A Starbucks bartender places an order at a South Philadelphia store.
Marco Makela | Reuters
Starbucks said it will raise wages for permanent workers and double training for new employees as the company and its CEO, Howard Schultz, will try to fend off the union push from its bartenders.
However, the coffee giant will not offer the greatest benefits to workers at the approximately 50 company-owned cafes who voted for the union. Such changes in unionized stores should come through bargaining, Starbucks said.
“Then, the partners will receive these salaries, benefits and store improvement investments in all stores operated by US companies where Starbucks has the right to make these changes unilaterally,” the company said in a statement. “However, in stores where workers have union representation, federal law requires bona fide bargaining on wages, benefits and working conditions that prohibits Starbucks from making or announcing unilateral changes.”
In total, Starbucks plans to spend $ 1 billion on wage increases, improved training and store innovation during fiscal year 2022, which ends in the fall. On the first day of Schultz’s return to the helm of the company, he suspended his buyback program to invest in workers and shops.
“The transformation will accelerate the already record demand in our stores,” Schultz said during the company’s conference call Tuesday. “But the investments will allow us to manage increased demand and deliver greater profitability, while delivering a high experience to our customers and reducing the pressure on our partners.”
It is Schultz’s third go-round as CEO of Starbucks. He is working on an interim basis until the company hires a successor for the recently retired Kevin Johnson.
Schultz told store managers last month that the company was reviewing its employee benefits. However, he argued that the new benefits legally cannot be extended to shops that voted to unionize without separately negotiated contracts for union workers. The Starbucks union, Starbucks Workers United, filed a complaint with the National Labor Relations Board regarding his comments.
This marks the third wage increase for bartenders’ salaries since company-owned stores in Buffalo, New York, petitioned to join the union. In October, under Johnson’s leadership, Starbucks announced two wage increases that would bring its minimum wage to $ 15 an hour by August.
The last round of increases is for permanent workers and managers. Employees who have been in the company for two to five years will either receive a 5% increase or be paid 5% more than the initial market rate, earning whichever is higher. Workers with more than five years in office will either receive a 7% increase or be paid 10% more than the initial market rate, earning depending on the higher rate.
Starbucks also said it will double its planned investments in the compensation of store managers, assistant store managers and shift managers hired starting Monday. These changes amount to one-time base pay adjustments, and employees would continue to receive the expected increases for fiscal year 2023 this fall.
Starbucks also said it will double the amount of training new bartenders and shift supervisors receive based on employee feedback during listening sessions attended by Schultz and other senior executives.
Further investments are also planned. The company said it will introduce credit and debit card tipping by the end of 2022 and is planning equipment and technology improvements, such as upgrading iPads in-store and accelerating the rollout of new ovens and espresso machines. .
Schultz’s willingness to wage an aggressive and costly campaign against union workers didn’t get much support from Wall Street. Shares of Starbucks are down 19% since its return early last month.
Starbucks shares were up 3% in extended trading after the company reported its fiscal second quarter results. Strong sales growth in the US offset sharp declines in China, helping the company beat Wall Street estimates for revenue and meet earnings expectations.