Scandinavian furniture store Ikea recently announced it will adopt a new, higher wage structure at its U.S. stores in 2015. The company says its average hourly minimum wage in will go up to $10.76, an increase of 17 percent. That's big news, but there was a footnote to that announcement that's worth pausing on.
In this new wage structure, Ikea's lowest wages will be based on something called the MIT Living Wage Calculator. How did one MIT professor's research project become a tool that will affect the wages of thousands of American workers?
The story begins with Amy Glasmeier, a professor of economic geography and regional planning at MIT. Glasmeier is the kind of person who, when she goes on a trip somewhere, is less likely to head to the tourist attractions and more likely to drive to a grocery store where she can squint at price tags to figure out what it costs to live there. Checking out local listings for apartments is also a favorite pastime.
These travel hobbies of hers have to do with one question: Why do certain places have such high poverty rates when others do not?
In her travels and her research, Glasmeier has found that places with higher poverty are often ones where lots of the available jobs pay minimum wage, a wage that she says "absolutely was not paying people enough to live on."
How the Living Wage Calculator works
So what would be enough to live on? That would of course depend on where someone lived, and how much that place costs. And so Glasmeier rounded up some of her best graduate students to create, basically, a giant spreadsheet. They loaded it up with the best regional data available, from government and industry surveys, on costs for housing, food, child care, medical expenses, and transportation. (Plus a category called "other," which includes a modest budget for things like clothes, cleaning supplies and toiletries.)
The spreadsheet adds all these costs up, divides by the number of hours a person typically works in a year, and spits out the hourly rate that, according to all these calculations, an individual must earn to support him or herself (and a family—the wages are adjusted by household size), working full-time.
The "living wages" the calculator produces are not "middle class" wages, cautions Glasmeier. They wouldn't cover a trip to Hawaii once a year or saving for retirement. The living wage is, as she defines it, just enough to pay bills for the necessities of life and not fall behind.
No longer an obscure tool
Since Glasmeier created her calculator, it has had its fans, from policy wonks to unions to the occasional small-business owner. But it was still a relatively obscure tool until one day a few weeks ago, when Glasmeier got a phone call from a reporter, informing her that Ikea was planning to use it to set its own internal minimum wage.
"We truly do see this as the right thing to do for taking care of our co-workers," says Rob Olson, the acting president for Ikea U.S. "An opportunity to increase coworker loyalty, decrease turnover, as well as being able to attract more and more qualified applicants."
Olson says it would be too complicated to pay people different wages based on household size, so Ikea's going to stick with what the Living Wage Calculator comes up with for a single person with no children. (In other words, the lowest wage the calculator offers). Still, starting in January, the minimum hourly pay for an Ikea worker in an expensive suburb of Washington, D.C. will be $13.22 an hour. Over in Pittsburgh, where cost of living is much lower, Ikea's minimum hourly rate will be lower too — $8.29 an hour. But even that is still a dollar more than the federal minimum wage.
Olson says Ikea found out about the MIT Living Wage Calculator through consultants and he didn't know much about who was behind the actual tool.
That's just fine with Glasmeier. With all the political debates over where to set the minimum wage right now, she thinks the anonymity of the tool in some funny way actually makes people feel better.
"As if it was just an MIT robot, somewhere in a closet, crunching the numbers on a daily basis," she says.
Of course, The MIT Living Wage Calculator is not a number-crunching robot in a closet. But you can see why the objectivity the name suggests could make it more attractive to businesses large and small.
Not long ago the calculator caught the attention of Artillery Riewaldt, who owns two Jimmy John's sandwich shops in rural Illinois. Riewaldt says he used to pay all his employees minimum wage. Then, one day, a few years ago, a worker mentioned he was looking for a second job because he couldn't make ends meet.
"It's very difficult knowing that you have a good living for yourself, working right next to someone every day who's trying very hard and helping you grow that business, and knowing that they can't survive the bumps that come up in life," he says. "An employer always needs to make the decision: how much is too much for me at the expense of them?"
Riewaldt says when he found the Living Wage Calculator one night doing research on Google, it felt like a relief. "It's as far as I can tell political-free — it is actual data trying to decide what is that line that has to be met in order to live and be OK."
As politics-free and data-driven as the calculator may be, it is still made by humans, who have to choose the data and update it. On a professor's research budget that can only happen so often, says Glasmeier. Her calculator is currently based on data from 2010, inflated to 2012. Meaning it doesn't reflect more recent rises in cost of living.
In fact, after Ikea announced it was going to be using the MIT Living Wage Calculator, Professor Glasmeier emailed the company.
First, she thanked Ikea for raising wages. "But then I also told them that we were going to have an update," she says. "And the update was going to have a wage that was going to be higher than the one they were using."
She says the update will be published in September.
For now, Ikea says it will stick with the older, lower calculations, but that it will reevaluate annually.
Amid all the Sturm und Drang of mergers and markets, we like to track compelling ideas on Marketplace.
How about if colleges and universities could grow, rather than subtract, from their endowment money by making their campuses more environmentally friendly?
