Gap's Minimum Wage Hike Is A Brilliant Business Move

The policy change will affect 65,000 of Gap's workers. The company is America's largest retailer.

While the move could reduce profits in the short term, it's actually a brilliant business move, according to a note by retail analyst Dorothy Lakner at Topeka Capital Markets.

Her reasoning?

Gap's higher wages will result in better customer service-and a happy clientele.

"You treat people well, they'll treat your customers well," Lakner told Bloomberg News. "Gap had a strong year last year compared to a lot of their peers. That sends a pretty strong message to employees that, "We had a good year, but you're going to be rewarded too.'"

Advocacy group Jobs for Justice also praised the retailer's decision, saying it would help the U.S. economy improve.

"We're thrilled to see The Gap joining the ranks of Costco and other companies who pay their employees a fairer wage," executive director Sarita Gupta said in a statement. "The facts speak for themselves: when workers are paid better, they're able to participate in and contribute to our economic recovery."