Ikea raises hourly pay for U.S. retail workers, still hiring for new Merriam, Kan., location

Ikea's U.S. retail division is announcing Thursday that it will make major changes regarding employee pay at it's stores across the nation.

Officials representing Ikea's new store at I-35 and Johnson Drive plan to hire 300 people immediately to work at the furniture superstore, which is slated to open this fall. The positions range from management, to cashier, to stocking positions.

The furniture giant plans to raise the minimum wage for thousands of its retail workers, pegging the change to the cost of living in each location instead of to local competition.

The raise will take effect Jan. 1. It will translate to an average wage of $10.76 an hour, a $1.59 increase from the previous $9.17.

The 17 percent raise marks the Swedish furniture chain's biggest in 10 years in the U.S.

About half of Ikea's 11,000 hourly store workers will get a raise. The raise will also apply to new workers at the Merriam location beginning January 1. The raise will vary based on the cost of living in each IKEA location.

The move represents a big shift in approach. The company says it is focusing less on what rivals do and more on the needs of its workers.

It's part of a debate taking center stage around the country. As legislators debate on the state and federal level about raising the minimum wage from $7.25, some companies are taking matters into their own hands.

In February, the company that runs GAP and Old Navy stores in the US made a similar pledge to raise minimum wages. The retailer says job applications to its stores surged 10%.

The C.E.O. of McDonalds said in early June that he backs legislation to raise the federal minimum wage to just over $10 an hour.

Some critics say raising the state and federal minimum wages forces companies to hire fewer people and can lead to price hikes in the store's merchandise.

IKEA claims it will not raise prices or cut hiring in order to make this change, rather saying it will give up some of its profit to make the change. IKEA hopes the minimum wage increase will improve employee retention.

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