IKEA gives its US employees a raise

Another major retailer in the United States is giving a boost to its base salary, although the size of the increase will vary from state to state. On Thursday morning, the Swedish furniture retailer IKEA announced that it would be adopting a new wage structure which is expected to increase pay for about 50% of its American employees. The change in company policy will take effect on January 1, 2015.

The new policy will base entry-level compensation on the MIT Living Wage Calculator, which estimates the wages required “to meet minimum standards of living” in each county of each state. IKEA’s new compensation system will offer different base wages at different store locations, depending on the cost of living in the surrounding area. The average minimum hourly wage across all store locations will become $10.59, a 17% increase from what it is now.

Rob Olson, the acting president and CFO for IKEA US, told msnbc that the policy change “goes back to the IKEA vision, which is to create a better everyday life for the many people.”

“We had always focused on making sure we were above average with our compensation rates, so whatever the average of our competitive set was, we wanted to be higher than that,” he said. “Now we’ve said, let’s not worry about where the competition is, let’s worry about where the co-worker is.”

Another major retailer, Gap Inc., unveiled a major wage hike of its own in February, when it announced that it would be increasing its nationwide base pay from $9 to $10. But the decision to peg a wage increase to the cost living is “a big step forward,” Demos senior policy analyst Amy Traub said over email.

“I predict that we’ll see more companies stepping forward to raise wages, as well as pressure continuing to mount for cities, states and federal government to raise the minimum wage across the board,” she said.

Olson denied that IKEA was raising wages in order to get ahead of state and local minimum wage increases.

“For us, it was less about that and more about doing the right thing for the co-worker,” he said. Yet he added the IKEA is prepared to comply with proposed minimum wage hikes across the country, including the suggested $15 minimum wage that will soon be implemented in Seattle and is currently being debated in San Francisco and Chicago.

“If movement is driven within local communities, we will definitely support that and be secure that we are above that level as well,” said Olson.

The MIT Living Wage Calculator bases its estimates on family size as well as region, but IKEA said its minimum hourly wage at all locations would be pegged to the cost living for a single, childless adult. According to Traub, that means working parents are likely to find their new compensation structure “to be very welcome, but it won’t be a living wage.”

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www.msnbc.com

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U.S. airlines improve quality, but top Chicago carriers lag

United ranks 12th of 15 in 2013, Southwest is 8th and American 9th based on 4 measures crucial to travelers

The average air traveler might not agree, but the quality of U.S. airlines last year improved to the highest level in the 24-year history of a widely reported rating system.

"All in all, it's a good time to fly," said Dean Headley, one of the authors of the report released Monday.

But airlines dominant in the Chicago region did not fare well overall, with none ranking in the top half of the industry.

While Chicago-based United Airlines, the largest carrier at O'Hare International Airport, improved on every measure, it ranked just 12th out of 15 airlines in the annual Airline Quality Rating report. The report is a joint project of researchers at Embry-Riddle Aeronautical University and Wichita State University.

Ratings are based on four measures crucial to consumers — on-time performance, baggage handling, customer complaints and being involuntarily bumped from a flight. Data come from metrics measured by the Department of Transportation and are weighted by researchers.

American Airlines, also a big carrier at O'Hare, ranked ninth, while Southwest Airlines, the largest carrier out of Midway Airport, ranked No. 8 and was the only airline to worsen on all four measures.

The best airlines in America, based on the report, were, in order: Virgin America, JetBlue Airways, Hawaiian Airlines and Delta Air Lines, which was top ranked among large airlines. The worst were American Eagle, SkyWest Airlines, Express Jet Airlines and United.

United, which rated last a year ago, was able to improve its performance on all four consumer criteria but remained on the bottom rungs.

"It had nowhere to go but up," said Headley, a professor at Wichita State. "At least, they went in the right direction. They had to. Their complaint ratio last year was just through the roof. … They still have a long ways to go."

United combined operations, including computer systems, with Continental Airlines in 2012. That led to glitches and inefficiencies that caused flight delays and cancellations during the year, especially during the busy summer travel season. It was the most-complained-about airline in America that year.

"United is investing significantly to improve our customers' experiences and provide employees the tools to deliver great service, with customer satisfaction ratings consistently reflecting that improvement," United spokesman Rahsaan Johnson said. "While we are pleased to see the latest rankings reflect our progress, we continue to develop new products, services and employee programs to better ensure we are delivering the experience customers expect."

Sometimes, travelers' experiences with airline quality don't jibe with dispassionate statistics, Headley said. "The numbers can move in the right direction, but perception oftentimes doesn't catch up with that," Headley said. "Let's face it, if your bag gets lost, that sucks."

And the data in the rankings do not account for fliers' distaste for added fees, which consumers sometimes view as "nickel-and-diming" by airlines.

Overall in 2013, airlines received fewer consumer complaints and bumped fewer passengers from flights, compared with the previous year. But on-time performance and the rate of mishandling bags worsened from the previous year.

The good news for Chicagoland fliers and travelers who connect through O'Hare is that the dominant airlines at that airport, United and American, were the only two U.S. airlines to improve their on-time performance in 2013.

In the past, airline mergers "almost always" meant worse quality for the consumer, at least in the near term — two to four years after the merger, Headley said.

That probably doesn't bode well for customers of the new American Airlines, a recent combination of American and US Airways that created the world's largest carrier, Headley said. It depends, in part, on what culture takes root at the new American.

"US Air has kind of a checkered history," he said. "Their ability to merge has not been stellar."

Headley said he's less worried about Southwest's ongoing merger with AirTran Airways, which experienced the biggest decline in the 2013 ranking, to 10th from third.

gkarp@tribune.com

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