The socialist senator from Vermont has never been afraid of rhetorical bombast.
“Starbucks has waged the most aggressive and illegal union-busting campaign in the modern history of our country,” said Bernie Sanders at a Senate hearing Wednesday, where the coffee chain’s founder and former CEO Howard Schultz was giving testimony. “What is outrageous to me is not only Starbucks’ anti-union activities and their willingness to break the law, it is their calculated and intentional efforts to stall, stall and stall.”
When it comes to contracts, we’re no fans in general of increasingly common stalling tactics on the part of either management or unions. Labor relations in America are best served by people getting in a room, face-to-face, and thrashing things out with compromise on both sides. Stalling usually just poisons the well of negotiations.
But the rest of what Sanders had to say? Pure self-serving claptrap aimed at the wrong target.
We’re not privy to Schultz’s inner thoughts. But we imagine one of America’s most successful businesspeople in history left that hearing room, poured a tall Pike and thought to himself: How on earth have I, a man who worked so hard to promote treating workers as well-compensated partners and offer them a better deal than union contracts typically achieve in my industry, find myself on the wrong end of Sanders’ battering ram?
Consider. As recently as 2014, Schultz was a hero to the left. And rightly so.
After saying he was “not going to wait for Washington” to improve college access and completion rates, he announced a new partnership between Starbucks and Arizona State University in which Starbucks would provide full tuition reimbursement for any of the company’s (at the time) 135,000 U.S. employees enrolled as juniors and seniors, each time they completed 21 credit hours.
The idea was that the delayed reimbursement would be an incentive not just to enrollment in online courses but to completion. ASU-funded scholarships also were part of the deal (especially for freshman and sophomores, who also got a lot of tuition help). You had to work 20 hours at Starbucks to be eligible, so there was a business benefit too, although Starbucks pointed out that there was no requirement to keep working there after graduation, saying “if some choose a different path, this is their education to keep.”
But, given that some three-quarters of Schultz’s employees had not completed a college degree, the deal was seen as transformational at the time. Especially since Schultz clearly did not care about the likelihood that better-educated employees were all the more likely to leave.
Schultz, who grew up in public housing in Brooklyn and attended college at Northern Michigan University on an athletic scholarship, was lauded by then-Education Secretary Arne Duncan and a whole raft of Democratic politicians. And to those who said the scheme was just a marketing stunt, Schultz pointed out, rightly, that Starbucks long had offered health insurance and stock options to employees who worked at least 20 hours a week. Very few other companies offered any kind of health insurance to part-timers.
For the record, that stock has done very well as the coffee chain expanded globally to some 33,000 stores in 80 countries. Anyone who took out those options now likely has a very nice nest egg.
Here is what Schultz was quoted as saying at the time: “This is not about PR. This is about the future of our company doing what’s right for our people and also, sending a message to the country that we can’t build a great company and we can’t build a great enduring country if we’re constantly leaving people behind.”
Exactly. This was enlightened capitalism.
And, before it was seen as a poster child for gentrification, a gross oversimplification if ever there was one, Starbucks also helped spur all kinds of development in struggling neighborhoods and Chicago, a coffee-loving city that was one of the first to welcome the chain, was one of the first to benefit. Once a Starbucks moved in, art galleries and converted industrial buildings followed, as did a diverse array of well-educated young people. People typically were delighted.
Chicago is becoming increasingly dependent on the West Loop’s success, we’ve often noted, and that is the perfect example of a neighborhood that changed after coffee houses arrived. Even now, as Michigan Avenue retail struggles to survive, one of the few bright spots is the Starbucks Roastery.
Even the most progressive coffeehouses would most likely not been there if Starbucks had not improved Americans’ taste in coffee. And while no corporation is perfect, it’s fair to say that the chain did more to improve wages and compensation for coffee growers than the big food and beverage conglomerates who had sold their coffee at American supermarkets.
So what happened? In its growth, Starbucks took its eye off the ball for a while when it came to industry-leading treatment of workers, especially as it pushed for efficiencies and drive-thru volume.
But what led to Schultz appearing at that hearing mostly were factors outside of his control. By 2021, COVID had helped cause all kinds of problems in cities, including a rise in homelessness, drug use and petty crime. Many Starbucks’ stores were in urban areas where employees said they felt unsafe, and Starbucks had no choice but to close profitable stores.
You’d think that was a laudable move, but unions looking to expand and seeing Schultz’s ideas mostly as a threat used that compassion for employees against the company.
Starbucks employees have the right to vote to unionize their store and bargain collectively. Of course they do. Starbucks should respond in good faith. But both the union and its supporters are wrong when they try to rewrite the historical narrative of a company that has been transformational in so many ways for the good, and that did its best to do global business in such a way as to empower its employees to feel part of the business and share in its profits.
Nobody did that better, nor did any other business empower more solo entrepreneurs to buy an espresso machine and provide a place for a community to work, rest and gather.
Americans of all stripes used to laud that kind of company, and it’s a sad indictment of the times that so many of us seem to have forgotten what we used to believe together.
