Ikea US Boosting Company Minimum Wage By 17%

Ikea US Boosting Company Minimum Wage By 17%

Swedish furniture titan Ikea announced yesterday that Ikea US was raising the company’s minimum wage for employees. Ikea US plans to increase the average minimum hourly wage at its 38 American locations to $10.76 as of January 1, 2015. That figures out to a 17% bump from the firm’s current $9.17-an-hour starting wage, and $3.51 above the federal minimum.

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The new minimum wage will impact close to half of Ikea’s more than 11,000 U.S. employees.

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Statement from Ikea US

“The happier the co-worker, the happier the customer and the better the overall shopping experience,” said Ikea US acting president, Rob Olson. “We wanted to be less concerned about the competition and more concerned about offering our co-workers a better everyday life.”

Olson also said he expects the raise will reduce employee turnover and help with recruitment.

Ikea uses regional minimum wage

Ikea’s hourly minimum wage is based on the cost of living in various store locations.The new minimum wage is tied to the MIT Living Wage Calculator, which calculates the cost of housing, food, healthcare, transportation and taxes for a single person without children. So Ikea employees in Pittsburgh, for example, will earn a lower minimum wage than those in Austin.

National trend toward increased minimum wage

Since 2012, fast-food workers and their supporters have organized a series of wide-ranging strikes and rallies calling for a minimum wage as high at $15 an hour.

So far this year, 38 states have considered minimum wage bills, and eight states and Washington, D.C., have pushed through new wage laws, according to U.C. Berkeley’s Institute for Research on Labor and Employment.

Earlier this month, the Seattle City Council voted unanimously for a gradual increase in the minimum wage to $15 an hour. The International Franchise Assn. is challenging the decision with a federal lawsuit that accuses the new rule of discriminating against franchisees and treating them as large, national companies instead of as small, local businesses.

In California, San Francisco, Richmond, Berkeley, Oakland and San Diego have all weighed citywide increases to more than $10 an hour. On July 1, the minimum wage in the state will increase to $9 an hour from $8 — where it has stayed since 2008. In 2016, the wage will rise again to $10 an hour.

But in a report this week, the U.C. Berkeley researchers questioned how far the boost will go, projecting that $10 in 2016 will be equivalent to $9.54 in today’s dollars, or $8 by 2023.

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