Workplace Issues

IKEA Raising its U.S. Worker Pay

The raise would put IKEA's minimum wage at $4.62 above the current federal minimum wage.
Katie Kuehner-HebertJune 25, 2015

IKEA said on Wednesday  that it will again raise its minimum hourly wage in the United States. Effective Jan. 1, 2016, the average minimum hourly wage paid in IKEA US stores will rise from $10.76 to $11.87, a 10.3% increase. The raise would put the furniture retail chain’s minimum wage at $4.62 above the current federal minimum wage.

Instead of basing wages on prevailing local labor-market rates, IKEA is computing worker wages by taking into account local living costs for workers, including housing, food, medical, and transportation costs plus annual taxes, the company said.

“IKEA not only seeks to understand life at home in order to offer our customers a great home furnishings offer, we also seek to understand our co-workers lives and needs in order to make IKEA a great place to work,” IKEA US president Lars Petersson said in a press release. “This latest wage increase is just the most recent in a series of investments grounded in our commitment to have a positive impact on our co-workers lives.”

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Six months after implementing its first minimum wage increase, IKEA is on track to reduce worker turnover by five points this year, Petersson added.

All but one of the 43 IKEA US retail locations will have an increase in their minimum wage and about 32% of IKEA US hourly retail workers will benefit from the change. All five U.S. distribution centers and all non-retail locations will also have minimum wages above the local living wage, and no worker will have a minimum hourly wage below $10.

A Wall Street Journal article reported on Wednesday that other retailers have followed suit and have boosted worker pay, including Target, Walmart, and TJX.

IKEA also said it was addressing workers’ feedback by considering ways to deliver more full-time schedules and increased schedule predictability. Although IKEA US currently provides workers with their schedules three weeks in advance, the company is seeking ways to make scheduling even more predictable.

IKEA currently employs 15,000 co-workers in its 40 U.S. stores, five distributions centers, and three non-store locations. The company has announced new locations in St. Louis, Memphis, Columbus, Ohio, and Las Vegas.

IKEA also said it was testing new click-and-collect points, which enable customers to order online and pick up items in person, in the United Kingdom.

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