Starbucks to raise wages and double worker training as CEO Schultz tries to stave off union pressure
A Starbucks barista fills an order at a South Philadelphia store.
Mark Makela | Reuters
Starbucks said it would raise wages for incumbent workers and double training for new hires as the company and its CEO, Howard Schultz, seek to fend off union pressure from its baristas.
However, the coffee giant will not offer the improved benefits to workers at the roughly 50 company-owned cafes that have voted to unionise. Such changes at unionized stores would have to go through negotiation, Starbucks said.
“Thus, Partners will receive these salaries, benefits, and investments in store improvements at all US company-operated stores where Starbucks has the right to unilaterally make these changes,” the company said in a statement. “However, in stores where workers have union representation, federal law requires good faith negotiation of wages, benefits and working conditions, which prohibits Starbucks from making or announcing unilateral changes. .”
In total, Starbucks plans to spend $1 billion on salary increases, improved training and store innovation in fiscal 2022, which ends in the fall. On Schultz’s first day back at the helm of the company, he suspended his buyout program to invest in workers and stores.
“The transformation will accelerate the already record demand in our stores,” Schultz said during the company’s conference call on Tuesday. “But the investments will allow us to manage the increased demand – and increase profitability – while delivering a superior experience to our customers and reducing pressure on our partners.”
This is Schultz’s third stint as CEO of Starbucks. He is working on a temporary basis until the company hires a successor for recently retired Kevin Johnson.
Schultz told store managers last month that the company was reviewing its worker benefits. However, he said the new benefits could not legally be extended to stores that voted to unionize without separately negotiated contracts for unionized workers. The Starbucks union, Starbucks Workers United, filed a complaint with the National Labor Relations Board over his comments.
This is the third paycheck increase for baristas since company-owned stores in Buffalo, New York, filed a petition to unionize. In October, under Johnson’s leadership, Starbucks announced two wage increases that would raise its wage floor to $15 an hour by August.
The last series of increases concerns regular workers and managers. Employees who have been with the company for two to five years will either receive a 5% raise or pay 5% above the starting market rate, whichever is higher. Workers with more than five years of tenure will receive a 7% raise or be paid 10% above the starting market rate, whichever is higher.
Starbucks also said it would double planned investments in compensation for store managers, assistant store managers and shift supervisors hired starting Monday. These changes amount to one-time base salary adjustments, and employees would still receive the increases scheduled for fiscal year 2023 this fall.
Starbucks also said it would double the amount of training new baristas and shift managers receive based on employee feedback from listening sessions Schultz and other senior executives attend.
Other investments are also planned. The company said it will introduce tipping on credit and debit cards by the end of 2022, and plans to upgrade equipment and technology, such as upgrading iPads in store and accelerating the deployment of new ovens and espresso machines.
Schultz’s willingness to wage an aggressive and costly campaign against worker unionization did not attract much support from Wall Street. Starbucks shares have fallen 19% since its return early last month.
Starbucks shares rose 3% in extended trading after the company reported its fiscal second quarter results. Strong sales growth in the United States offset sharp declines in China, helping the company beat Wall Street revenue estimates and meet profit expectations.
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