A bit of news that should make just about everybody happy today: Ikea is announcing plans to raise the average minimum wage in its U.S. stores by 17 percent, to $10.76 per hour. The company will now set its pay based on MIT’s Living Wage Calculator, which reports how much a worker must earn to comfortably cover essentials like food, housing, child care, and transportation, depending on where they live in the country. Ikea is setting its pay floor at the living wage for a single adult without children. So, as the Huffington Post points out, that means employees at its Woodbridge, Virginia, outpost will make at least $13.20 per hour, while hires in low-cost Merriam, Kansas, will earn at least $9.36 per hour. In the end, it amounts to a raise for about half the company’s American retail workers.
Notably, Ikea isn’t raising prices on its furniture to pay for the raise. Instead, the company’s management says it believes the pay hike will help them compete for and keep talent, which is of course good for business. The Gap used a similar justification when it announced it would raise its own minimum to $10 by 2015.
Which I think hints at something about what would likely happen if the U.S. raised the federal minimum. The conservatives who argue that higher pay floors kill jobs also tend to assume that businesses are already running at pretty much peak efficiency. According to this logic, forcing companies to spend more on labor will lead to less hiring. But left-leaning economists see it differently. They tend to argue that increasing wages can lead to savings for business by reducing worker turnover, for instance, and forcing managers to make better use of their staff.
Companies like Ikea and the Gap probably aren’t raising pay for thousands of workers as a PR initiative or out of a sense of humanitarianism. They seem to have made a judgment that low wages simply aren’t an efficient way to do business. And—even if they haven't realized it yet—I'd guess many other companies are in the exact same boat.
TODAY IN SLATE
Blacks Don’t Have a Corporal Punishment Problem
I Bought the Huge iPhone. I’m Already Thinking of Returning It.
Scotland Is Just the Beginning. Expect More Political Earthquakes in Europe.
Lifetime Didn’t Think the Steubenville Rape Case Was Dramatic Enough
So they added a little self-immolation.
Two Damn Good, Very Different Movies About Soldiers Returning From War
- North Korea: American Sentenced to Hard Labor Wanted to Become “Second Snowden”
- Almost One in Four Americans Support Idea of Splitting From the Union
- ESPN Story Alleges Ravens, NFL Are Scapegoating Ray Rice in Coverup
- Dean of Islamic Studies at University of Karachi is Murdered Amid "Blasphemy" Allegations
The Most Terrifying Thing About Ebola
The disease threatens humanity by preying on humanity.