Bloomberg Law
Free Newsletter Sign Up
Login
BROWSE
Bloomberg Law
Welcome
Login
Advanced Search Go
Free Newsletter Sign Up

Howard Schultz Returns to an Unstoppable Union Wave at Starbucks

May 12, 2022, 8:00 AM

On April 4, the first day of Howard Schultz’s third go-round as chief executive officer of Starbucks Corp., he set the tone with an espresso tasting. Dozens of baristas gathered in rows at the company’s headquarters in Seattle, while many more joined from across the country via livestream. First, the assembled took a collective slurp of coffee. “Full-bodied, bold—to me, that’s representative of who we are,” said Michelle Burns, the executive who oversees coffee sourcing. Next, an employee named Fen Tapley led the crowd in an impromptu protest against Florida’s new “Don’t Say Gay” law: “Gay! Gay! Gay!” they chanted. Then it was time to introduce Schultz. “He’s chosen to return and to come back and to put on the green apron alongside all of us,” Tapley said. The baristas gave the CEO a standing ovation. “You’re going to make me cry,” Schultz said.

Megaphone.fm: Steamed by Listen to the Story

Schultz has always linked Starbucks closely to his own sense of right and wrong, and this speech was no different. As a screen behind him displayed photos of smiling employees, he emphasized his determination that the company provide better jobs than his blue-collar dad ever had. This would be a new beginning, he vowed, but also a return to form. He listed the employee perks he’d established that set Starbucks apart from its peers, including stock grants and free tuition for online courses at Arizona State University. “It’s a return to the celebration of coffee, something that, for whatever reason, has kind of been dissipated over the last few years,” he said. “It’s a return to kindness.” Then he turned to the remarkable trend of the past several months: Starbucks employees (the company calls them “partners”) unionizing at a rate that would have been unimaginable a year ago.

Featured in Bloomberg Businessweek, May 16, 2022. Subscribe now.
Photographer: Sarah Anne Ward for Bloomberg Businessweek; Stylist: Eugene Jho

Yes, he acknowledged, Starbucks had erred by privileging stock buybacks over investing in the business, and turnover was high. He’d recently learned that most baristas had been with the company for less than a year. But collective bargaining, he suggested, wasn’t the answer. “We can’t ignore what is happening in the country as it relates to companies throughout the country being assaulted, in many ways, by the threat of unionization,” he told the baristas. After declaring that he wasn’t anti-union, just pro-Starbucks, he added: “We didn’t get here by having a union.”

Until December, none of Starbucks’ roughly 9,000 corporate-run US coffee shops were unionized—owing in part to the company’s aggressive resistance to organizing, but also to the relatively strong pay and benefits that give Schultz so much pride. (By August, all US employees will be guaranteed a minimum wage of $15 an hour.) Now workers at more than 60 locations in 17 states have voted to join Workers United, an affiliate of the Service Employees International Union, following the lead and advice of first-mover baristas in Buffalo. Employees at about 175 more Starbucks have petitioned the federal government for votes of their own.

Although this hardly represents the majority of the company’s stores, and none of the workers have negotiated a contract yet, the steady drip has transformed the idea of winning a union vote at a Starbucks from seemingly impossible to almost inevitable. As of May 10, only eight stores have called an election and then voted to reject the union. Successful votes have taken place from coast to coast, including in deep-red states as well as at a flagship megacafe in Seattle. Employees attempting to organize at Amazon, Apple, Verizon, and elsewhere cite these successes as an inspiration. “We’re going to spread just like the Starbucks movement,” Christian Smalls, a fired Amazon.com Inc. worker who led the successful union vote at his old workplace in New York City, said on CNBC the same day as Schultz’s speech in April. The baristas’ rebellion is acting as a beacon for workers and a warning for executives: If it can happen at the Starbucks on the corner, it can happen anywhere.

Michelle Eisen, a barista in Buffalo, has helped train others to organize.
Photographer: Brandon Watson for Bloomberg Businessweek

As with Smalls at Amazon, the Starbucks organizers have succeeded mainly by mentoring one another. “It’s the ultimate group project,” says Michelle Eisen, a Starbucks barista in Buffalo who’s coached baristas at other stores from Kentucky to Hawaii. “Everybody has to pull their weight.” Baristas from Boston, Buffalo, and Seattle have trained more than 80 co-workers across the US on how to mentor colleagues at other stores. Richard Bensinger, a Workers United organizer, is helping to steer the campaign at the national level but says he generally keeps his mouth shut in those trainings, if he’s even there. “They don’t need to hear from me,” he says.

