A Starbucks barista fulfills an order in a South Philadelphia store.
Mark Makela | Reuters
Starbucks said it would increase the wages of permanent workers and double the training of new employees as the company and its CEO, Howard Schultz, try to repel the union’s press from the baristas.
However, the coffee giant will not offer the improved benefits to workers at the around 50 company-owned cafes that have voted to be unionized. Such changes in unionized stores must come through negotiations, Starbucks said.
“So partners will receive these pay, benefits and store improvement investments in all US company-run stores where Starbucks has the right to unilaterally make these changes,”[ads1]; the company said in a statement. “In stores where workers have union representation, however, federal law requires bargaining in good faith about wages, benefits, and working conditions that prohibit Starbucks from making or announcing unilateral changes.”
In total, Starbucks plans to spend $ 1 billion on salary increases, improved training and store innovation during fiscal year 2022, which ends this fall. On Schultz’s first day back at the helm of the company, he suspended the buyback program to invest in workers and shops.
“The transformation will accelerate already record demand in our stores,” Schultz said at the company’s conference call Tuesday. “But the investments will enable us to handle the increased demand – and deliver increased profitability – while delivering a high level of experience to our customers and reducing the burden on our partners.”
This is Schultz’s third round as Starbucks CEO. He works on a temporary basis until the company hires a successor to the recently retired Kevin Johnson.
Schultz told store managers last month that the company was reviewing the benefits for workers. He said, however, that the new benefits could not legally be extended to shops that have voted for a union without separately negotiated contracts for unionized workers. The Starbucks Association, Starbucks Workers United, filed a complaint with the National Labor Relations Board over his comments.
This marks the third pay rise for baristas’ pay slips since company-owned stores in Buffalo, New York, filed a union petition. In October, led by Johnson, Starbucks announced two pay raises that would bring the pay floor up to $ 15 an hour by August.
The last round of hiking is for permanent workers and managers. Employees who have been with the company for between two and five years will either receive an increase of 5% or be paid 5% above the market’s starting rate, and earn the highest. Workers with more than five years of employment will receive an increase of 7% or be paid 10% above the market starting rate, and earn depending on which is higher.
Starbucks also said it would double the planned investments in salaries for store managers, assistant store managers and shift managers hired from Monday. These changes constitute one-off adjustments to the basic salary, and the employees will continue to receive the increases planned for the financial year 2023 this autumn.
Starbucks also said it would double the amount of training new baristas and shift managers receive based on feedback from employees during listening sessions attended by Schultz and other top executives.
Several investments are also planned. The company said it will introduce credit and debit card tipping by the end of 2022, and it plans equipment and technology improvements, such as upgrading in-store iPads and speeding up the rollout of new ovens and espresso machines.
Schultz’s willingness to run an aggressive and costly campaign against union workers has not received much support from Wall Street. Starbucks shares have fallen 19% since returning early last month.
Starbucks shares rose 3% in expanded trading after the company reported its second-quarter financial results. Strong sales growth in the US offset sharp declines in China, helping the company to top Wall Street’s revenue estimates and meet earnings expectations.