So-called 'minimum wage laws' don't just hurt entry level job seekers who suffer from reduced opportunities. They also hurt experienced employees who suddenly find less productive workers making as much as they do.
Workers are keenly sensitive about how their pay relates to that of others. Such considerations of fairness play a profound role in how many employers set pay, Princeton University economist Alan Krueger said in a 2013 speech. The minimum wage serves as an anchor for other wages and a benchmark for fair pay, he said.
Gap won accolades in February 2014 for announcing it was raising pay to a minimum $10 for its more than 60,000 hourly employees the following year. The retailer has recorded a double-digit increase in job applicants since then, according to spokeswoman Laura Wilkinson, as well as increased employee retention.
A current Chicago-area Gap sales associate said the wage hikes prompted her to look for other work. She joined the company in 2013, earning $9.25 an hour, won a small raise in 2014 and had hoped to reach $11 by 2015. Instead, she was given $10 an hour last June, just like new employees, though she had been with the retailer for two years.