American multinational coffee chain Starbucks Corporation (SBUX) may not get away with this one. In what looks like a union-busting attempt, the company is giving wage increases to all store employees — except those that are unionized.
Is the move a corporate attempt to bust union drives that have spread like wildfire across Starbucks locations in the U.S.? It sure looks a lot like it, and even Labor Secretary Marty Walsh has voiced his disapproval.
Starbucks plans to increase wages for all employees but unionized stores.
Current Starbucks CEO Howard Schultz announced in an earnings call on May 3 it would invest an additional $1 billion into its stores and partners. This includes increased pay increases, but Schultz specified that the wage bumps will only apply to those stores not involved in the unionization efforts.
According to Huff Post, more than 50 Starbucks locations have unionized, with at least 100 more in the process of unionization. The ripple effect has been drastic since the first Starbucks store, located in Buffalo, N.Y., unionized in December 2021.
Starbucks Workers United, the organization representing Starbucks workers, said about the exclusionary move, “This threat is blatantly unlawful and a continuation of the union-busting campaign. Starbucks is permitted by law to offer these benefits to workers at unionized stores.”
As a result, the union filed an official charge with the National Labor Relations Board.
Labor Secretary Marty Welsh reacted to Starbucks's blatant move.
Welsh thinks Schultz could do better in leading Starbucks toward continued success. Sticking with the logistics, Welsh told broadcast reporters, “I think he is going to have to invest in all of his workforce—he can't just not invest in the dozen shops that are organized, it's not a good business model.”
Referring to the Starbucks unions, Welsh added, “There could be a real partnership to help continue making Starbucks a very successful company."
Is the Starbucks union-avoidant pay raise illegal?
Schultz said Starbucks can't implement the broad benefits at unionized locations or those in the process of unionization because of legal restraints. He said, “We do not have the same freedom to make these improvements at locations that have a union or where union organizing is underway. Partners in those stores will receive the wages increases that were announced in [Oct. 2021], but Federal law prohibits us from promising new wages and benefits at stores involved in union organizing. And by law, we cannot implement unilateral changes at stores that have a union.”
That all makes sense, but Schultz didn’t clarify the next steps for the union-involved locations. He didn’t talk about reserving some of the allocated funds for unionized locations once restrictions lift. Plus, those restrictions haven't been confirmed nor denied yet, so it’s hard to tell.
With a freckled history including various union-busting efforts, especially under former CEO Kevin Johnson as well as Schultz during previous tenures, Starbucks doesn’t have a squeaky clean past to fall back on.
Starbucks Workers United has already filed a charge, and with Welsh speaking out, Starbucks is likely feeling the pressure. Schultz or his successor will have to decide if Starbucks as a whole is willing to marginalize a growing swath of its workforce just to keep unionization out of the corporation. Only time will tell.