Ikea announced Thursday its plan to raise the minimum wage for all of its average workers at the company’s locations across the United States by 17 percent. Although the lowest-paid workers will not see their wages rise to the level of average and higher-ranking employees, new wages for all employees will be set to match the cost of living in each of the given areas where the company is located.
Around half of the over 13,000 Americans employed by Ikea will soon benefit from the pay increase, but workers will see a range of increase depending on a city or region’s cost of necessities, including food, housing, taxes and transportation. In some areas of Virginia, the wage increase will go to as high as $13.22 per hour, while staying as low as $8.69 in Pittsburgh, PA. However, the company has stated that they will raise the average minimum wage across the country to $10.76.
Rob Olson, president and CFO of Ikea’s presence in the U.S., said that the company is deciding to raise its minimum wage because it wishes to continue to invest in its co-workers. He also stated that the company believes that by providing a higher income, its employees will be able to invest in Ikea’s customers, which in turn will enable them to reinvest at Ikea.
Stating that the company’s minimum wage increase strategy will be a “win-win-win” for its employees, customers and Ikea stores, Olson also reassured customers that the new raise in wages will not result in higher prices to purchase its household goods.
This decision announced by Ikea has followed in suit of other large companies who have recently announced that they will be introducing their own minimum wage raises on a voluntary basis. This past February, the Gap raised the wage for its lowest-ranking employees to $10 per hour.
Meanwhile, companies like Costco, In-N-Out, Ben & Jerry’s and Whole Foods have already maintained a voluntary minimum wage higher than many other companies. According to Ben & Jerry’s company spokesman Sean Greenwood, entry-level employees make $16.29 per hour, which is more than twice the federal minimum wage. Because of this, Greenwood stated that as “we as a business prosper, those around us should prosper as well.”
Representatives from the companies mentioned above have gathered proof that a voluntary raise of a company minimum wage both attracts and keeps better and more productive workers. Ultimately, this attracts customers who improve the company’s profit and public reputation. For example, the Gap saw a 10 percent increase in the number of received employment applications and have experienced an increase in sales.
While Ikea and other companies have taken the initiative to improve business practices and better provide for their workers, action in the U.S. congress to reach a $10.10 federal minimum wage has yet to follow through. Originally introduced by Congressional Democrats and President Obama, the measure has been consistently struck down by opposing Congressional Republicans who argue against any such wage increase. However, more than nine states in the U.S. have made strong attempts to raise the average minimum wage. While Ikea has made the choice to raise its average minimum wage, the company already offers other benefits to its employees, including 401 (k) plans and other bonus rewards programs that employees can choose to accept.
By Scott Gaudinier