Ikea to Increase Minimum Wage for U.S. Workers

June 24, 2015  by in Furniture Retailing, Industry   

The retailer will increase its minimum hourly wage from $10.76 to $11.87. The new rate is $4.62 above the current federal minimum wage of $7.25.

Last summer, the Ikea set a minimum wage structure based on local living costs for workers. MIT’s Living Wage Calculator takes into consideration housing, food, medical and transportation costs and annual taxes for a single person without children.

"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," said Lars Petersson, U.S. president for the retailer. "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."

With the change, 42 of 43 U.S. Ikea retail locations will have an increase in their minimum wage and approximately 32 percent of the company’s hourly retail co-workers will benefit from the change.

As of January, all five U.S. distribution centers and all non-retail locations will also have minimum wages above the local living wage, and no co-worker will have a minimum hourly wage below $10.00.

"This is not only the right thing to do for our co-workers, it's also good for business,” Petersson said. “One year ago when we announced our new minimum wage structure based on local living conditions, we hoped it would contribute to reducing co-worker turnover. Now six months after the implementation, I am pleased to see that we are pacing to reduce co-worker turnover by five points in FY15."