Why Starbucks? Dozens of baristas across eight states say the reality of the green apron falls short of the picture Schultz paints, and short of US workers’ rising expectations. Fifteen dollars an hour is decent money in some parts of the country, but it’s still less than half what it costs to support one adult and one child in a city such as Seattle, according to the MIT Living Wage Calculator. Even before the pandemic, Starbucks stores were understaffed. Covid-19 exacerbated that and added major health risks, as corporate failed to account for staff shortages, provide employees with high-quality masks, or reinstitute its mask mandate once a new variant came along. The newly unionized employees are demanding stronger job protections, deeper staffing, and higher pay that also accounts for inflation. If staffing issues mean one of them has to do double the work for a shift, they say, that person should get paid double, too.

“Few companies stepped up during Covid like we did,” Starbucks spokesperson Reggie Borges said in an email, citing a period during spring 2020 when the company’s shops allowed only drive-through customers and some workers stayed home with pay. “We will build a better experience working side by side than by sitting across a negotiating table.” The company has said it strongly recommends that customers wear masks and requires them where legally mandated. Borges said union efforts have been cropping up recently at all sorts of companies, and Starbucks was targeted during the pandemic by activists who applied for jobs there so they could start a campaign. “Workers United is a business,” he said. “This business is not a cause, a movement.” The company has said repeatedly that it complies with labor laws and has strenuously denied allegations that it’s attempting to squelch the union illegally by targeting activists or threatening retribution. It did, however, create a website telling workers that under a union contract “some things you value now might go away.”

Cafes in Buffalo were the first to unionize, in December.
Photographer: Lindsay DeDario/Reuters

Starbucks is right that the union campaign there is in part a symptom of broader labor unrest, with workers taking chances and making demands they never would have before. If the Amazon victory was stunning in part because of how powerless its workers had seemed, the Starbucks union wave is remarkable in part because of how content its staff was often thought to be. The Starbucks activists don’t dispute that it’s a better place to work than many of its peers. But they want more than that—more pay and more backup, sure, but also more say in how the company is run, in their work, and therefore in their life. Incredibly, they might get it.

Shayla Swain, a barista in Pennington, N.J., says her manager warned her that Starbucks staff already have the equivalent of a venti cup of pay and benefits and that the cup can hold only so much. Swain says the analogy isn’t worthy of Starbucks. “If a drink doesn’t fit in a venti cup,” she says, “you put it in a trenta cup.”

Schultz isn’t exactly the master of the punchy slogan. Before his first-day-back speech in April, he published an open letter pledging to “engage in design sessions with partners of all levels across the organization to co-create a future of mutual thriving in a multi-stakeholder era.” But he has a justifiably healthy confidence in his ability to win over people.

He grew up in public housing in Brooklyn, N.Y., with that blue-collar dad (the old man drove a truck) and joined Starbucks at age 29 in 1982, when the chain’s stores numbered in the single digits. Schultz turned 40 the year after Starbucks’s initial public offering, and by the end of his first run as CEO, in 2000, the company was a ubiquitous piece of US culture that sold Americans on drinking much better coffee than they were used to—and paying much more for it. He took the reins again from 2008 to 2017, by which point Starbucks’s share price had exceeded its IPO level by 21,000%. Today the company operates more US locations than any other fast-food chain (it avoids franchising) and generates more revenue than any peer besides McDonald’s Corp., according to QSR magazine, which analyzes the quick-service restaurant industry.

Schultz
Photographer: Jason Redmond/AFP/Getty Images

In his 1997 memoir, Pour Your Heart Into It, Schultz includes a passage recounting how he correctly predicted Starbucks’s few unionized stores would vote to end their union affiliation after he became CEO, because they believed in him. “If they had faith in me and my motives, they wouldn’t need a union,” he wrote. Organizing efforts over subsequent decades fizzled, in part because of what US labor board prosecutors and judges repeatedly deemed illegal retaliation by the company. (Starbucks, which denied retaliating, appealed some of those cases and settled others.) And some baristas still trust Schultz to look out for them better than a union contract would. Taylor Shaw, an employee in the Buffalo area who’s applying for management, says the CEO’s push for strong benefits is more than just talk. “My job is the only reason that I can pay for my medical. I’m going to go to college for free,” Shaw says. “So I just feel appreciated.” The pandemic, she adds, brought challenges that demanded a certain amount of patience.

But growing numbers of baristas are saying the company’s Covid policies have radicalized them, even if other chains’ conditions may be similar or worse. Both before and during the pandemic, they say, Starbucks consistently prioritized cost-cutting over their basic needs. The company rolled out $3-per-hour hazard pay in March 2020—but rolled it back after two months. Workers say that Starbucks refused to pay them during self-isolation following exposures if they hadn’t tested positive and that it didn’t do anything to help them secure tests. Twenty people who’ve worked at Starbucks during the pandemic say understaffing has gotten severe enough that it’s sometimes been a struggle to make it to the bathroom. Two of them say they’ve soiled themselves at work because they had no backup.

