What’s brewing for Starbucks’ anti-union efforts?
Howard Schultz, the former three-time CEO of Starbucks who passed the company’s reins to Laxman Narasimhan on March 20, didn’t get to start enjoying retirement right away.
Instead, Schultz testified nine days later, under threat of being subpoenaed, before the U.S. Senate Health, Education, Labor and Pensions Committee chaired by Sen. Bernie Sanders, I-Vt., regarding Starbucks’ handling of unionization at several of its stores — a much less enjoyable experience than receiving a gold watch.
Sanders’ questions and Schultz’s testimony focused on how Starbucks has treated its employees seeking to unionize, including allegations of union-busting activity, the most interesting labor story of the past 18 months.
In Schultz’s public communications, he has always portrayed himself as what we in the 1990s might have called a “third way” capitalist. While he proudly grew profits as a self-described merchant, he also he regarded his employees as partners, going out of his way to offer health care, 401(k) plans and free college education to those working at least 20 hours per week at his stores.
With Schultz out, it’s worth catching up on how the conflict between labor and Starbucks is going.
In January 2023, two Houston-area Starbucks stores and one Dallas-area store voted to unionize. No new petitions to unionize have been filed since December, and the number of union stores in Texas stands at 15.
Nationally, 290 of Starbucks’ roughly 9,000 locations — about 3 percent — have unionized, as it was in December.
One factor that may be playing to Starbucks’ advantage is the passage of time, particularly as collective bargaining between Starbucks and Workers United — the union that employees have joined — has still not begun. The same sticking point from last fall, whether to meet in person or to allow video conferencing, divides the union and the corporation even before they address employment-related issues. Each side claims the other is being obstructive about the method of collective bargaining, but the balance of the pain seems to fall on the union’s side, since it cannot show substantial gains through unionization without a negotiated deal. Meanwhile, the corporation has withheld enhanced benefits from unionized store workers, claiming that they can’t be given to those stores’ employees, pending a collective bargaining agreement.
The usual roles
While bargaining between Starbucks and the union hasn’t happened, Workers United has inundated the company with allegations of unfair labor practices. This includes 34 in Texas since one year ago, with nine complaints in the first three months of 2023. Nationwide, more than 500 allegations of labor law violations have been filed with the National Labor Review Board. Starbucks, for its part, has fired back in Texas with five complaints against the union in 2023.
The NLRB, in an administrative decision issued in March, found Starbucks responsible for hundreds of misdeeds in its treatment of unionizing workers. The company was ordered to reinstate fired workers, as well as to reimburse workers. Also, the NLRB restricted and admonished the company from doing anything that could be construed as anti-union.
Such activity spurred Sanders to convene his Senate committee hearing with Schultz.
It was a letdown for me that everyone at the hearing played their usual roles: the pro-labor Democrats, the self-made billionaire and the proownership Republicans. We didn’t get much in the way of breakthrough third way thinking.
Sanders played the mad-as-hell friend of labor, saying Starbucks has waged “the most aggressive and illegal union-busting campaign in the modern history of our country.”
Those are some fighting words.
Schultz played the aggrieved, up-from-hisbootstraps billionaire who doesn’t like being called a billionaire, which he described as an “unfair” moniker.
“My parents never owned a home. I came from nothing. I thought my entire life was based on the achievement of the American dream,” he said. “Yes, I have billions of dollars. I earned it. No one gave it to me.”
So Schultz’ feelings were hurt at the hearing.
Republican Sen. Rand Paul of Kentucky called the hearing a “witch hunt.” Republican Sen. Bill Cassidy of Louisiana said, “These hearings are anything but a fair and impartial proceeding.”
At least Sen. Mitt Romney, R-Utah, acknowledged the strange alliances and crosscurrents involved in defending Schultz and Starbucks as he alluded to the former CEO’s various musings about some day running for president as a Democrat.
“I recognize at the outset,” Romney said, “there’s some irony to a non-coffee-drinking Mormon conservative defending a Democrat candidate for president in perhaps one of the most liberal companies in America.”
Who’s winning? What’s being lost?
At this point, it seems like Schultz and Starbucks are winning this war. New unionization at stores has stalled.
Schultz denied any wrongdoing. Unionized employees feel gaslit, targeted and disheartened by Starbucks’ corporate response.
The company has made more than $20 billion in profit during each of the last three years. Narasimhan, the new CEO, won’t want to do worse on the profits side than his predecessor.
At the corporate scale of 9,000 locations and 200,000 employees in the United States, can capitalism that puts employee rights on par with customers and profits deliver? I still think that’s the central question posed by the Starbucks labor movement of the last 18 months.
If Schultz and Starbucks management are still scoring the most points, the labor movement isn’t the only the loser. The ideal that Schultz and Starbucks have championed for decades also loses.
Can capitalism be both profitable and good to workers?
Maybe when you win the war, you destroy the battleground of ideas on which you stood.
As Schultz stepped down for the third time as CEO and received a Senate grilling as his going-away present, does he feel like he won? In his mind, what does fairness mean?