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

Glitches slow Boeing, SpaceX plans for human spaceflight

Boeing has an issue with its abort system that may cause the spacecraft to “tumble.”

Best foot forward: Ferndale company to make custom shoes easy

Long specializing in insoles, Superfeet is putting 3-D machines in stores to make customized shoes.

Planemaker joins forces with auto-industry supplier Adient

The new venture poses a threat to Zodiac Aerospace and Rockwell Collins

Alaska Airlines has selected destinations for new service from Paine Field. (Alaska Airlines)
Alaska Airlines will fly from Everett to 8 West Coast cities

Two destinations that didn’t make the list were Spokane and Hawaii.

Port of Everett CEO Les Reardanz has been called up and will be spending much of the year away from his office. He is going to Afghanistan. (Dan Bates / The Herald)
Port of Everett CEO reporting for duty — in Afghanistan

Les Reardanz has been called to active duty with the Navy for an eight-month deployment.

Boeing opens new $17 million training center in Auburn

Workers and dignitaries marked the grand opening of the facility Monday.

Trump’s company fights efforts to shed the president’s name

“Our homes are worth more without the Trump name.”

Airbus floats shutdown of A380 superjumbo

The aircraft is so big that some airports had to expand runways to accommodate the 550-seat plane.

Does a hypersonic US reconnaissance plane already exist?

A Skunk Works executive speaks of the top secret aircraft as if it is already in operation.

Most Read