Ikea boosting minimum wage for employees

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.



Effective Jan. 1, the average minimum hourly wage paid in IKEA U.S. 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.

"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, 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. 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."



Thirty-two percent of Ikea’s U.S. staff will be affected, and total average hourly wage will rise to $15.45 from $14.19 as a result. Raises may also vary according to cost of living in different store locations.



Last June, the retailer announced would raise its hourly minimum wage in U.S. stores from $9.17 to $10.76, a 17.3% hike.



The current federal minimum wage is $7.25. A number of retail chains, most notably Wal-Mart, have recently increased their corporate minimum wage in response to increased public pressure and scrutiny.

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.