decision to Raise Minimum Wages

Name: Yuchun Lu
Date: Feb 23rd, 2014
The New York Times, Feb 20th, 2014,
B2：Gap to Increase Minimum Hourly Pay for its Employees in America
Uncontrollable Variable: Economics The article, Gap to Increase Minimum Hourly Pay for its Employees in America, discusses Gap’s movement of raising minimum hourly payment. As the debate of whether increasing minimum wage to $10.10 becomes white-hot, Gap’s announcement of increasing minimum wages wins president Obama’s praises and appreciations. Despite of receiving the support from Obama, Gap’s chief executive claims that this move is not related to a political issue. The goal of increasing payments is to gain employees’ direct support and stimulate their work motivations. In fact, the change brings lots of competitive advantages to the firm. Firstly, the increased payment, which stimulates sales motivations, not only directly benefits Gap’s new program, a “reserve-in-store” program, but also increases the firm’s general productivity. Furthermore, as Mr. Flickinger, the managing director of the Strategic Resource Group, said in the article, “Gap will have higher retention, higher productivity, higher shopper satisfaction and will continue to increases its sales.” Secondly, the competitive workers’ treatment would definitely improve Gap’s reputation，thus enticing more talented employees to work for Gap. As it says in the article, the better treatments that Gap offered might push “a public relations edge on many of its competitors.” However, there is still a small group of people expressing reservations about the idea of raising hourly minimum wage. Just like Stuart Appelbaum, the president of the Retail, Wholesale and Department Store Union, said in the article, “The biggest issue facing retail workers nowadays is being able to work enough hours to earn a decent living.” Even though the payment increases, the continuously changing part-time hours still bother part-time workers a lot. After summarizing the article I have read, I also have some personal opinions about the article, which include the structure of this article and the writer’s writing style.
Throughout the article, the author offers a completed analysis of Gap’s move. For example, the author lists one of Gap’s competitors, Walmart, in order to explicate how Gap’s new policy would affect other businesses. Furthermore, the author not only discusses the advantages of increasing payments, but also figures out the limitation of Gap’s new movement. All these make the article become more convincing.
Then, let us talk about the author’s writing style. The author’s language is very clear and objective. As a journalist, the author, Steven Greenhouse, doesn’t express any personal opinions in the article, which makes the article very fair. However, I still think that the article could have some room for improvement. Firstly, for the sake of describing how Gap would change the whole retail market in the future, the author chooses one firm’s reaction to illustrate. I think this strategy is good, but Walmart may not be the perfect choice. As we all know, Gap is a market leader in the fashion retail industry while Walmart is famous as a retail corporation that runs chains of large discount department stores and warehouse stores. If the author could choose another fashion retail like Zara or H&M instead of Walmart, the comparison would become highly targeted. In addition, as the vice president says in the article, Gap’s decision of the increased payment would directly benefit Gap’s new program, a “reserve-in-store” program, which is eager to find a group of high-talented employees to execute this program. The Gap’s original intention is to maintain high-qualified workers and increase their loyalties. However, it implies in the article that among 70,000 workers, who work in Gap in United States, only 65,000 workers benefit from this policy. Basically, these 65,000 workers are mainly unskilled workers and 5,000 workers are professional workers whose their hourly payment have been more than $10.10. This means that the move only benefits the unskilled workers, but contradicts with the company’s goal of maintaining professional workers. The author’s description is contradictive and makes the article inconsistent.
Now, after summarizing the article and analyzing the bias and uncovered materials in the article, let us talk about the implication of this case.
Gap’s case shows readers how economic changes or potential changes would affect business decisions, even affect the whole market sometimes. Even though the vice president of Gap claims that the decision of raising the payment is not related to the Obama’s proposal, there is little doubt that the government’s intention of raising wages encourages the managers make the decision quickly, helps Gap gain a more positive reputation and brings a win-win situation to the firm. Also, Gap’s amazing move would force other companies make the similar decisions later. Since they are both suffering from the pressure from labor unions, following Gap’s call for raising payments would avoid potential threats of losing their talented workers and reducing their competitiveness. In this case, Gap makes me reevaluate the disputed issue of unemployment. Some people oppose to raise the minimum wage due to the increased unemployment rate. When the business wants to make the decision of increasing payments, it needs to evaluate whether the advantages outweigh the disadvantages. In the article, some experts list several advantages of paying more wages, such as higher retention, higher productivity, higher shopper satisfaction and increased sales. In addition to all these benefits, this movement can bring some disadvantages. For example, the cost of input would increase, as there are more wages the employer needs to pay. In order to maximize the profits, some businesses may choose to fire some unskilled workers, thus increasing the unemployment rate. Also, even though some businesses try to satisfy every employee with higher and equal payments, workers’ satisfactions might not be improved, as companies don’t fundamentally solve the problem. As it mentions in the article, “the continuously changing part-time hours” is another cause that can make employees dissatisfied.