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
I don’t think so, but in his heart he does believe it.
They’re the highly specialized people who know how to operate an Italian espresso machine. You know, those big contraptions that have steaming pipes and are quite noisy.
“Their toilet facilities are labeled properly though.”
Shhh!
See, the only thing a pancake is good for is putting on a bunny’s head.
“Anyone who cannot understand that people demand less of something when the price goes up and more when the price goes down are hopelessly stupid.”
Agreed. You go on to provide two very good examples on how people adjust their behavior based on price.
I once argued on FR that automation of check-out lanes and fast food establishments have been accelerated due to all this talk of raising the “living wage” and raising the minimum wage. One poster just refused to see any connection.
I’ve met many people at starbucks for meetings, but never never purchased a thing. They always did.
I saw immediately as starbucks grew in popularity (cultish addictive following) it was not a place I would ever want to have a penny of my money.
Even today outside a market near me - people asking for signatures to get increase in minimum wage on our state ballot. I said no. They said it’s just to get it on the ballot. I said no, employers should set they rates they pay workers not anyone else. As wages rise so do all other prices and as this story shows hours get cut or workers will get cut.
Wage hikes is not the answer.
PS: one person collecting signatures said she had been brought from florida for this job of collecting signatures......found that odd with so many people outa work here.
“Explain to me how it harms an employee to get a 10% raise and then have 10% fewer hours scheduled.”
Was that claimed in the article?
I saw:
“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.”
But I did not see how much salary went up.
I agree with you that a 10% raise and a 10% reduction in hours leaves direct compensation (ignoring other forms of compensation) unchanged, while providing more leisure time.
The impression I got from the article is that individual workers are expected to do more in less time, placing them under additional stress and reducing customer satisfaction.
I think some of the reaction to the article is due to the way liberals present the idea of wage increases. First, they are pious and morally superior. Second, they do not acknowledge any adverse impact on employment. This article claims there has been an adverse impact on employment, employee morale, and customer satisfaction. Results have not lived up to promises.
I think everyone should mind their own business. But that is not today’s world. We prefer to mind the business of others, despite our ignorance of their lives, and wish others would mind our business so we need not be burdened.
It’s none of my business whether companies raise or lower salaries. I wish they would do so in silence. It is a bad sign of the times when they make a big show of their actions.
“Community Coffee can’t be beat.”
I agree wholeheartedly!
My first encounter with Community Coffee was in Louisiana.
A nice flavor with a caffeine rush that can wake the dead.
Just the ticket for a tired driver with another five hours of wheel time ahead of him.
I would bring a bag or two home every trip.
Sadly unable to find it locally since I retired.
The Pilot truck stops also had good coffee at reasonable prices.
Never been to Starbucks and doubt if I will ever go.
More so, the minimum wage attacks his competitors and limits the number of viable business models.
In matters of taste there is no right or wrong.
I’m not so sure. Some things are just wrong.
I quit t.v. for the most part well over 40 yrs. ago. One
day I was sitting there and the “Days of Our Lives”
prelude came on. It hit me “Like sands thru the hourglass,
so goes the days of our lives.” I hit the OFF button &
have wasted precious little time with any more of the t.v.
drivel. Also, don’t have a cellphone. Fang started out with
the huge cellphones that first came out, before very many
people even had them. We had been having to stop at pay
phones & he really needed a phone in his work. The first
one he got took up a whole passenger seat in the car.
He still doesn’t use it much so it stays in his car. We
also pay as we go. Bill Clinton & Hitler-y Clinton are
two of the biggest frauds that have ever wrested control
in this country. I’m praying Hitler-y will collapse from
her own weight. Also, that Chelsea won’t continue the
CLINTON DYNASTY.
“One poster just refused to see any connection.”
I think refused is he right word, how could anyone who is not insisting on living in a fantasy fail to see it?
Why would you for 1 waste money that way and 2 support a leftist organization?
Because it's my money and my choice. Or do you not believe in the free enterprise system?
The Clinton trio are so disgustingly repulsive they make honest American citizens puke.
If Hitlery is elected through some colossal error (like electing and re-electing the pond scum occupying the disgraced White Hut) Billy Goat will be appointed a Secretary of Commerce or Treasury and Chelsea would be appointed as an amb-ass-ador to the UN or some other high goobermint position.
Without the benefit of the employer portion of the SSI tax, everyone would be paying double what they do now. It’s certainly a cost to the employer and a benefit to the employee. You may not want to call it compensation, but it certainly is when contextualized properly, or at least will be compensatory at some point in the future. Work comp insurance is definitely overhead, but can also become compensatory as well. The employee sure doesn’t pay for it - besides in lower wages because of it anyhow, so I would argue that one either way.
That is not a good comparison. In 1936, the US had just come out of a horrific deflationary period, a currency famine, where the expression was “You could buy a pound of hamburger for a nickel, but nobody had any nickels.” Crops cost more to send to market than they were worth, so corn was being burned for fuel at the same time people in the cities were starving and had to eat at soup kitchens.
“The “great deflation” was between 1930–33 when the rate of deflation was approximately 10 percent/year, part of the United States’ slide into the Great Depression, where banks failed and unemployment peaked at 25%.
“The deflation of the Great Depression occurred partly because there was an enormous contraction of credit (money), bankruptcies creating an environment where cash was in frantic demand, and when the Federal Reserve was supposed to accommodate that demand, it instead contracted the money supply by 30% in enforcement of its new real bills doctrine, so banks toppled one-by-one (because they were unable to meet the sudden demand for cash).”
In more recent times, just the *opposite* of this happened during Jimmy Carter, when he decided to order the double digit inflation of the dollar by “printing” money, so he could have more money to spend, inflation favoring debtors.
However, Paul Volcker, the chairman of the FED, stuck it to Carter’s scheme by increasing the prime lending rate to match Carter’s money printing. This neutered Carter, by causing huge jumps in prices and wages.
Then Reagan defied expectations that he would try to stabilize and normalize the economy (which likely wouldn’t have worked and caused a crisis). Instead he went for huge (relatively speaking) deficit spending, while slashing taxes, and instead of focusing on cutting the size of government, he just cut the rate of growth of government.
But the time has truly come for a POTUS to slash the size and cost of government, among other major reforms. Which will work unless the FED stands in the way.
Payroll taxes are just that: taxes. They are reported that way on your W-2 form.
If your employer pays the premium on a life insurance policy and you or your next of kin (not the employer) is listed as the beneficiary, then the premium is reported as taxable income on your W-2 form.
The key here is that real compensation only counts if the benefit accrues now, not at some unspecified point in the future when SSI may not even be solvent.
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