TIME Retail

IKEA Is Going to Raise Minimum Wages in All its U.S. Stores

Contractors work on construction of a new IKEA store in Miami, May 20, 2014.
Contractors work on construction of a new IKEA store in Miami, May 20, 2014. Christina Mendenhall—Bloomberg/Getty Images

IKEA will use MIT's Living Wage Calculator to calculate minimum earnings for staff, leading to an average 17% hike

IKEA, the world’s largest furniture retailer, plans to raise the minimum wage in all of its U.S. stores by using MIT’s Living Wage Calculator, which estimates the base pay needed to survive in a particular city – a move that could set a new standard expected for major retailers.

Huffington Post quotes Rob Olson, the chief financial officer of IKEA U.S., as saying that the average store minimum wage will increase by 17% to $10.76 per hour on Jan. 1. Employees at each of the 38 stores will have a different base salary depending on the cost of living in the city they’re in, ranging from $9-$13 per hour. Olson notes that the average minimum wage at U.S. stores will be $3.51 higher than the current federal minimum wage, which is $7.25 per hour. “It’s all centered around the Ikea vision, which is to create a better everyday life for the many people,” Olson told the Huffington Post.

The move is only the most recent illustration of divided stances on minimum wage reform. The heated national debate has been marked by protests waged by McDonald’s workers demanding higher pay. Meanwhile, Seattle voted to raise its minimum wage to $15 an hour in May — the highest minimum wage in the country. The International Franchise Association opposed the decision, calling it “unfair and discriminatory minimum wage plan,” according to the Washington Post. Barack Obama has been a proponent of higher minimum wages, reflected in a decision to hike the minimum wage for federal contractors up to $10.10—a move that he suggested should be adopted throughout the country.

Although other companies such as Gap Inc., have vowed to raise the base pay for stores nationwide, IKEA is the first major retailer to use a living wage calculator when setting salaries. Olson says that the new base pay salary is meant to be a selling point to recruit more talented employees, according to the Washington Post. While IKEA’s new minimum wage hike could sharpen the company’s image, it’s perhaps a greater sign to other companies of an impending trend in the workplace.

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