The FINANCIAL — IKEA US announced on June 24 that it will again raise its minimum hourly wage in existing stores. Effective January 1, 2016, the average minimum hourly wage paid in IKEA US stores will increase from $10.76 to $11.87, a $1.11 or 10.3% increase. This is $4.62 above the current federal minimum wage.
In June 2014, IKEA US announced its new minimum wage structure, which bases minimum hourly wages on local living costs for co-workers. The basis for the local living costs is the MIT Living Wage Calculator, which takes into consideration housing, food, medical and transportation costs plus annual taxes. This is a departure from determining wages based on the local competitive situation and is centered on the needs of the IKEA co-worker.
“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,” commented Lars Petersson, IKEA US President. “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.”
Petersson continues, “This is not only the right thing to do for our co-workers, it’s also good for business. 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 5 points in FY15.”
As a result of today’s announcement, 42 of 43 IKEA US retail locations will have an increase in their minimum wage and approximately 32% of IKEA US hourly retail co-workers will benefit from the change. As of January 2016, all five US 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, according to IKEA.
In addition to investing in co-worker compensation, IKEA US is addressing co-workers’ feedback and needs by considering ways to deliver more full-time schedules and increased schedule predictability. Although IKEA US currently provides co-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 US stores, five distributions centers and three non-store locations. The company has announced new locations in St. Louis, Memphis, Columbus and Las Vegas.