Ikea Boosts Minimum Wage For U.S. Workers An Average Of 17 Percent

June 27, 2014  |  

Ikea has entered into the minimum wage debate as the Swedish furniture giant announced it is raising the minimum wage in all of its U.S. stores. No telling if other retailers in America will follow, but the move does set a new standard.

Ikea will base the wage floor for each of its stores on the MIT Living Wage Calculator, which figures out what salary a worker needs in order to live in a particular geographic region, reports The Huffington Post. The company will use the setting  for a single adult without children, the lowest category.

This will increase the average store minimum wage to $10.76, a 17 percent increase, according to Ikea. About half of the company’s 13,650 U.S. employees will get raises when the new rates go into effect on Jan. 1.

“It’s all centered around the Ikea vision, which is to create a better everyday life for the many people,”  Rob Olson, chief financial officer and acting president of Ikea U.S., told The Huffington Post. “The many people is, of course, our customers and consumers, but it’s also our co-workers.”

This decision by Ikea will add fuel to President Obama’s push to increase the national minimum wage,  currently $7.25 per hour. It hasn’t been raised since 2009. Democrats in Congress seek to gradually raise it to $10.10 per hour and have it  tied to an inflation index. Republicans  are opposed citing that it will be too costly for businesses.

Over at Ikea, the company says customers will not see an increase in price in order to offset the wage boost. And while the new minimum wage will vary at each of Ikea’s 38 stores, five distribution centers, two service centers and one manufacturing plant, Olson said none of the minimum wages will be below $9 per hour. In the priciest markets it will top $13.

Ikea isn’t alone in increasing wages for workers. The Gap Inc. said it would raise its wage floor throughout the U.S. to $9 per hour this year and $10 in 2015.   The Gap says it’s already seen about 10 percent more job applications after announcing the raise.

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