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Ear to the Ground

Ikea’s Raising Its Minimum Wage for U.S. Workers Without Increasing Prices

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Posted on Jun 26, 2014

    If only more companies were as concerned about fair wages as the Swedish furniture giant seems to be. aoo3771 / Shutterstock.com

The Swedish ready-to-assemble-furniture store is following its vision to “create a better everyday life for the many people ... customers and consumers, [and] also our co-workers.” Effective Jan. 1, Ikea employees earning minimum wage will see their paychecks increase to $9 to $13 an hour, depending on geographic cost of living.

Using MIT’s Living Wage Calculator, the company determined its average minimum wage should go up to $10.76, a 17 percent increase that will affect about half of Ikea’s U.S. workers and will hopefully set the bar for other companies.

The Huffington Post:

The company’s move will likely become a talking point in the national debate over increasing the federal minimum wage, currently $7.25 per hour, which hasn’t been raised since 2009. Democrats in Congress want to gradually raise it to $10.10 per hour and tie it to an inflation index. Republicans have opposed that plan, saying businesses can’t afford it.

Ikea said it does not plan to raise prices for customers in order to pay for the wage increases.

Using a living wage calculator to determine area salaries appears to be without precedence among major retailers. The new minimum wage will vary at each of Ikea’s 38 stores—as well as its five distribution centers, two service centers and one manufacturing plant in the U.S.—depending on the cost of living in each location…

According to Olson, the new minimum wage structure is part of a broader Ikea effort to make its pay and benefits package more attractive. In the past year, the company increased the employer match on its 401(k) and began auto-enrollment to incorporate more workers, he said. It also launched a separate retirement account for employees who are with the company for at least five years.

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—Posted by Natasha Hakimi Zapata

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