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
...and a latte (coffee with cream?) $5.50.
I love that in this country a business is free to make poor decisions like hiring whiny people and paying them too much.
Dunkin Donuts has the tip jars too. I escape that by using their mobile apps to pay. I just scan my phone and I’m out of there. Starbucks has a pop up on their app letting you tip but I just close it.
I don’t mind tipping at a sit down restaurant but being expected to tip at the counter for a cup of coffee is ridiculous. Especially when you have to stand in line behind giggling teen age girls who have extremely complicated instructions to make their $7 concoction. Is this like a game among them? Seeing who can order the most complicated drink?
I just order black coffee.
I don’t have the option of sitting at home with a cup of coffee. I am out of the house 14 hours a day and need to be on the road by 4:30 am.
The article is just flat out wrong.....
Total compensation is NOT pay plus hours worked. Total compensation includes benefits and the cost of administration. It is the cost of having a person as an employee. Even if one does not include admin costs it still includes benefits (and that includes the free drinks and free pound of coffee)
A venti with 4 shots of espresso. Let's try to be accurate.
Most Starnucks employees are students. They are working and going to school. Starnucks allows flexibility of schedule. Plus every Starbucks I know of pays a very nice hourly wage
Robotic Baristas.
Guarantee you they’re coming, just like kiosks in MacDonalds and robotic burger flippers.
I gotta figure out which robotics/AI company to invest in.
Robotic/AI “Judgement Day” will be the legacy of the “Unintended Consequences” of government interference in the interpersonal free market exchange of goods and services.
“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.”
____________________________________________
How do these numbers translate to the franshise owners all over the country? To be honest, I feel sorry for them in investing so much of them $$ and time in a business, only to be undercut by an out-of-touch CEO who makes proclamations that gun owners and people who believe in traditional marriage are not welcome in Starbucks and now this.
$15 / hour pay may not hurt Starbucks in large metropolitan areas where salaries were likely near that amount. But what about in the regional and rural areas? The franchisee pays more in salary but cuts back in hours and employees.....meaning that the franchisee is the one who works longer hours (no extra pay) to make up the difference.
There are food service jobs open every where. The Subway here is offering a $50 hiring bonus. Quit Starbucks and you can have as many hours as you want anywhere else.
It would just require a bit more work than merely making coffee.
Good points.
Many forget that employees need a backroom administrator.
But eventually this central socialist government will edict that employers MUST pay what they’re ordered to.
I’ve never been in a Starbucks and never will.
But who needs anything in their coffee (or tea, for that matter) but a dram of whiskey? Or Brandy.
You not racist, are you? :)
With the extraordinary markup on Starbucks product they can certainly afford to pay more than other businesses.
Coffee presses are very good and Keurig is fine if you buy the $5 reusable plastic one to fill with your own brand of (cheap) coffee. Forget buying the loaded cartridges.
It did not work out right because they need to raise the wage to $25/hour. Silly conservatives.
Those things bug me to no end. You are standing in line to be waited on. You bus your own food, drink, cone or whatever. In some cases, you are even paying top dollar for it because of location or whatever.
It makes less sense than putting a tip jar at the grocery store check-out line.
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