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August 7, 2014

Retailers Increasing Minimum Wages

Filed under: Compensation,General HR Buzz2:01 pm

Home furnishings retailer, Ikea, recently announced an overhaul to their wage structure that will increase their average minimum wage to $10.76 per hour by January 1, 2015, which is a 17 percent increase, and is well above the federal minimum wage of $7.25 per hour.  The increase will not be adjusted across the board, but will be a market-based adjustment from $8.69 per hour to $13.22 per hour depending on the cost of living in the city in which the store is located.  Ikea estimates that about half of its United States workforce will benefit by the increase which will be based on the MIT Living Wage Calculator.

Rob Olson, Ikea’s acting president for the United States and its chief financial officer was quoted as saying, “We are of course investing in our co-workers.  We believe they will invest in our customers, and they will invest in Ikea’s stores.  We believe that it will be a win-win-win for our co-workers, our customers and our stores.”  Ikea’s goal is to promote a “better everyday life” for their people.

Gap is another retailer that will be increasing its minimum wage to $10 per hour January 1.  This specialty retailer had set its minimum wage at $9 per hour in February.  Their new wage policy will benefit more than two-thirds of its 90,000 U.S. employees.  Gap reported more than a 10 percent increase in their applications for employment after they announced the increases.

Both retailers have a great desire to help their workers, and even though the minimum wage increases are a large investment, it is one they feel will help them reach their organizational goals and have a positive impact on the bottom line.

 

Source:  Greenhouse, Steven.  The New York Times.  “Ikea to increase Minimum Hourly Pay.”  Available here.

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