Kathleen Geier: Ikea and the Business Case for a Living Wage

June 27, 2014

This week, the Swedish furniture giant Ikea announced that it plans to start paying its retail workers a living wage. The new hourly minimum will be based on regional estimates derived from the MIT Living Wage Calculator. Beginning next year, the average minimum wage of Ikea workers will increase by 17 percent, to $10.76 an hour.

Ikea’s new policy may be a sign that retailers are, at last, starting to have second thoughts about the low-wage, race-to-the-bottom business strategy that has dominated the retail sector for decades. Earlier this year, Gap announced that it would raise its minimum pay to $10 an hour, and it’s seen job applications increase by 10 percent as a result. Even the most infamous low-wage employer in America, Walmart, said recently that it would not oppose a minimum wage increase, marking a reversal of long-standing policy (if true).