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The Associated Press reports that as Starbucks announced record sales, CEO Howard Schultz announced $200 million in additional investments in worker pay and training - on top of $1 billion announced last fall - that will only apply to non-union employees.

Unionized workers will have to negotiate for pay and benefits, the company said.

Schultz made the announcement as Starbucks posted Q2 sales that rose 15 percent  to $7.6 billion, though net earnings rose just two percent to $674 million, in part because of higher employee costs.

According to the AP story, "On Tuesday, after a series of meetings with workers around the country, Schultz unveiled $200 million in additional investments in worker pay and training. That includes raises for employees who have been at the company for at least two years as well as a near doubling in training time - from 23 hours to 40 hours - for new baristas and shift supervisors. Starbucks is also reintroducing a coffee mastery program for employees and considering other benefits like increased sick time … Schultz said the new investments will improve employee recruiting and retention. Starbucks also plans additional changes it will outline at an investor meeting in September, including adding credit and debit card tipping in its stores and accelerating the rollout of new ovens and espresso machines."

The story goes on:  "Workers who have voted to unionize or stores that have petitioned to hold a union election won’t be eligible for the enhanced benefits announced Tuesday. Instead, Schultz said U.S. labor law requires stores to negotiate their own contracts with Starbucks … Starbucks Workers United, the group behind the unionization effort, disagrees, and said it filed charges with the National Labor Relations Board against Starbucks on Tuesday. The group said the company is violating labor law for threatening to exclude unionized stores from receiving the new benefits."

There's another interesting passage from the AP story:

"Schultz opposes unionization. But he noted that employees are under 'tremendous strain' due to strong customer demand and pandemic-related changes in the business, including a surge in mobile and drive-thru orders. Stores are built to serve hot drinks, for example, but 80% of U.S. orders are now cold drinks.

"'These young people have completely valid concerns given today’s uncertainty and economic instability. They look around and they see the burgeoning labor movement as a possible remedy to what they are feeling,' Schultz said.  'But compare any union contract in our sector to the constantly expanding list of wages and benefits we have provided our people for decades, and the union contract will not even come close to what Starbucks offer'."

KC's View:

I'm not a lawyer, nor a labor law expert.  But it seems entirely reasonable to me that once employees have decided to form a union, it is up to that union to negotiate for wages and benefits;  management has a lot more leeway when it comes to determining these things unilaterally for non-unionized workers.

I'm not sure how successful Schultz and Starbucks will be in stemming the unionization tide.  It remains fairly small when considering in context - just 250 stores out of some 9,000 have filed petitions to hold union elections, and only 50 and actually voted to unionize.  While I've taken some shots at Schultz for having a messiah complex, and for shooting off his mouth in ways that not helpful upon returning to the CEO job, the moves that the company seems to be making could be effective.

The lesson ought to be evident to other retail businesses - don't wait for unionization movements before addressing the issues that your front line workers may be facing.  Retailers ought to think about just one of the issues raised by Schultz - "stores are built to serve hot drinks, for example, but 80% of U.S. orders are now cold drinks" - and ask if there is any sort of corollary in their businesses.

The betting here is that there is at least one.  Deal with it now.  Time alone won't solve anything.