Ikea's U.S. division raising minimum wage for retail workers, West Chester store gets lowest raise

Average pay raise around 17 percent

NEW YORK (AP) -- Ikea's U.S. division is raising the minimum wage for thousands of its retail workers, pegging it to the cost of living in each location, instead of its competition.

The West Chester location in Butler County will get the lowest raise alongside the Pittsburgh location, going up to $8.69.

The 17 percent average raise, expected to be announced Thursday, is the Swedish ready-to-assemble furniture chain's biggest in 10 years in the U.S.

The pay increase will take effect Jan. 1. It will translate to an average wage of $10.76 an hour, a $1.59 increase from the previous $9.17.

About half of Ikea's 11,000 hourly store workers will get a raise. How much will vary based on the cost of living in each store location.

Ikea, which has cultivated a reputation for fair treatment of its workers, evaluates its benefits plans every year and had always adjusted wages based on its competition. But Rob Olson, Ikea's acting U.S. president, says the latest move shifts its approach.

"Now, we decided to focus less on the competition and more about the co-workers," Olson told The Associated Press in an interview this week. He says he was guided by its vision of "creating a better life" for its workers. That will improve the company's relationship with employees and reduce worker turnover, which he says is already well below the retail industry's average. About 19 percent of full-time retail workers leave their jobs annually, according to the National Retail Federation.

Ikea's raises come when a push to raise wages for hourly workers has made headlines.

Fast-food workers asking for higher pay in cities have staged protests across the country. Union groups have also held protests at Wal-Mart Stores Inc., the nation's largest private employer. And President Barack Obama is endorsing a bill that would raise the federal minimum wage to $10.10 an hour by 2016.

Many business groups have opposed the measure, saying it would hurt the economy and lead to job losses.

Still, some are making public splashes with across-the-board raises. Gap Inc. said in February that it will set the minimum wage for workers at $9 an hour this year and $10 an hour in 2015. Most retail workers already make more than the federal minimum wage of $7.25 an hour, though not necessarily much more.

Olson emphasized that the pay increase will not lead to higher prices, reduced work hours or job losses. Rather, the raises are being offset by such cost-cutting measures as using national purchase programs for such items as cleaning services or printer paper. In the past, each store would use individual suppliers.

Olson said Ikea is basing its wage increase on the MIT Living Wage Calculator, which takes into consideration housing, food, medical and transportation costs plus annual taxes. Ikea says it's a significant departure from the retail industry standard, which sets wages according to the local employment market.

According to the calculator , the living wage for one adult in Butler County to support themselves is $7.69. The living wage increases when more family is added. For example, the living wage needed to support one adult and two children in Butler County is $22.41.

All 38 U.S. locations as well new locations planned for Merriam, Kansas; Miami; and St. Louis will use the new wage structure. It doesn't affect the remaining 2,615 salaried and hourly employees at five distribution centers, two service centers and a manufacturing plant. Those employees who have hourly jobs are already paid above the local living wage, Ikea said.

Ikea has recently expanded other employee benefits. In the past year, it has introduced an employee loyalty program, which makes contributions to a new retirement fund, and has increased the employer match to workers' 401(k) plans. It also launched a unified bonus program.

Olson said Ikea's wage structure varies by country based on different parameters. Ikea noted that if there's an increase in the federal minimum wage increase, it would welcome that.

Meanwhile, Wal-Mart has remained neutral on whether the federal minimum wage increase should be increased. The nation's largest private employer, with 1.3 million workers in the U.S., has said less than 1 percent of its workforce is paid minimum wage. It has said its average wage for both full- and part-time hourly workers is nearly $12 an hour.

-------

Follow Anne D'Innocenzio at HTTP://WWW.TWITTER.COM/ADINNOCENZIO

 

Print this article Back to Top

Comments

or Subscribe now so you can share your opinion! It’s only a penny for a month trial.

Latest Forecast
More National News
A failed American experiment hides in the desert
A failed American experiment hides in the desert

Did you know there's an ocean and rainforest stuck in the middle of the Arizona desert? A science lab called Biosphere 2 one of the most…

Is Snowden developing anti-surveillance tech?
Is Snowden developing anti-surveillance tech?

Speaking to a crowd at the Hackers on Planet Earth conference in New York City, N.S.A. whistleblower Edward Snowden hinted that he…

Tooth plaque gives insight into ancient diets
Tooth plaque gives insight into ancient diets

Ever wonder what our ancestors' diets consisted of in the ancient days? Researchers have uncovered some answers after examining ancient…

Who is Behati Prinsloo? The web's hottest topic
Who is Behati Prinsloo? The web's hottest topic

Just who is Behati Prinsloo? That’s what Internet users have been asking for the past year and according to search engine statistics,…

Four articles you don't want to miss
Four articles you don't want to miss

It's been a rough few days newswise, with little relief from violent, heart-breaking stories. So do yourself a favor and apply these few…

2 Americans killed in fighting in Gaza Strip
2 Americans killed in fighting in Gaza Strip

Max Steinberg and Nissim Sean Carmeli grew up in America. But they both developed a passion for Israel.

PD: FB photo of shoplifted dress leads to arrest
PD: FB photo of shoplifted dress leads to arrest

Police said 27-year-old Danielle Saxton, of West Frankfort, shoplifted from a downtown boutique last week. Then, she posted pictures of…

Ways to guard against theft while on vacation
Ways to guard against theft while on vacation

Being robbed is a quick way to put a real damper on your vacation.  While there is no way to guarantee thieves will leave you alone,…

Protect yourself from vacation rental fraud
Protect yourself from vacation rental fraud

When on vacation, choosing to rent from a private citizen rather than an established hotel can be risky, especially when you're trying to…

BLOG: Explore! It's good for your mental health
BLOG: Explore! It's good for your mental health

Sometimes a long trip just isn't possible, but it's still important to use your vacation time to recharge and re-examine the world…