Investing

Starbucks Union Busting

Douglas A. McIntyre

Published: April 2, 2023 9:34 am

Recently, Senator Bernie Sanders labeled Starbucks’ work to close down union activity as the “most aggressive and illegal union-busting campaign in the modern history of our country.” There has been some support for that viewpoint recently. Just days ago, the coffee chain fired an employee who was deeply involved in the effort to organize store workers. 

On one side of the argument is recently retired CEO Howard Schultz, who had done everything in his power to keep unions of Starbucks stores. He is also among the most wealthy people in the world. His argument is likely simple. Unionized workers for companies to pay employees more, which is bad for business.

On the other side are a growing number of Starbucks store workers—these number in the thousands and work for as little as $15 an hour. A case is to be made that this is not a living wage. The question of whether their time is worth more has been settled for now by Starbucks’ unwillingness to consider increasing compensation.

Starbucks has made a gamble which may be larger than a dollar or two an hour in compensation. Customers have ignored the union issue. People are content to buy their coffee and leave pay to management, which means management has a large advantage over time. None of Starbucks’ revenue is or has been threatened.

Specifically, what is a stake financially is the company’s $8.7 billion in revenue measured by the last quarter. Additionally, there was $855 million in net income. For investors, the stakes are $166 billion market cap and a stock price that is up 14% in the last year. Starbucks has effectively walled off any investor concern from its shareholders. No one has hinted that management practices will trigger the sale of a single share.

Starbucks’ battle with the unions may cost it over time. For the time being, the wage is cheap.

See the Starbucks Capitals of America