Retail

Billionaire Starbucks CEO Schultz Doesn't Want Unions

Billionaire Howard Schultz turned Starbucks from a tiny company to one of the largest restaurant chains in the world. He has returned as chief executive officer after several years away, the third time he has led the company. Some observers believe one reason for his return is management anxiety over a move by workers to unionize, city by city. On that matter, Timothy Hubbard, assistant professor of management at the University of Notre Dame’s Mendoza College of Business, commented, “My sense is that if they want to shut down the unions, this is the best course of action Schultz has what it takes to tackle a hard topic like unions.”

Schultz repeatedly has made the argument that Starbucks workers are treated so well that a union is unnecessary. In October, the company said it would move its hourly wage floor to $15. In a period of rapid inflation, that can hardly be called a living wage. According to Forbes, he is doing much better than that, as he has a net worth of $5 billion.

It is not as though higher wages for Starbucks workers would cripple the company financially. In its most recently reported quarter, it posted revenue of $5.7 billion, up 23% from the same period the year before. Operating income was $1.1 billion, or 35% higher. Management views the company’s success as so robust that it plans to open thousands of more locations over the next several years.

It will be interesting to see what Schultz says in public about the union issue. He loves the limelight. He hinted he would run for president in 2012, 2016 and 2020. He decided against the effort in each case, perhaps because the wage issue would be a hindrance.

Schultz is among a small group of billionaires who run retailers with workers that make unusually low wages. In the same boat, the Waltons, who inherited their wealth from Walmart founder Sam Walton and are among the richest families in the world. They continue to control the management of the world’s largest retailer.

As he faces a mass movement to unionized Starbucks locations, Schultz will need to say more than that he is a billionaire who treats his workers so well that they do not need a union. The $15 an hour number shows that is not true.


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