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Ikea and Gap raise their own minimum wages | Deseret News National
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Jae C. Hong, Associated Press
Moneywise

Ikea and Gap raise their own minimum wages

Ikea, the Scandinavian behemoth of cool-and-cheap furniture, announced Thursday that it will be raising its minimum wage for all U.S. workers to $10.76 an hour.

Ikea's CFO Rob Olson denied any political agenda. "We're more focused on our co-workers and doing the right thing for them," he told the Huffington Post.

But the move comes at a time when many American businesses are raising pay, and President Obama has proposed raising the minimum wage to $10.10 an hour. The current minimum wage stands at $7.25 and totals $15,000 a year for someone working a 40-hour week.

A report from the Congressional Budget Office says that paying employees $10 an hour could significantly lift people out of poverty but could also stifle job growth and drive companies to hire fewer workers, or even result in layoffs.

In the meantime, Gap Inc. also announced a wage raise to $9 an hour that took effect last week and will jump to $10 next year. "We have very good people today, but to attract and retain the best talent we have to make sure we invest in them," Glenn K. Murphy, the clothing company's chief executive, said in a statement. Since raising the wage, the company says that it has seen a leap in job applications.

These companies are following the footsteps of retailers like Costco, which is well-known for paying its employees well above the average rate, citing that it's good business. Costco's starting pay is $11.50 an hour, but after bonuses, the average employee earns a healthy $21 an hour. On top of that, almost 90 percent of workers have company-sponsored health insurance.

Costco's generosity does appear to pay off — a much-cited study by Wayne Cascio at the University of Colorado at Denver compares Costco to competitor Sam's Club, owned by Wal-Mart Stores Inc., and found that Sam's Club's cut-rate wages ended up costing the company, while Costco kept good employees and maintained an upscale shopping base.

"It absolutely makes good business sense," Costco co-founder Joe Sinegal said in the report, citing better productivity. "It's axiomatic to our business — you get what you pay for."

Likewise, Whole Foods pays a minimum of $10 an hour, but the average hourly wage is $18.89 and average salary is $39,289. A company spokesman told the Huffington Post that employee turnover is less than 10 percent.

Fast-food chains are notorious for low wages and have recently been the targets of protests from low-wage workers, but even some burger joints have sweetened the deal for workers. Popular East Coast burger joint Shake Shack pays $10 an hour in New York plus benefits, and the In-N-Out burger chain starts at $10.50 an hour with vacation and retirement, according to the company website.

"We strive to create a working environment that is upbeat, enthusiastic and customer-focused," a company spokeman told the Huffington Post. "A higher pay structure is helpful in making that happen."

Email: laneanderson@deseretnews.com