Almost exactly a year after IKEA announced it would raise the hourly starting wage for employees from $9.17 to $10.76, the furniture retailer says it will give workers another 10% pay boost.
Bloomberg reports that IKEA will raise the hourly minimum wage it pays employees to $11.87 in an attempt to keep workers, well, working.
The latest increase is set to take effect on January 1 for about 32% of IKEA’s hourly staff and some working in the company’s distribution system.
Following the new increase, IKEA’s average hourly rate will be $15.45 at its 43 U.S. stores.
“Every year we evaluate our wage structure,” Rob Olson, chief financial officer of IKEA’s U.S. unit, tells Bloomberg. “It is not about being the leader, it’s about doing the right thing for our co-workers.”
While the company says the newest wage increase — which follows a 17% boost that took effect just six months ago — was promoted by updates to the Massachusetts Institute of Technology Living Wage Calculator and considerations of local competition and minimum-wage regulations in different cities, employee turnover also played a part.
IKEA says that since its last wage increase it has seen a stronger job applicant pool and saw staff turnover decrease by more than 5%.
Those reductions – which saved the company costs related to recruitment — are expected to continue with the increase to $11.87, Olsen tells Bloomberg.
“We’ve been ahead of the industry sector average for a while, and we want to be even further ahead,” he says. “We’ve seen that trend already.”
The company plans to evaluate wages each year and provide adjustments as needed.
Ikea Will Raise U.S. Minimum Wage to $11.87 to Retain Workforce [Bloomberg]
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