Ikea's Minimum Wage Hike Was So Successful, It's Raising Wages Again

[Crabtownboy]

Well, isn't this interesting?

A year after it first announced a major minimum wage hike in its U.S. stores, Ikea said Wednesday that it plans to implement another nationwide raise to its wage floor next year, bringing the average store's starting pay to nearly $12 per hour.

Under the system that the ready-to-assemble furniture maker first established in January, the starting wage for any given store in the U.S. reflects the cost of living in that particular area as determined by the MIT Living Wage Calculator, which takes into account the local cost of rent, food, transportation and the like. After the second round of raises, which is slated for this coming January, all of the company's U.S. stores will be paying at least $10 per hour, and the average minimum wage across all locations will be $11.87 -- a 10.3 percent increase over the previous year, according to the company.

So what types of benefits has Ikea seen?

For one, less turnover. Although it's only been six months since the raises went into effect, Olson said Ikea is on pace to reduce turnover by 5 percent or better this fiscal year. Holding onto employees longer means the company is spending less on recruiting and training new replacements.

Ikea is also attracting more qualified job seekers to work at its stores, according to Olson. Pay for retail sales workers in the U.S. is generally very low, with an average industry wage of just $12.38 per hour, according to the Bureau of Labor Statistics. But Ikea's average store wage is heading north of $15. After its living wage announcement last year, the company opened two new locations -- one in Merriam, Kansas, and another in Miami -- and the higher wages (and attendant publicity) likely helped the company lure more candidates.

"At both of those stores, the applicant pool was fantastic," Olson said.

http://www.huffingtonpost.com/2015/06/24/ikea-minimum-wage_n_7648804.html

 

[annsni]

OK - So of COURSE there is a benefit to the employee and they will have less turn-over and happier employees. Pay me more than I make now doing graphics and computer work to pack out products and run a cash register (less responsibility, not much need for thinking or skill) and I'll also stay on and be happy.

Now what has it done to their bottom line?

 

[777]

Right, annsi, this is a matter of a private company deciding to pay more. It's not like some minimum wage mandated by the government.

IKEA can figure out how much to pay their workers that's affordable and won't affect quality of the product. It is hard to automate this sector of the customer service industry, who wants robots showing you furniture?

 

[matt wade]

Glad to see capitalism works!

If the government raised min. wage across the board, it would't have the same effect.

 

[Salty]

From Crabs Link " as determined by the MIT Living Wage Calculator, which takes into account the local cost of rent, food, transportation and the like"

and then as the economy of local communty gets better, they will see increases in the cost of rent, food, transporation, and the like. Which will mean another round of raises for the company.....

 

[padredurand]

Ikea has 9499 employees in the US. Managers make an average of $57,268. Full-time retail workers make an average of $18,300.

Net profit for the giant Sweden-based home furnishings retailer grew 9% to 3.1 billion euros ($4.2 billion), the company said. While the company didn't disclose U.S. sales in dollars, an official said they accounted for 12% of global sales, which would be around $4.4 billion.

After the second round of raises, which is slated for this coming January, all of the company's U.S. stores will be paying at least $10 per hour, and the average minimum wage across all locations will be $11.87 -- a 10.3 percent increase over the previous year, according to the company.

Wow, at least $10.00 an hour starting next January. I think they should get a medal or something.