Swedish ready-to-assemble furniture maker IKEA will soon give a pay raise averaging $1.59 per hour to its lowest-paid U.S. employees. The move, affecting about half the company’s workforce of 11,000, will raise IKEA’s average minimum wage to $10.76.
The company arrived at the new hourly rate using the MIT Living Wage Calculator, which takes into consideration housing, food, medical and transportation costs plus annual taxes in each of the company’s 38 locations in the United States.
IKEA says using the MIT formula demonstrates a commitment to paying a living wage. The company claims the wage increase will not result in higher prices or reduced hours. It says other operational efficiencies will fund the raises.