“Understaffing was an issue that many retailers struggled with,” Borges, the Starbucks spokesperson, said in an email. “We gave our local leaders the autonomy to make the best decisions for their partners so that no one had to choose between their health and their job.”

Last summer, baristas in Buffalo decided they’d had enough. After weeks of confidential conversations in homes and rival coffee shops, they announced their union campaign and petitioned the National Labor Relations Board to hold votes at three stores in the area. One of the campaign’s architects was Jaz Brisack, a Rhodes scholar who’d spent a summer working with Bensinger as an organizer. She’d seen a Starbucks worker get fired after talking about organizing and decided to go work there herself in 2020 in the hope of taking things further. (Federal filings show Brisack was also being paid by Workers United last year while employed by Starbucks; she says a lot of baristas there have second jobs.) Another was Eisen, who’d worked at Starbucks for 10 years and says the company’s refusal to prioritize safety during the pandemic showed how badly its workers need a voice. “I don’t know that I could fully grasp how completely undemocratic the corporation is until that moment,” Eisen says. “I just don’t know how you continue to be the company they say they are and do what they’re doing.”

Starbucks responded by trying to convince the NLRB that baristas had no right to vote on unionization on a store-by-store basis. It sent executives and extra store managers to Buffalo to discourage organizing. Then the company called in Schultz, who was at that point still retired from the company, for a pinch-hit speech. On a Saturday night in November, Buffalo stores closed early so workers could go hear him at a local hotel. “I think it’s really incumbent upon me to spend some time sharing with you and, in a sense, educating you on where this all has come from,” he said. He talked about the company’s great benefits and sense of belonging, as well as his childhood and his dad. “I wanted to do something that was so significantly different than the abuse that my father had, in being the kind of person that was not respected and dignified and did not have any value.”

Employees’ best interests were already on Starbucks executives’ minds, Schultz said. The company’s board of directors places two empty chairs at each meeting to represent the perspectives of its customers and its employees. “Those two empty chairs is not some metaphor,” he said. “It’s real.” Then he stumbled into an awkward Holocaust metaphor that would make international news. Concentration camp inmates chose to share their blankets with others who didn’t have them, he said, and “what we have tried to do at Starbucks is share our blanket.” He didn’t take questions.

Michelle Hejduk unionized her Mesa, Ariz., store with Eisen’s help.
Photographer: Cassidy Araiza for Bloomberg Businessweek

A week after Schultz’s Buffalo speech, a barista in Mesa, Ariz., named Michelle Hejduk called up the union and was soon talking to Eisen. Starbucks had recently forced out her manager for leaking info about an anti-union meeting, leaving employees mad enough to quit and therefore more willing to fight, according to Hejduk. (Starbucks wrote that the manager resigned voluntarily and wasn’t retaliated against.) “We were all terrified,” Hejduk says. “We were like, ‘All right, we’re just going to jump and see where we land.’ ”

Eisen was terrified, too, though she didn’t tell Hejduk that. “I remember thinking, ‘Yikes,’ ” she says.

Over the following weeks, Eisen and Hejduk kept talking. Both thought of themselves as the “store mom”—levelheaded, no-nonsense, long-tenured, and on the older side. Both are millennials working largely with Gen Z colleagues. Among Eisen’s tips for organizing: Anticipate the company’s arguments against unionization, and prepare co-workers to expect them. Be welcoming and positive to new hires. Don’t do anything that could give management an excuse to fire you. In anti-union meetings, keep your cool and ask uncomfortable questions.

When the ballots from Eisen and Brisack’s store were counted in December, they’d won, 19 to 8. Hejduk’s store started voting in January; when those votes were counted in February, she’d prevailed 25 to 3. The next day, Hejduk was on a Zoom call with Starbucks employees in Virginia, sharing her own pointers. “It was really, really good to hear someone who’s made it to the other side,” says Kat Wiggers, a barista there. “She was like, ‘Yeah, I see you. I went through the exact same thing, and look where we’re at now.’ ”

Eisen and Hejduk’s buddy system has now gone national. In a web of Zoom calls and Slack messages, baristas are sharing the strategies that seem to work. In Seattle, barista Sydney Durkin asks colleagues what they’d love to do if they weren’t so exhausted after work or were paid a little better. In New York City, an employee recorded their manager warning about the dangers of unionizing and shared it with organizers elsewhere as a blueprint of the company’s talking points. In Florida, North Carolina, and Texas, employees prepared for anti-union pressure from managers by role-playing with Buffalo area barista Will Westlake, who says he was once called into an anti-union meeting with six managers. The company had excluded him from a larger anti-union gathering with his co-workers, claiming that if he attended, there wouldn’t be enough macaroons for everyone.

