Lean times and labor pains are tarnishing the coffee giant's image.
Fall is pumpkin-latte season for those who can still afford to indulge, but for Starbucks workers, it's been a season of discontent. The coffee giant has recently responded to hard times with scheduling changes that are likely to inflict misery on its employees. These policies seem sharply at odds with Starbucks' reputation for social responsibility but make sense in the context of the company's record as an employer. Curiously, the coffee retailer's benevolent image seems most fragile at the moment that the company's best days seem to be receding into the past.
The store atmosphere remains suffused with NPR-style high-mindedness. A fact sheet from Good magazine about the U.S. economy's woes is prominently displayed, as is Helene Cooper's memoir about her childhood in Liberia. So it's fitting that when Starbucks introduced a new human-resources strategy two weeks ago, a new company manual for managers - obtained and shared with TBM by the Starbucks Workers Union, a group of employees pressing for better wages and working conditions - explained the change in lofty terms, insisting that it was "a philosophy, not a program."
This new "philosophy" is called "Optimal Scheduling," and it requires that "partners" (Starbucks-speak for employees) must dramatically increase their own flexibility. If they'd like to work full time, they must be available to work 70 percent of open store hours. (For a Starbucks open 16 hours a day, as is typical, this means 80.5 hours per week.) Many Starbucks employees say they want to work more hours; the new system could make it possible for those people to work more by downsizing those who can't or don't want to. Starbucks spokeswoman Tara Darrow says optimal scheduling is "a win-win for our customers and partners" that will lead to "more stable scheduling and more satisfied partners."
Liberte Locke, a New York City barista, is not one of those "satisfied partners." Why? Because, although she has opened up her entire day to Starbucks (from 4:15 a.m. to 11 p.m.), the company is "not guaranteeing any hours, not a single one." She's right: The fact that no hours are guaranteed, even for workers classified as "full time," is underscored repeatedly in the company managers' manual. The company is demanding almost all their time and, Locke says, "We are getting nothing in return." Optimal scheduling amounts to a permanent booty call; only the most boorish boyfriend would insist on such conditions.
The new availability requirement could make it almost impossible for employees to have a second job, as many low-wage workers must in order to make ends meet. Erik Forman, who works at Starbucks in the Twin Cities' Mall of America, says one of his fellow baristas opens McDonald's and closes Starbucks every day. Another co-worker opens Starbucks and closes IKEA. As Liberte Locke points out, Starbucks "doesn't pay enough to be someone's livelihood," especially with no hours guaranteed.
Being available 80.5 hours a week, Forman points out, will also be hard on "a student, a mother, or anyone who does anything besides working." Workers who can't make themselves available for the required number of hours will, within six months, lose their jobs. "It's another way for [Starbucks] to thin the herd," says Locke, "to have layoffs without calling them layoffs."
True, and perhaps to be expected. Starbucks' business isn't booming. With consumer sentiment ranging from grim to terrified, who's bold enough to pay $5 for coffee? Just stepping into this emporium of high-priced foamy drinks can feel like a time capsule journey back to prerecession days. Starbucks' profits have taken a beating, and its stock price has been steadily slipping over the past year. Milk inflation has been disastrous for the company (because, let's face it, Starbucks' drinks are mostly milk). That, along with rising gas costs, led the company to raise its own prices - already prohibitive to increasingly cost-conscious consumers - this summer. Store traffic is down for the first time since the company began measuring it.
Under such circumstances, it's not unusual for a company to cut costs (though it doesn't have to fall mostly on employees). When Starbucks closed 600 stores this summer, many baristas lost their jobs, but, as spokeswoman Tara Darrow points out, the company was able to place others in nearby stores. In fairness to Starbucks, its low-wage workers have not borne the pain alone: According to Darrow, about 1,000 jobs were axed at company headquarters in July.
Still, optimal scheduling is only one installment in an epic series of workforce management missteps for Starbucks. Like Wal-Mart, the company has an extensive union-busting operation and has been the target of numerous National Labor Relations Board complaints over unlawful violations of workers' rights. In early October, Starbucks was forced to settle the case of Mall of America barista Erik Forman (quoted above), who was fired for talking with co-workers about managers' apparent efforts to fire him for union organizing. It is illegal to dismiss workers for this, and after local publicity and citywide store pickets, Starbucks invited Forman back to work. The company also faces trial in Grand Rapids, Mich., for firing a barista for union activity and is awaiting a trial verdict in New York City on 30 counts of violating employees' union organizing rights. Earlier this year, a California court ordered the company to pay baristas more than $100 million for tips illegally shared with shift supervisors.
Though it's easy and fun to mock Starbucks' self-righteous hype, many take it seriously. In corporate-responsibility classes in business school, the Starbucks case studies provide a beacon of hope for the ethically concerned minority. In such discussions, Starbucks is always showcased as a company that provides suppliers with positive incentives to grow coffee in ways that are better for the environment, even throwing some labor standards into the mix. But Starbucks' good reputation on supply-chain practices has deflected attention from its treatment of baristas and even helped nourish the perception that it's a decent employer. Starbucks has repeatedly landed on Fortune magazine's "Best Companies to Work For" list. While Wal-Mart is constantly criticized - including by this writer - for stingy health-insurance policies, Starbucks is often praised for offering any health insurance at all. Yet Starbucks insures an even lower percentage of its work force than Wal-Mart does: 40.9 percent, as calculated from figures the company disclosed to the Seattle Post-Intelligencer last year (about 47 percent of Wal-Mart workers have company insurance). Spokeswoman Tara Darrow deflected TBM's questions about the percentage of employees covered by company insurance, preferring to emphasize that 88 percent of the workers are covered by some form of insurance - which could be Medicaid, or a parent's or spouse's plan - and that 65 percent of "eligible" employees are covered by the company plan.
Unlike Wal-Mart, Starbucks rarely draws criticism for its wages. Yet baristas' wages are similar to those earned by Wal-Mart workers and in some markets may even be lower: about $7 to $9 an hour. (Starbucks wouldn't offer any data on its wages, but the Starbucks Workers Union provided TBM with an internal company document from 2005, which shows the highest and lowest wage in each location. It's unlikely that Starbucks workers' wages have increased much in the last three years, since hardly anyone's have.)
There's always been some media bias in favor of Starbucks, which is perhaps why the company's worst practices have drawn so little attention. Unlike frumpy, red-state Wal-Mart, Starbucks, with its jazz compilations and recycled napkins, is our kind of company. Yet when it comes to mistreatment of employees, says labor activist and former Starbucks barista Daniel Gross (no relation to the Slate writer of the same name), who was fired from the company for union organizing, "Every retailer - McDonald's, Wal-Mart - does the same things. The difference is that Starbucks has really succeeded in convincing people that it's better."
Perhaps this is about to change. Everyone's feeling cranky, and Starbucks' self-love and feel-good branding seem as ill-fitting to our current cultural moment as its prices. The company shouldn't be surprised if recession brings more criticism along with so many other woes.
Liza Featherstone is the author of "Selling Women Short: The Landmark Battle for Workers' Rights at Wal-Mart."