Living Wages – IKEA style

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I was reading that IKEA was going to change it’s wage policy based upon the Living Wage Calculator. First I heard of that. And, I was pleased to see that it’s an MIT project.

IKEA has decided that, for it’s 38 stores, they will use the living wage, as determined by this MIT maintained calculator, to set their minimum pay and not use the minimum wage for their employees. (I have been advocating that we should not raise the minimum wage- but require all but the very small firms (more than 50 employees or about $3 million in annual revenue) reimburse government for the subsidies we must provide their employees who require medicaid, food stamps, or welfare. Obviously, IKEA will not be among such firms.

This calculator has its genesis way back in 2000.  The Economic Policy Institute developed the concept for a few cities, and then extended it to a few more cities in 2001. Dr. Amy K. Glasmeier (Urban Studies, MIT) began refining this (Poverty in America), including census data, schools, and the effects of the various local labor markets.

By 2004, the first version was produced for use and has been in refinement since. The system became fully operational in 2012. There are and will be continual  periodic updates to the calculations that will include data on costs of food, child care, healthcare, housing, transportation, taxes, wages, and other necessities. A company called West Arete developed the software for the site and Eric Shultheis has been working the data as part of his doctoral research.

I compared the results for a few cities, as you can see in the chart below. I was surprised to see that our headquarters was in the highest wage needs area among all our locations. (I really expected Long Beach and Long Island to be higher.) It was really interesting to see the change in wage requirements for the various locations.

Living Wage in Various US Cities

Now that I know this sort of data are available, I will be using this concept for all of our clients- to insure they pay a reasonable wage to get the folks they need to grow their businesses. You might want to play with the calculator, too. It’s not just an academic tool- or solely for Ikea’s benefit.

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8 thoughts on “Living Wages – IKEA style”

  1. I didn’t realize your headquarters were in Charlottesville, Roy. On the small world front I did some traveling with an eye toward where I want to land in my next chapter very recently. That charming little city ranked pretty high. Would have looked you up (not sure if you would have welcomed a face-to-face hello :-)) if I had know.
    On the political front (I couldn’t even begin to consider a comment for your latest post – I’ll keep my general policy of staying away from debate on such things), I doubt we”re going to find too much common ground here, but still enjoy seeing how you pose your opinion ;-).
    Nanette recently posted..Déjà vu strategic marketing

    1. The headquarters used to be in Charlottesville, Nanette.
      It’s a great place to visit, but living there depends upon what you really want in life- and a few other questions best kept for private discussion.

      Let me know whenever you are in town. I would be honored to give you a walk-around, share a dinner, etc.

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