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IKEA’s “Minimum Wage”


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?p=9979Bastiat : IKEA’s “Minimum Wage”

By Matt McCaffrey

Friday, July 4th, 2014


IKEA has announced it will be raising the “minimum wage” of its US employees to $10.76 per hour, an increase of about 17% from the current minimum. The news comes in the midst of another “national discussion” (often code for anti-economic hysteria) about minimum wage “reform” (always code for an increase).


Economic criticisms of the public minimum wage are readily available, but IKEA’s decision is different. It does have some interesting economic implications, but there are a lot of other issues in this story worth discussing, not the least of which is the language used to report it. That is, I have to wonder why people use the term “minimum wage” to refer to the internal policy of a private firm..Scissors-32x32.png


First, remember that minimum wages are most relevant for people earning relatively low wages, e.g. low-skill and teenage workers, so not every job is threatened by raising the minimum. In IKEA’s case, the new policy will leave wages unchanged for about half of its employees in the US. Scissors-32x32.png

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