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 17 percent average raise, 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.
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