“Our meetings are not mandatory, and we always lead with our mission and values,” Borges, the Starbucks spokesperson, wrote in an email. “Claims of anti-union tactics are categorically false.”

Contract talks are now under way at a couple of stores including Eisen and Brisack’s, albeit slowly and awkwardly, even by the standards of a Zoom call. At the first session, when the workers suggested each participant start by sharing what excited them about the process, the company didn’t respond. When Starbucks lawyer Alan Model remarked regarding scheduling future sessions that he knew no one there wanted to give up their Saturdays, the baristas accustomed to working weekends marveled at the gulf between them and the company.

More recently, Model questioned the workers about their European-style proposal to make Starbucks put a worker representative on its board. “You don’t want to be there,” he said, asking if they understood how boring board meetings can be. The workers asked why, if Starbucks was so opposed to their participation, Schultz and others kept boasting about the empty chair. Model answered with another question: “Haven’t you ever heard of a metaphor?”

Nikki Taylor says she was fired for organizing co-workers in Memphis.
Photographer: Ariel Cobbert for Bloomberg Businessweek

Initial collective bargaining agreements usually take more than a year to negotiate, and Starbucks has every reason to drag out the Buffalo talks for as long as possible, because a worthwhile deal would encourage more workers to organize. The Buffalo baristas say they expect that to get an agreement in place, the company will need to face a whole lot more pressure from investors, lawmakers, customers, regulators, and more workers demanding a voice.

In the meantime, the union campaign has also suffered setbacks, and some baristas have paid a price. Starbucks Workers United has filed labor board allegations claiming the company illegally fired 20 employees across the country in retaliation for organizing. In February, Starbucks fired seven workers in Memphis, saying they broke numerous safety rules when they let a local TV station interview them in the store after hours. The fired workers deny behaving unsafely, and the NLRB recently sued seeking a court injunction to reinstate them. “We were loud, we were bold, and the company tried to use us as examples,” said Nikki Taylor, one of the fired Memphis leaders, while being interviewed by Vermont Senator Bernie Sanders in February. Starbucks wrote that it’s never retaliated against employees for organizing.

The Memphis workers included five of the six members of their store’s organizing committee. “If something does happen to me, I’m really worried that’s going to be the end of it,” says Reaghan Hall, No. 6. So far, though, outrage over the purge has fueled more support for a union, she says.

The numbers seem to bear that out. Unionization petitions and votes have continued to increase around the country in the three months since the Memphis firings, and Schultz’s return as CEO hasn’t slowed the pace, either. An additional 50 stores filed for votes in his first three weeks back. On May 3, Starbucks said it would roll out 5% raises for nonunion employees who’ve been with the company for at least two years. “We do not have the same freedom to make these improvements at locations that have a union,” Schultz said on an earnings call.

A month earlier, Starbucks convened a hand-picked group of about 20 baristas from Southern California in a conference room in Long Beach for what sounds like one of history’s less fun three-hour pizza parties. Basically, it was a focus group. They spent the first hour watching Schultz’s speech from earlier that week. Then Schultz himself entered the room and took a seat in their circle of folding chairs. A moderator asked the employees to react to a list of potential grievances, such as “Our stores are short-staffed,” then use sticky notes to mark up the wall with ways the company could improve things.

The meeting got tense when one of the invited employees, a union activist named Madison Hall, asked Schultz to speak about the company’s retaliation against organizers. In response, the CEO accused the union of disrupting a recent memorial service for an employee (the union denies that), which he said reflects “the disrespect of an organization that doesn’t know who we are.” Then he returned to the themes of the speech the invitees had just watched: his childhood, his quest to do better, the good perks. Hall, sitting a few feet away, told Schultz that tuition-free college is great, but it doesn’t pay the rent.

“I’m sensing a lot of anger from you about Starbucks,” Schultz told Hall. “If you hate Starbucks so much, why don’t you work somewhere else?” (Starbucks wrote that Schultz “aimed to bring the focus of the meeting to the task at hand” after the activist “attempted to divert” it.)

Since that confrontation, Hall says, dozens of fellow baristas have contacted them online to ask for help calling votes of their own. “The only way to truly have a level playing field with somebody with that much power over you is to have a union contract,” they say. “We want a seat at the table.”

And Schultz doesn’t have to be seated there, Hall adds. Officially the CEO is back on an interim basis, with a more permanent announcement planned for the fall. Whatever happens, Hall says they plan to stick around: “I’ll be here after he leaves.” Three days after the Schultz confrontation, Hall’s store petitioned to unionize.

To contact the author of this story:
Josh Eidelson in San Francisco at jeidelson@bloomberg.net

To contact the editor responsible for this story:
Jim Aley at jaley@bloomberg.net

Jeff Muskus

© 2022 Bloomberg L.P. All rights reserved. Used with permission.