Ikea lifts minimum wage, adding pressure to McDonald's, Wal-Mart


Ikea says it plans to increase the minimum wage for its U.S. retail workers by an average 17% starting next year, a decision that may add to pressure on retailers and fast-food companies that have not raised wages, particularly the largest holdouts, such as McDonald’s (MCD -0.1%) and Wal-Mart (WMT -0.7%).

Business opponents say raising the minimum wage would add as much as hundreds of millions of dollars to costs; Ikea is presenting the move as good for employee well-being, and says it will not raise prices to offset the new costs.

Earlier this year, Gap said it would raise its minimum hourly rate for U.S. employees to $9 in 2014 and $10 in 2015.

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Comments (22)
  • GaltMachine
    , contributor
    Comments (2085) | Send Message
     
    Curious how this move puts pressure on walmart and McD's?

     

    This is how it should be done in any event - voluntarily without force.
    26 Jun 2014, 11:49 AM Reply Like
  • redhat63
    , contributor
    Comments (330) | Send Message
     
    Well then, let the Walmart and McDonald workers leave those companies and apply for work at Ikea and Gap if they are so talented. I am certain that WMT and MCD will have no trouble filling jobs that are supposed to be summer and student jobs. Only in Ostupid's economy are these jobs now considered "careers".
    26 Jun 2014, 11:51 AM Reply Like
  • vanebfbc
    , contributor
    Comments (160) | Send Message
     
    90%+ of all corporations treat their employees as a cost rather than investment, so no wonder people living on minimum wages can hardly pay off their rent, tuition, car lease, etc. and no production overall for the welfare of workers and growth of the economy as a whole. Ikea is taking a good stride ahead, and I wish many more corporations can follow its step.
    26 Jun 2014, 11:56 AM Reply Like
  • Alex_P
    , contributor
    Comments (251) | Send Message
     
    Vanebfc, If the employee has a high human capital and if it takes years for the company to train him/her, yes these are investments.
    If I can replace you any time with somebody from the street, than you are just a commodity, or as you say expense.
    26 Jun 2014, 04:56 PM Reply Like
  • Shaduc
    , contributor
    Comments (3005) | Send Message
     
    BUDGETTING PROBLEM: people living on minimum wages can hardly pay their car lease!

     

    And if there is no public transportation nor feasible to like ride a bike/moped, then Walmart should be obliged to provide its employees shuttle bus transportation.

     

    It is ridiculous!
    26 Jun 2014, 07:08 PM Reply Like
  • Daveqwerty
    , contributor
    Comments (74) | Send Message
     
    $9 per hour? $10 per hour? Almost $11 per hour??? This is ridiculous greed. I pay the kid who pulls weeds in my garden and cuts the grass $15/hr. These companies make massive amounts of money on the backs of the poor and should give them a decent living wage, not the absolute minimum.
    26 Jun 2014, 12:09 PM Reply Like
  • Rubygreta
    , contributor
    Comments (586) | Send Message
     
    Show me a McDonalds franchisee who raises his wage to $15/hour, and I will show you a franchisee, after raising prices accordingly, who is out of business. You can't compare the one-time $15/hour cash payment you pay a kid to the costs of paying $15/hour to a large full-time staff.
    26 Jun 2014, 12:15 PM Reply Like
  • redhat63
    , contributor
    Comments (330) | Send Message
     
    @Ruby - Well said. Thank you.
    26 Jun 2014, 12:26 PM Reply Like
  • Daveqwerty
    , contributor
    Comments (74) | Send Message
     
    @ Ruby, with all due respect, I don't believe you. I have a family member in the business and he pays his front-line employees $17/hr because, as he says, "I get enthusiastic and trustworthy people who really value their job, who keep my customers happy and loyal and make me a lot of money".

     

    He makes more profit doing this than I could ever dream of. And he always adds in a good Christmas bonus. His employees are extremely loyal, theft is zero and his turnover is negligible.

     

    And he is proud of what he is doing for these people. He holds his head high in our small community.
    26 Jun 2014, 12:50 PM Reply Like
  • Daveqwerty
    , contributor
    Comments (74) | Send Message
     
    MacDonald's CEO makes $9247.00 per hour. I wonder if that affects the price of their products.
    http://read.bi/1jovsPX
    26 Jun 2014, 04:36 PM Reply Like
  • Alex_P
    , contributor
    Comments (251) | Send Message
     
    Daveqwerty, as your profile says: You have "much yet to learn".
    26 Jun 2014, 04:59 PM Reply Like
  • Shaduc
    , contributor
    Comments (3005) | Send Message
     
    Try Seattle ... that is going to be a very expensive city to live in!

