Starbucks employee unionizing effort spread

Posted Sep 5th 2006 6:03PM by Michael Canfield
Filed under: Bad News, Starbucks (SBUX), Employees

I've blogged previously about unionization efforts by Starbucks (SBUX) retail employees (baristas ~~and store-manager-level personnel~~) in New York City. Efforts are underway elsewhere too. In Chicago workers in a Logan Square store declared their wish to be represented by the IWW just before the Labor Day holiday weekend. The IWW is the "wobblies" -- a historically important union prior to the first world war, but hardly the Teamsters. However, a branch of the Teamsters: the Amalgamated Lithographers of America issued a press release in protest of the firing of an IWW member in NYC. Leaders in the Logan's Square unionization effort state they feel they should be paid $10 an hour -- which is a nice round number -- and are paid $7.50 an hour now. Most Starbucks employees are eligible for discount stock purchases and grants, but unionized employees in Canada, for example, are not eligible for this benefit. So that's a trade-off to consider.

Rarely do companies readily give over, or willingly share, a degree of control with a collective bargaining unit. Starbucks probably feels that the company offers competitive wages. As a pioneer in providing (at least some degree) of medical benefits to part-timers, management may even feel resentful of any implication that its employees need unions. Starbucks' stated position is that it does not discourage unionizing efforts -- which legally it would have to say anyway, so I put no stake either way in that claim.

Whether these union efforts will factor into the decision making process for investors, I can't say for certain, but frankly I doubt it. At this point most of the information I read about this effort comes from union websites, with an occasional mention in the popular press about an planned event, such as the Logan Square declaration. Retailers like Starbucks operate on such a thin margin that -- were Starbucks to become widely unionized -- there would be some transfer of money into union dues, but any significant increase in pay or benefits would result in the need to cut overall staff, something a union would not be likely to tolerate.

Michael Canfield is a private investor, a business and media writer, living in Seattle. He doesn't own stock in Starbucks.

Tags: chicago, coffee, espresso, IWWO, sbux, starbucks, stocks, unions

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Reader Comments (Page 1 of 1)

9-06-2006 @ 5:42AM

Steve Ongerth said...

Mr Canfield is obviously unfamiliar with the IWW. His comment. . .

"Retailers like Starbucks operate on such a thin margin that -- were Starbucks to become widely unionized -- there would be some transfer of money into union dues, but any significant increase in pay or benefits would result in the need to cut overall staff, something a union would not be likely to tolerate."

. . .shows that he hasn't read the IWW's website or researched our organization carefully. The MAXIMUM amount the IWW charges per month in dues is $18. The wages Starbucks workers make is within the range where members would pay $6 / month.

Starbucks can almost CERTAINLY afford to pay their employees more than $0.02 / hour (which is about what $6 / hour works out to assuming a 173-hour full-time month). They've already give raises around $50 / month in response to the unionizing drive.

In any case, the issue isn't so much wages as it is the ability to work enough hours to get the vaunted health benefits Starbucks touts so highly.

Folks, if you get investment advice from this guy (Canfield), check your wallets or get another advisor, because /he doesn't know what he is talking about/ and his numbers simply /do not add up/!

9-06-2006 @ 5:43AM

Steve Ongerth said...

Correction on recent comments.

$50 / month should have been $0.50 / hour, however that works out to more than $86 / month assuming a full time work month of 173 hours.

9-06-2006 @ 7:59PM

Van said...

If Canada's starbucks are unionized, and still open, the company is obviously still making a profit on their Canadian stores.

Furthermore, somebody who is supporting just themselves - or even just p/t trying to pay for school - cannot even dream about purchasing any sort of quantity of stock, no matter how cheap it is.

Any company with the chutzpah to charge $3.00 or more for a cup of joe but complain about the cost of unionization is either lying, or has a really poor management.

9-07-2006 @ 6:03PM

Dominic Allen said...

Regardless of Michael Canfield's cognisance of the IWW's, or any Union's, stance regarding organising workers he should, as an investor, be able to read Starbuck's company literature. I can only imagine that he does not make too much money from investing as he has evidently failed to engage in even cursory research for his claim that Starbuck's operates on a thin profit margin. If comrade Canfield was to check the company's website and go into the "Investor Relations" page and open the financial highlights page he would see the see the rather astonishing growth in revenue for the company over the last ten years. It is a fallacy to suggest that Starbuck's could not afford a pay rise and maintain staffing numbers.