Mark Orlowski is founder and executive director of the Sustainable Endowments Institute. He has an online system to help schools track ways that they can get financial returns, not just through stock and bond markets, but through energy efficiency.
His project, the Billion Dollar Green Challenge, and online platform (GRITS) help universities take their operating cash or endowment, upgrade the energy efficiency of campus buildings, and get a bigger return in savings than the stock market would earn them.
The Green Revolving Investment Tracking System (GRITS 1.0) is designed to manage every aspect of an institution's green revolving fund (GRF), including aggregate and project-specific financial, energy, and carbon data. It also helps track and manage projects, as well as reports on environmental benefits and financial return.
How's that for compelling?
First up, more on Walgreens' decision not to move its headquarters overseas. It will, however, go through with a purchase of European pharmacy Alliance Boots. Plus, two large merges have fallen apart; Rupert Murdoch has abandoned his bid to purchase Time Warner, and Sprint lets go of its merger with T-Mobile. Also, what if colleges and universities could grow, rather than subtract, from their endowment money by making their campuses more environmentally friendly? The Sustainable Endowments Institute is trying to help them do just that.
A technology called PhotoDNA -- developed by Microsoft and used by Google along with other online companies -- is being credited with leading to the arrest of a man accused of distributing child pornographic images through Gmail.
Google has argued that they were largely complying with the law in notifying police. According to Stephen Balkam, founder and CEO of the Family Online Safety Institute, the company's actions are consistent with the legal understanding.
“They are to report images of child sexual abuse, and they have done so,” he says.
What makes this particular case different from finding evidence of other criminal activity in an email, according to Balkam, is that Google does not scan for illegal content in such a way as to detect things like planned robberies.
But even with these efforts tackling email attachments, there are other methods of disseminating this material, so action by search engines isn’t the end of the story.
But, under its new law, the state is prohibited from collecting information about a kid’s Body Mass Index. It also can’t keep a record about whether she’s pregnant, and it can’t gather kids' email addresses.
And that’s just a small part of what the state’s law covers.
"States have taken a huge step forward in the last two years in really strengthening their capacity to safeguard data," said Aimee Guidera, head of the Data Quality Campaign, a non-profit that is tracking student data laws.
But, as technology advances and students do more work on computers, a lot of states want more.
Idaho, for example, rules out certain biometric data; the kind that are collected by analyzing brain waves and heart rate.
New York calls for a parents bill of rights for data privacy and security.
Kentucky has made it illegal for student data to be used to target ads to kids.
So far, more than 20 states have passed laws. And that’s just the beginning.
States with new student-data laws
(click state for details)
New York North Carolina
"Our sense is that we’re going to see a growth in the number of pieces of legislation introduced next year," said Guidera.
A lot of this legislation is being driven by fear, particularly among parents. They worry about what data is being collected and by whom. They want to know how it's being used and whether it is safe.
The rash of new laws and the push by states to pass more is also creating fear among educational technology companies.
"Some of the requirements provide real practical challenges to their ability to serve their customers," said Mark Schneiderman, Senior Director of Education Policy at the Software & Information Industry Association.
In other words, the privacy push is making it harder for companies who want to get their apps into classrooms across the country, he said. It also makes it harder to for them to cash in on the multi-billion dollar market for educational technology.
"We’ve heard it from developers who are now shying away a little bit from the education sector," said Schneiderman.
In tech-centric California, state legislators have been trying to find a way to keep everybody happy.
"We think we’ve found the sweet spot here," said Senate President pro Tem Darrell Steinberg. He's proposed a law that’ll let app developers use student data to improve their products, but not to market to students.
"We’re not trying to stifle this technology," he said. "To the contrary, we want more apps to help more kids."
But, said Steinberg, there are too many weak privacy polices right now, and there's too much free rein for companies collecting data about kids.
The operating system Android scored a point recently in its ongoing war with Apple. According to the latest data - for the first time ever - the web traffic generated from Android smartphones and tablets was greater than that of Apple’s mobile devices.
The news wasn't entirely a surprise. For some time now, sales of Android smartphones and tablets worldwide have been beating Apple. But Apple’s CEO Tim Cook has waved off any concern by saying Apple dominates when it comes to online traffic. Then he’d ask, where are all those Androids anyway?
"They must be in warehouses, or on store shelves, or maybe in somebody's bottom drawer," Cook would quip.
Cook will have to retire that joke with the news that Android now beats Apple’s mobile devices in web traffic. Tuong Nguyen is an analyst at Gartner and he doesn’t think Apple users will just switch to Android.
"When you talk about the iOS crowd, they tend to be a more self-selecting crowd," he said. "Users who have more income or are more engaged with their technology and devices."
Pai-Ling Yin is the co-founder of the Mobile Innovation Group at Stanford. She says the real turning point will be when greater Android web use turns into more money.
"Just because they’re using it more doesn’t mean you can get them to pay you more," says Yin.
She says Apple users still buy more apps and goods online and so, from a business perspective, can be seen as more valuable.
The veteran Kansas Republican senator defeated radiologist Milton Wolf, who fashioned himself in the mold of Texas GOP Sen. Ted Cruz.