Ikea to pay its workers a ‘living wage’

NEW YORK — A bit of news that should make just about everybody happy today: Ikea is announcing plans to raise the average minimum wage in its U.S. stores by 17 percent, to $10.76 per hour.

The company will now set its pay based on MIT’s Living Wage Calculator, which reports how much a worker must earn to comfortably cover essentials like food, housing, child care and transportation, depending on where they live in the country. Ikea is setting its pay floor at the living wage for a single adult without children. So, as the Huffington Post points out, that means employees at its Woodbridge, Virginia, outpost will make at least $13.20 per hour, while hires in low-cost Merriam, Kansas, will earn at least $9.36 per hour. In the end, it amounts to a raise for about half the company’s American retail workers.

Notably, Ikea isn’t raising prices on its furniture to pay for the raise. Instead, the company’s management says it believes the pay hike will help them compete for and keep talent, which is of course good for business. The Gap used a similar justification when it announced it would raise its own minimum to $10 by 2015.

Which I think hints at something about what would likely happen if the U.S. raised the federal minimum. Conservatives who argue that higher pay floors kill jobs tend to assume that businesses are already running at pretty much peak efficiency, and so forcing them to spend more on labor will lead to less hiring. But left-leaning economists see it differently. They tend to argue that increasing wages can lead to savings for business by reducing worker turnover, for instance, and forcing managers to make better use of their staff.

Companies like Ikea and the Gap probably aren’t raising pay for thousands of workers as a PR initiative or out of a sense of humanitarianism. They seem to have made a judgment that low wages simply aren’t an efficient way to do business. And, even if they haven’t realized it yet, I’d guess many other companies are in the exact same boat.

More in Herald Business Journal

Peoples, HomeStreet banks bump lowest salaries after tax cut

The banks with Snohomish County branches will raise minimum salaries for employees to $15 an hour.

Exotic animals find compassionate care in Bothell (video)

At the Center for Bird and Exotic Animal Medicine, vets treat snakes, hedgehogs and even kangaroos.

Electroimpact cuts Mukilteo staff by 9 percent

“What we’re missing now is a monster anchor project,” the company’s VP said.

How can you tell if you are getting good financial advice?

Assume that it’s still the same buyer-beware market that has always existed.

Amanda Strong (left) tries on an Angel of the Winds Arena hat as she and Courtney Brown hand out gift bags after the renaming ceremony Dec. 13 in Everett. The new name replaces the Xfinity name. (Andy Bronson / Her file)
Angel of the Winds to break ground on $60M casino expansion

“We think we’re on the cusp of becoming a major resort.”

In this Dec. 20, 2017, photo, a clerk reaches to a shelf to pick an item for a customer order at the Amazon Prime warehouse, in New York. (AP Photo/Mark Lennihan, File)
Amazon’s potential HQ2 sites leaves many cities disappointed

And yet, some municipal leaders are looking at the bright side of being rejected.

How do you retrieve an errant Boeing 737 from a muddy slope?

Turkish authorities used cranes to lift a plane that skidded off a runway.

Don’t take economic forecasts to the bank — or the casino

Air travel delays could spur a rebirth of passenger rail service.

Emirates orders 20 more Airbus A380 jumbos, saving program

The Dubai carrier also has options to buy 16 more. The program seems safe until 2029.

Most Read