Starbucks is handing out pay hikes and new benefits. But some are only for non-union workers
Starbucks has recently introduced enhanced compensation and benefits for its employees, although these measures are primarily directed towards non-unionized baristas. This decision comes in light of a prior ruling by a National Labor Relations Board (NLRB) judge, who found that similar actions taken by Starbucks were in violation of federal labor law. The company has chosen to appeal this ruling.
The distribution of perks and benefits to workers has been a contentious issue in the ongoing dispute between Starbucks and labor unions across the nation. Since the first Starbucks location voted to unionize almost two years ago, the company has been actively opposing unionization efforts. The NLRB has accused Starbucks of engaging in unlawful practices in certain instances, with Starbucks vehemently denying these allegations.
As of mid-October, approximately 360 stores had voted in favor of forming unions, and their results had been certified by the NLRB. Around 70 stores voted against unionization, with those outcomes also certified. It is worth noting that there are approximately 9,300 company-operated Starbucks stores in the United States.
Starbucks announced its latest round of benefits, including wage increases, on a Monday. Sara Kelly, Starbucks’ Chief Partner Officer, emphasized that investments in pay lead to greater stability and higher employee retention. Additionally, she mentioned that improved benefits are expected to enhance the customer experience.
The breakdown of these benefits is as follows: non-unionized employees will have the opportunity to accrue vacation time more rapidly. In terms of pay, Starbucks revealed that all eligible workers at company-operated US stores will receive a 3% annual pay increase effective from January 1. Employees with 2-5 years of tenure will receive a minimum pay increase of 4%, while those with over five years of service will receive at least a 5% increase.
Union members will receive the pay increases that were agreed upon last year, which may vary. This means that many unionized workers will receive the 3% or 4% wage hike, with some receiving the 5%, depending on their specific circumstances. However, the company will not offer new pay increases or additional vacation accrual benefits to unionized workers unless they are granted through collective bargaining negotiations.
It is noteworthy that all employees, regardless of their union status, are expected to benefit from improved scheduling, as part of a company initiative designed to provide employees with more flexible hours based on their preferences.
Over the past few years, Starbucks has contended that it cannot legally provide certain new benefits to unionized employees without first negotiating with the union. Nevertheless, an NLRB judge ruled against Starbucks, stating that the company violated federal labor law by offering wage increases and new benefits exclusively to non-union employees.
Starbucks has appealed this decision and remains steadfast in its position. According to Starbucks spokesperson Rachel Wall, the company has adhered to long-standing legal obligations that necessitate differentiation between unionized or organizing partners and partners in all other stores. Wall also emphasized that Starbucks is committed to improving partner benefits and perks as broadly and swiftly as possible.
Both Starbucks and union organizers have accused each other of delaying negotiations, and NLRB regional offices have filed complaints alleging that the company has failed to bargain in numerous cases. A hearing for a consolidated complaint on this matter is still ongoing.
Union representatives have argued that withholding benefits from unionized stores is against the law. They assert that their efforts have contributed to some of the changes made by Starbucks, including the addition of credit-card tipping at non-union locations.
Stores that have successfully voted to unionize have encountered strong opposition from Starbucks, which the NLRB has deemed illegal in some cases. Earlier this year, an NLRB judge accused Starbucks of “egregious and widespread misconduct” in its dealings with employees involved in unionization efforts in Buffalo, New York. Starbucks has appealed the decision, and the case remains open.
During an investor event, Starbucks unveiled its plans to increase wages for employees as part of its broader strategy to drive growth. The company has set a goal to double hourly pay from fiscal year 2020 through the end of fiscal year 2025. Starbucks has implemented price increases in recent years and believes that higher wages and more hours will help achieve this 2025 goal.
The move to accelerate growth, which includes doubling the number of active digital rewards members over the next five years, streamlining stores, and expanding globally, follows a successful year for Starbucks. Total company revenue saw an 11% year-over-year increase in the fourth quarter, reaching a record $9.4 billion. For the entire fiscal year, revenue grew by 12% to a record total of $36 billion.
In response to the 3% wage increases, Starbucks Workers United member Alex Yeager expressed the view that such raises were insufficient, given the company’s substantial revenue. Yeager emphasized that this is precisely why the fight for a union is ongoing.
