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Wages

Ikea Raises Its Minimum Wage to $10.76* an Hour


Ikea in Centennial, Colo., employs more than 400 people

Photograph by Cyrus McCrimmon/The Denver Post via Getty Images

Ikea in Centennial, Colo., employs more than 400 people

There’s more good news today from the world of retail. Ikea, the world’s largest furniture seller, is giving its U.S. workers pretty substantial raises. The company announced it will increase the average minimum hourly wage for those working in its U.S. locations to $10.76 next year. It’s an average because Ikea plans to tie its wages to the cost of living in the 38 cities where it has stores.

Ikea will determine the new wages using the Massachusetts Institute of Technology’s Living Wage Calculator. In New York City, where Ikea has one store in Brooklyn, the calculator comes up with $12.75 an hour for a single person without kids.

The company’s decision comes amid a national debate over raising the federal minimum wage from $7.25 to $10.10 an hour. Ikea—controlled by one of the richest families in Europe—is in good company. Cities such as Seattle haven’t waited for the government to act. Neither did Gap (GPS).

“The transition to the new minimum hourly wage structure is not only the right thing to do, it makes good business sense,” Rob Olson, Ikea’s acting president and chief financial officer for the U.S., said in a statement. Ikea won’t raise prices, either. In fact, the retailer says it is committed to lowering prices.

The company says the increases will benefit about half of its retail workers. No word yet on whether they’ll have more responsibilities, too. Maybe they’ll be so cheery that they’ll even help guide anxious customers through the stores.

Susan-berfield-photo-200x200
Berfield is a writer for Bloomberg Businessweek in New York. Follow her on Twitter @susanberfield.

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