Is it a trend? The New York Times reported on Thursday morning that Ikea will announce an increase in the minimum wage that the company pays the workers in its 38 stores in the United States to an average of $10.76 per hour, a 17 percent increase.
The rates will not be the same for all stores since it will be based on the cost of living in the area where each store is located, the lowest rate being $8.69 in Pittsburgh and West Chester, Ohio to a high of $13.22 at the store in Woodbridge, Virginia.
Ikea is not the first to announce such an increase. The Gap announced in February that they would begin paying a minimum of $9.00 an hour this year increasing to $10.00 next year. A Dallas hospital is increasing the minimum for its employees to $10.25 using funds originally earmarked for executive bonuses and two pizza companies in St. Louis have increased minimums to $10.10, the amount proposed as the federal minimum.
The Gap says that their new pay scales will increase the income of about two-thirds of its U.S. employees while Ikea estimates that approximately half of its employees will be affected.
“This stems back to Ikea’s decision to create a better everyday life for our people,” said acting president of U.S. operations and CFO Rob Olson.
“We are of course investing in our co-workers,” Olson continued. “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 was already noted for its better than average benefits package which includes a 100 percent match on 401(k) contributions, up to 4 percent of pay and a 50 percent match on the next 2 percent and a bonus plan which includes all employees.
The reason most often cited by companies which choose to raise wages voluntarily is that they have found that they draw a better quality employee who is willing to stay with the company, eliminating the expense incurred with a high turnover rate. The Gap reported a ten percent increase in job applicants after announcing their new base pay scales in February.
These companies are finally paying attention to what studies have long shown, that raising the minimum wage and paying people a reasonable amount for their labors does not harm the bottom line. In fact, there is evidence that it may actually have a positive effect as the economy as a whole improves with more disposable income in the hands of more people.
h/t: Think Progress