Raising the Minimum Wage: Ikea Goes to $10.76 an Hour

The nationwide debate over a living wage.
6:34 | 06/27/14

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Transcript for Raising the Minimum Wage: Ikea Goes to $10.76 an Hour
And it's Friday June 27 the New York markets are open at today's big number. Ten dollars and 76 cents. That's -- minimum wage for workers at IKEA a 17% increase as pressure grows nationwide. To raise the current federal minimum wage from 725 an hour. Hello everyone on this Friday I'm Michelle Franzen in New York here to discuss the wage wars -- MacKey of Yahoo! finance. Good morning Jeff give us an idea what's going on with -- Race in this -- -- about it. I Q when I had and they pro actively raise the minimum wage as he said to 1076 on average now. A couple things here to want to preface this by eight by mentioning that. No one is saying these are credible job stands under -- hour is not something that you're gonna put your kids to college through. These jobs are not intended to be full time lifetime jobs but I -- went ahead. And stepping in front of the federal government on this minimum -- and raising it to 1076 that's on average. Based on where you live in a country and so if you work in San Francisco. And it's much more expensive to live there then saved Missoula Montana to -- one count which is beautiful part of the world. It then -- probably gonna make memorial have lasted to actually spend because all costs are much more -- -- living. But -- is being proactive and are thinking and they join our rank of companies like gap. Who did just about six months ago that are raising their wages to hire better workers this is capitalism at its best. Again operating ahead of the federal government so while the government deckers about what minimum wage should be these companies are gone hadn't raising -- Well let's talk about that figure a little -- we mentioned 17% on average a raise that sounds great but when you do the math. A forty hour week equals 430. Dollars before taxes. Can even imports of IKEA furniture on. Barely barely and you know what you. A worker every can you make them happy binoculars that works out to 2000 dollar 2000 hours a year to ever take is what full time work isn't so you're talking about. Less than 22000. Dollars a year again these are terrific jobs and this from someone who. I started working at Macy's I put shoe was on men's feet and let me tell you something. Front line retail is not a pleasant place to work is not really supposed to be now what front line retail does offers the chance for upward mobility and advancement -- is not saying listen. Our job is to employ Americans all over the place what they're saying is if we go above markets. If we work and we we offer a little higher salary than say Wal-Mart. Or this is comparable to Costco or some other front line jobs maybe we can get better workers and when those workers come. What a front line retail does have is the chance for upward mobility and advancement and if so you show up and -- make -- 76 hour and you do your job well you know what. You're gonna be promoted pretty quick and retail because again this is very tough work to do and if you do well you get rewarded very fast. And for many people many families that even that -- can make a huge difference of course the wage issue gaining momentum. With some workers demonstrating outside fast food restaurants and the like. And some states are even raising the minimum wages on their own. Massachusetts up to eleven dollars an hour by 2017. In Seattle has a more aggressive -- up to fifteen dollars with some rules and limitations. -- higher minimum wage -- huge companies such as McDonald's and what do you think about the State's taking -- on themselves. Well I think -- states are also behind it just like -- the bill overall federal government. They gap when they decided they were gonna raise the rates there to ten dollars on a minimum basis this is back in February they've seen applications for jobs -- -- go up by 10%. Again they're hiring more -- Workers are more aggressive the hunger for these jobs they can pick better workers and it's gonna improve this story experience which was the -- stated purpose for doing -- It's not gonna hurt the big companies -- a lot of people think that that's. That this is all about whether -- McDonald's can make money and in terms of -- match in the fast food workers. They're too old misnomer is behind the -- gear to misconceptions by -- idea I should say one is that and at a McDonald's franchise. The people there are really working for McDonald's award for the franchise companies are -- not some margin McDonald's control. The other is fifteen dollars -- hours so far away from where reality is right now the market will bear right around ten or eleven dollars an hour. That's right he is paying that's of the gaps gonna pay. And that's kind of the way the system works best is if you have this free market bidding process and so these rates I guess is my greater point. The wages being paid at the very front line at the bleeding edge of the economy the hardest jobs to do. Those are rising and the rising as a function of prosperity and company's desire to attract better workers. That's the way it should work that's the way of the market works best for all its flaws capitalism works better than trying to gin up these federal or state level systems. I was just going to ask -- the fact that we're talking about a company raising. Their own minimum wage. What does that say about our economy as a whole. It says it's -- it's doing -- prosperity slowly despite our greatest efforts. Is slowly taking hold this is astoundingly unpopular observation to make -- take a lot of -- -- -- wrote about on Yahoo! finance today. But you know what. Wages are slowly going higher where we want them to go higher and that's at the lower and that means we get a better more distributed wealth type of system throughout the country. And it's happening -- keep mentioning this but I can't beat the drum loudly enough. On a free market based company are raising wages so they can -- hire better workers. That's the way to share the prosperity it's not whether or not they they corporations are evil they're not there -- -- they don't care they're trying to attract great workers so they can make higher profits. One of the ways to do as the pay higher -- -- doesn't have to do this. The gap didn't have to do is IKEA particularly -- -- Swedish company. No one was talking about them having to raise rates they they were hardly on the front lines. In terms of being criticized for doing this because they think it's competitive business advantage to do it. To pay people more to hire better workers. And it's gonna work for you and I won't be talking about -- otherwise for right now 1076 is an attractive and less you don't have a job right now in which case well. That's not so bad to -- to be going they're working hard getting a paycheck and having a chance for upward mobility that sounds pretty good. Jeff MacKey from Yahoo! finance thank you for joining us as a way. You can't of course keep up with the latest headlines right here on abcnews.com. You've been watching the big number -- Michelle Franzen in New York.

This transcript has been automatically generated and may not be 100% accurate.

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