Swedish furniture giant Ikea is wading into the contentious American minimum wage debate by raising pay in its U.S. stores.
Ikea US will boost the average minimum hourly wage across its 38 retail locations to $10.76 beginning Jan. 1, 2015. That’s a 17 percent bump from its current $9.17-an-hour starting wage, and $3.51 above the federal minimum.
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“The happier the co-worker, the happier the customer and the better the overall shopping experience,” said Ikea’s acting U.S. president, Rob Olson. “We wanted to be less concerned about the competition and more concerned about offering our co-workers a better everyday life.”
Nearly half of the company’s 13,651 American employees, full and part-time, will get a raise. Executives said the policy is a departure from that of most other companies, which generally aim to pay employees at roughly the same rates as their rivals.
The federal minimum wage has not changed from $7.25 an hour since 2009. President Obama is campaigning for legislation that would boost the wage to $10.10 an hour.
But critics worry that such a lift could stifle job growth by raising the cost of labor, driving companies to hire fewer workers and boost productivity through technology.
The National Retail Federation called the proposal “an anti-job tax.”
A February report from the Congressional Budget Office concluded that a $10.10-an-hour minimum could scale back total employment by 0.3 percent, or 500,000 workers. But researchers cautioned that, given the report’s margin of error, those losses could actually range from a tiny reduction to a million jobs.
The report also projected that the higher minimum wage could increase incomes for 16.5 million people and elevate 900,000 people out of poverty. The proposal could mean higher prices for consumers and crunched margins for businesses, which might also have to raise pay for higher-wage workers to retain them, researchers said.
But higher wages would also likely spur more spending by workers, potentially giving businesses more revenues to pay their staffs.
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