     

    And that is from someone who stayed in San Francisco for 3 weeks (lack of safe, affordable housing!).
    26 Jun 2014, 07:14 PM Reply Like
  • Rubygreta
    , contributor
    Comments (586) | Send Message
     
    My guess is that if he took no salary, and the $9,247 per hour was distributed to every McDonalds employee, it would make zero difference. Maybe someone else can look up the info and divide the number of employees by his salary.
    29 Jun 2014, 05:23 PM Reply Like
  • taxman100
    , contributor
    Comments (642) | Send Message
     
    Fast food is already overpriced for lousy quality. Imagine it if it was even more expensive.

     

    It's a tough world for the working class, with a government that has absolutely no plan on how to make it more attractive to hire them. Instead they allow this country to be flooded with cheap imports with no tariffs, and flooded with illegal aliens who are encouraged to stay, with the hope of voting they way our ruling class desires.

     

    A total mess that a rising minimum wage will only increase unemployment.
    26 Jun 2014, 12:22 PM Reply Like
  • micium
    , contributor
    Comments (115) | Send Message
     
    All those increased wages will go directly back in to the economy since those folks need to live and pay their bills. The economy will adjust and the weak will be eliminated. Maybe it will be a good thing if less people eat fast food. And, with the influx of more illegals being allowed to stay in the US, there will be increased pressure for social services and hand outs since these folks are most likely unskilled. Will it lead to more crime? I don't know, but I bet the milder climate states will have greater homeless populations.
    26 Jun 2014, 12:28 PM Reply Like
  • hhess13892
    , contributor
    Comments (744) | Send Message
     
    When Ronnie Macs Steakhouse raises their menu prices to offset any wage increase one has to wonder who will do the most complaining. I'm guessing those who are making minimum wage.

     

    This is similar to the government trying to spend its way out of a recession.

     

    Long MCD
    26 Jun 2014, 12:40 PM Reply Like
  • glf4mny
    , contributor
    Comments (464) | Send Message
     
    If Ikea raises minimum wage by 17%, you can bet they will cut their employees commissions by at least an equal amount.
    26 Jun 2014, 02:01 PM Reply Like
  • edhaven
    , contributor
    Comments (109) | Send Message
     
    A nothing announcement. How many employees does this cover? What do they make now. What fringe benefits do they offer? Who in the US owns stock in ikea?
    I think they have franchises .. do they have contracts telling them what to pay?
    I admit not knowing anything about them. Who does?
    26 Jun 2014, 02:30 PM Reply Like
  • Knecke
    , contributor
    Comments (2) | Send Message
     
    Its owned by a foundation in Holland, controlled solely by the Swedish founder Ingvar Kamprad who lives in Switzerland. He collects royalties on all sales to another company in Luxemburg which owns the IP rights on the goods.

     

    "Furniture store IKEA will raise the minimum wage for its U.S. workers by an average of 17% beginning next year. In a press release, the company said the average hourly minimum wage for its employees will be $10.76 an hour, a $1.59 increase over the current average, and $3.51 above the federal minimum wage.

     

    The company will use MIT's Living Wage Calculator to determine what employees at their 38 U.S. locations will earn. The Living Wage Calculator determines the cost of living in U.S. cities. IKEA will base their employees’ wages based on what the calculator says a single person without children would need to live." -YAHOO

     

    They have ~13000 employees in the US.
    26 Jun 2014, 03:22 PM Reply Like
  • tall hawaiian
    , contributor
    Comments (2) | Send Message
     
    Sorry got to call BS on Ikea won't pass thru the cost of the higher wages on their product. Don't believe a word they say.
    26 Jun 2014, 03:21 PM Reply Like
  • lkrhelming
    , contributor
    Comments (14) | Send Message
     
    IKEA from what I learned does not have a well established line of competitors offering easy to find alternatives. MCD is there in front of everyone every day. Raising their price for food would seem to be a requirement to maintain their margin between revenue and cost of remaining in business. Investors and capital is what initially supported MCD to grow into what it is today. Continuing profits allow further growth and expansion. Taking a chance on raising prices when others in competition are not motivated to do so makes them vulnerable if this increase is spread over the whole areas serviced by MCD. Investors and more capital will not be there I fear if the business model is not maintained. I vote no for increasing the minimum wage 17% and in saying that I don;t know what percentage wages are in the total cost picture.
    26 Jun 2014, 05:13 PM Reply Like
  • Shaduc
    , contributor
    Comments (3005) | Send Message
     
    Yesterday, I ate a McChicken Grill and keenly observed how the price went from 10 to 16.5 RMB (over a dollar incr.)!
    26 Jun 2014, 07:18 PM Reply Like
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