Ikea to raise minimum wage again

Ikea announced today that it will raise the average minimum hourly wage at its U.S. stores to $11.87, a 10.3% increase and $4.62 above the current federal minimum wage.

The increase, which is effective Jan. 1, comes on top of a 17% jump in the retailer’s minimum hourly wage for 2015. The earlier increase, announced a year ago, came out of the retailer’s new minimum wage structure, which bases minimum hourly wages on local living costs for co-workers.

The basis for the local living costs is the MIT Living Wage Calculator, which takes into consideration housing, food, medical and transportation costs plus annual taxes. It was a departure from determining wages based on the local competitive situation.

“Ikea not only seeks to understand life at home in order to offer our customers a great home furnishings offer, we also seek to understand our co-workers lives and needs in order to make Ikea a great place to work,” said Ikea US President Lars Petersson. “This latest wage increase is just the most recent in a series of investments grounded in our commitment to have a positive impact on our co-workers lives.”

Petersson added that, six months after the implementation of the new wage calculation, worker turnover is on track to decrease by five points in fiscal 2015.

As a result of the latest announcement, 42 of 43 Ikea US retail locations will have an increase in their minimum wage; and approximately 32% of Ikea US hourly retail workers will benefit from the change. As of January 2016, the company said all five U.S. distribution centers and all non-retail locations also will have minimum wages above the local living wage, and no employee will have a minimum hourly wage below $10.

Ikea US also is considering ways to deliver more full-time schedules and increased schedule predictability. Although Ikea US currently provides workers with their schedules three weeks in advance, the company is seeking ways to make scheduling even more predictable.

Ikea currently employs 15,000 people in its 40 U.S stores, five distributions centers and three non-store locations. The company has announced new locations in St. Louis, Memphis, Tenn., Columbus, Ohio, and Las Vegas.

Source: Furniture Today