Posted on 07/03/2016 4:15:00 AM PDT by HomerBohn
ZeroHedge reminds us that a year ago, owner and CEO of Seattle-based Starbucks, Howard Schultz, piously told CNN that he supported raising the minimum wage to $15/hour “across the country,” but warned that “it will be very difficult for small business in the country at a $15 level to pay those kinds of wages.” Then Schultz grandly announced that Starbucks will lead the way by raising the wages of its employees “way above the minimum wage”:
“For Starbucks come January 1 we are taking wages up across the country and we will pay above the minimum wage in every state we operate. Starbucks is way above the minimum wage. I have always looked at total compensation. I have always believed that our success as a company is best shared.“
Note that a worker’s total compensation is a function of hourly wages and total number of hours worked.
Fast forward a year . . . .
Lisa Baertlein reports for Reuters, June 30, 2016, that Starbucks, the world’s biggest coffee chain that employs 160,000 people in the United States, is accused by an online petition, signed by more than 9,000 people, of “extreme” cutbacks in work hours at its U.S. cafes, which hurt both employee morale and customer service.
In other words, Starbucks compensated for raising its employees’ wages to “way above minimum wage” by reducing its workers’ hours, so as to maintain its profitability.
According to Jaime Prater, a Southern California barista and the online petition’s creator, some 7,000 signers of the petition described themselves as Starbuck employees.
Prater said “The labor situation has gone from tight to infuriating.” The manager of a central California Starbucks who asked not to be identified for fear of reprisal, told Reuters that the store’s work force has shrunk by about 10%, even though sales are up.
Similar complaints were made by many signers of the online petition:
Signer Aaron I. wrote: “No matter what we do to save on labor at my store, the system tells us EVERY SINGLE DAY that we are at least 8 hours over in labor for the day and have to cut even more.”
Leslie S, a self-described shift manager, wrote: “We’re suffering, & so are our customers. It’s not working.”
Makenna S, a shift supervisor, wrote: “Mobile orders have increased sales and created more need for labor, yet the company is cutting labor.”
While its employees contend with reduced work hours and, therefore, pay, Starbucks’ established cafes in U.S.-dominated Americas region is enjoying increased sales of:
9% sales increase in the first quarter of this year,
7% increase in the second quarter, and
an expected 6.2% increase for the current quarter, according to Consensus Metrix.
Howard Penney, an analyst at Hedgeye Risk Management who follows Starbucks, observed, “They’ve been posting industry-leading same-store sales growth for the last five years while reducing labor costs – a trend that can’t continue.”
According to Wikipedia, Starbucks’ CEO Howard D. Schultz “was born to a Jewish family on July 19, 1953, in Brooklyn, New York.” He is pro-gun control and same-sex marriage. In 2012, Forbes magazine ranked Schultz as the 354th richest person in the United States, with a net worth of $1.5 billion.
Howard Schultz’s name should be listed in dictionaries as a synonym of hypocrisy
Starbuck's kids really don’t think ahead which is truly a lost art in today’s brainless and oversexed world.
Idiots live idiotic lives.
If the Starbucks employees find themselves with too few work hours, they should be able to pick up another $15 per hour job to help fill the void...or maybe go back to school for a more marketable skill.
Quit!
Starbucks charges $6 for a cup of coffee and pays workers $15 per hour for a job any high school dropout can easily do.......BUT, then has the gall to put a damn tip jar at the check out counter....Star Bucks can Kiss My Backside.
All liberals need to go back to school to study math and economics. And told there are no money trees then left to cry. Reality and truth; neither live in them.
Well, since the remaining human workforce is complaining, Starbucks should start implementing automation and server robots. They would provide a better customer experience without the attitude.
Quit? Nah, it’s easier to whine and play the victim.
I wonder if Liberals ever see how ludicrous they look when grand schemes go wrong as they always seem to do?
I’ll get my (better)coffee somewhere affordable, thank you.
Buying roasted beans (currently Guatemalan) from costco, I make a 14 cup carafe daily for less than a buck a pot.
Even the Starbucks when on sale at Costco is way cheaper.
[Sorry...I just like the “burnt” flavor.]
It’s not hypocrisy, it’s another example of a large business using regulation to help stifle smaller competitors.
Starbucks is a huge operation with a large economy of scale. They can afford machinery and business process and inventory systems that smaller competitors can’t. By hiking the minimum wage they are putting pressure on themselves, but even more pressure on the smaller coffee shops around them.
Where ever you see a generous businessman talking about higher wages, look for the following:
1) His competition depends on minimum wage labor.
2) He has a commanding lead in exactly the sort of infrastructure and scale than allows him to minimize the use of such labor.
In matters of taste there is no right or wrong.
A job at Starbucks sounds like a great place for a recent college graduate to get their foot in the door of the work force.
$15.00 per hour wages
Stimulating conversations at the work place
Meeting interesting, smart people in the corporate world.
Sometimes serving the glitterati.
Only have to work 10-15 hrs a week.
But wait...........................................
I agree with Jackie Mason. Starbucks = ‘Boint Coffee’.
I like strong coffee not Boint Coffee.
A 12oz cup of coffee at Starbucks costs $1.95. I just bought one.
They don’t care how ludicrous they look. For some incomprehensible reason, holding certain policy positions is their only “greatest commandment”.
It outweighs horrible outcomes. It even outweighs the bad, hypocritical things they personally do.
Hypocrite but excellent marketing and business strategy.Sales up, labor down, image with customers up, employees locked in.
Simply consider demand curves as taught in economics 101 (and beyond). If you select a higher price, the quantity demanded is less. This applies to wages also. Raise the minimum wage; get less employment of minimum wage workers. Raise union wages; get reduced employment of union workers. This is real. People just don’t want to believe it.
The examples above were done through fiat, or arbitrary orders. Let’s consider another approach, increasing worker productivity.
It makes sense to pay someone more when they are more productive. If a company is more productive, they can reduce the price of their product and sell more. Combining the productivity increase (more product per worker) with increased sales of the final product may keep employment about the same - but with an increase in wages.
Of course, increasing productivity is easier said than done. There are always companies and individuals trying to do this, with some success every year. Our wages have gone up over the centuries due to increasing labor productivity. Unions, politicians, and others claim the credit, but the real credit should go to everyone who figured out a better way to get a job done.
They never realize how ludicrous they look. They just move on to some new social project, never looking back.
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