Howard Schultz Launches 'Union Busting' in Earnest... Starbucks Announces Wage Increase Plan

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Howard Schultz, CEO of Starbucks, has begun actively responding to the labor union formation movement. By announcing a large-scale company investment plan including wage increases and expanded training, Starbucks is seeking to create division within the unionization efforts by applying different standards based on union membership.

According to CNBC and other outlets on the 3rd (local time), Starbucks stated in a press release that it will invest $1 billion in stores and employees during the 2022 fiscal year to promote wage increases, store equipment maintenance, expanded training, and enhanced barista welfare.

This includes raising wages by at least 5% for baristas who have worked for more than two years starting August 1, and a 3% increase for new baristas. Additionally, in August, store managers and supervisors will receive a temporary doubling of their base pay, which will be reflected in the 2023 fiscal year. The minimum wage will also be slightly increased to $15, and existing employees will receive raises based on their tenure.

At the same time, starting from the 21st of next month, training hours for new baristas will be doubled, and training for other employees will be expanded to strengthen the training program. Furthermore, the number of sessions where all employees can collaborate will be increased next month, and in August, a new employee application (app) will be created to provide a channel for hearing the voices of all 240,000 employees in the United States.

Overall, it appears that the company is increasing wages and welfare benefits for employees, but Starbucks’ announcement contains a strategy to create division within the unionization movement. This is a measure following CEO Schultz’s return as interim CEO on the 4th of last month, signaling a war against unions. Already, on the 13th of last month, during a meeting with store managers, he stated that while employee compensation would be expanded, union members would be excluded from these benefits.

Howard Schultz, CEO of Starbucks
Photo by Reuters Yonhap News

In the statement, Starbucks said, "Employees in the U.S. who can unilaterally receive these changes from the company will be eligible for wage increases, benefits, and investments in store improvements," but "for stores represented by unions, negotiations regarding wages, benefits, and working conditions are required under federal law, so the company cannot unilaterally provide these changes."

CEO Schultz said during the earnings conference call that "contracts with unions will be difficult to reach the level provided by the company." He emphasized, "The experience of Starbucks customers and partners will change, and these changes will further increase the already record-high store demand," adding, "These investments will handle the growing demand and improve profitability."

Before the company’s announcement, the Starbucks employee organization pushing for union formation, the Workers United, sent a letter to the National Labor Relations Board (NLRB) claiming that this differential provision of benefits violates the National Labor Relations Act (NLRA). Union lawyers argued that Schultz’s remarks threaten union activities and requested intervention from relevant authorities.

Meanwhile, Starbucks announced its fiscal second-quarter (January to March) results on the same day. Revenue reached $7.64 billion, surpassing the market forecast of $7.6 billion. Although local sales in China were severely impacted by COVID-19 lockdown measures, increased demand in the U.S. offset this, CNBC reported. Following the earnings announcement, Starbucks shares rose more than 5% in after-hours trading.

This content was produced with the assistance of AI translation services.