Written by Michael Moon, GEI Associate
IKEA, the largest furniture retailer in the world with 356 stores in 44 countries, announced that it will raise the average minimum wage for its workers in U.S. stores by 17%, from $8.97 to $10.76. The new average minimum wage is $3.51 higher than the federal minimum wage of $7.25.The change will take effect starting next year and will impact about half of IKEA’s retail employees at the 38 stores nationwide.
The $1.79 increase in the minimum wage is only the average value, meaning that some states will see a larger change than others. IKEA used MIT’s Living Wage Calculator, which displays the cost of a minimum standard of living in each city,to ensure that the amount of minimum wage hike is appropriate for each store location.
IKEA’s new minimum wage policy will obviously reduce its profit margins, but Rob Olson, Vice President and Chief Financial Officer of IKEA U.S., said that IKEA does not plan to raise prices to make up for it, in an interview with The Huffington Post.
Olson told The Huffington Post:
“It’s all centered around the Ikea vision, which is to create a better everyday life for the many people. The many people is, of course, our customers and consumers, but it’s also our co-workers.”
IKEA is not the first company that surprised us with a minimum wage increase this year. Gap Inc. announced in February that it would set the minimum wage for its U.S. employees at $9 an hour starting June and at $10 an hour starting next June, a move that was praised by President Obama.
A map of all the IKEA locations and the minimum wage for each state has been provided by USA Today:
Sources:
- IKEA to raise its minimum wage (Paul Davidson, USA Today, 26 June 2014)
- Ikea To Raise Minimum Wage For U.S. Workers With Tie To Living Wage Calculator (Dave Jamieson, Huffington Post, 26 June 2014)
