Starbucks and the American Dream

Starbucks. (Pixabay License).

From its founding in 1971, Starbucks branded itself as a very American operation. The company was initially named Pequod, inspired by the ship in the classic American novel Moby Dick, but the name was later changed to Starbucks, taken from Pequod’s chief mate, Starbuck.

The concept was to Americanize Italian-style coffee drinks like espresso and cappuccino, upping the acceptable price for coffee while slowing down the pace of its consumption, emphasizing coffee culture, the idea that a cafe is a place to sit, talk and work. Meanwhile its development of a nationwide chain was as American as McDonalds, as was its pay structure.

Starbucks grew during a period, from the late 1970s on, when the wealth gap exploded in America. Top CEO pay between 1978 and 2019 rose by 1,167% during this four-decade period while average wages for workers rose by just 13.7%, as Urban Milwaukee reported. Had the minimum wage risen by this same rate since 1978, it would have climbed to $32.25 by 2019.

The disparity in wage growth has meant that top CEOs were earning 320 times more than the average worker by 2019, compared to a 31-1 ratio back in 1978.

At Starbucks the pay gap is far worse. Its CEO Keven Johnson was paid $20.4 million in 2021, for instance, which made him one of the restaurant industry’s top-paid executives. He was succeeded last fall by Laxman Narasimhan, the departing chief executive of Durex condom maker Reckitt Benckiser, who will be paid a salary, bonus and stock worth up to $17.5 million a year.

Compared to the average pay of $14 an hour for Starbucks workers, Johnson earned 728 times more than the average worker, while his successor stands to earn 625 times more. The cool coffee culture was helping make the wealth gap in America even worse.

It also helped Starbucks become the largest coffeehouse chain in the world. Yet the company did not grow quite as easily in Wisconsin. Precisely why is unclear, perhaps because it came later to this state, or because of the success of local companies like Colectivo, which has 12 locations in the metro area and Stone Creek, with nine. According to Starbucks magazine, the company has 145 locations in Wisconsin. That may sound like a lot, but is far less than five states with less population, including Colorado (495 locations), Oregon (359) and Nevada (253).

Starbucks makes hefty profits, a net annual income of $3.6 billion to $4.2 billion in recent years. Colectivo and Stone Creek are not publicly held companies so their profits are unknown, but Stone Creek co-owner Eric Resch told Milwaukee Magazine that the company determines its employees’ wages by benchmarking the pay rates of other companies in the industry.  And the industry is driven by Starbucks.

It was during the pandemic that efforts to unionize coffee shops suddenly arose. An effort to organize all of the Colectivo stores began in August 2020, as Urban Milwaukee reported. In 2021 workers at Starbucks stores in Buffalo began efforts to organize unions. In February 2022 employees of a Starbucks in Oak Creek announced an effort to start a union, followed by efforts at company store in West Allis and, just last week, at the New Berlin location. To date, more than 8,500 Starbucks workers at more than 300 stores have joined the campaign, a small percent of what Starbucks magazine says is a 70,000-employee, 17,000-store operation in the U.S. alone.

“We’re sick of being treated just as numbers, drive times, customer connect scores, turnover rates and labor hours,” said Mona Kemstra, a barista and organizer at the New Berlin store, in an interview with Urban Milwaukee. “We deserve to be treated as what we got hired as; partners.”

Yes, Starbucks calls its workers “partners,” though they aren’t treated that way, as a letter to then-CEO Kevin Johnson by the Oak Creek store’s union organizers complained: “It once again comes back to the complete lack of respect that you, Kevin, have for us as ‘partners’ and as human beings. The wealth you possess comes directly from the pockets of partners who work day in and day out enriching you under increasingly challenging conditions.”

The complaints were more subtle by Colectivo “co-workers,” a term the company used in a letter to employees opposing the union. “The owners’ resistance to unionization would continue throughout the organizing process, as they hired expensive lawyers that specialize in ‘union avoidance’ and challenged the results of National Labor Review Board elections,” as Urban Milwaukee reporter Graham Kilmer wrote.

Yet that was nothing compared to how Starbucks has reacted to union organizers. U.S Senator Bernie Sanders accused Starbucks of running “the most aggressive and illegal union-busting campaign in the modern history of our country.”

The National Labor Relations Bureau’s regional offices have issued 93 complaints covering 328 unfair labor practice charges against Starbucks since late 2021, as The Guardian reported. NLRB prosecutors alleged that Starbucks illegally refused and failed to bargain at 144 unionized stores.

“Multiple federal judges have ruled that Starbucks illegally fired workers in both Buffalo, New York, and Memphis, Tennessee,” PBS reported. NLRB Administrative Law Judge Michael Rosas cited Starbucks’ “egregious and widespread misconduct” in a March 2 ruling, which consolidated 35 unfair labor practice complaints against the company.

At Colectivo, Scott Schwebel, its vice president of brand, marketing and retail for Colectivo, warned that collective bargaining would have no benefits for workers because “transient employment cafe jobs get little or nothing” from unions.

That miffed many Colectivo workers, union organizer Hillary Laskonis told Urban Milwaukee. She noted that the company proudly touts workers who’ve celebrated their “Colectiv-ersaries,” many of them having worked anywhere from three to 20 years.

The reality is that millions of Millennials are making their living in these so-called transient jobs. They make up 59% of all workers for bars, hold 49% of all restaurant and food service jobs, 45% of jobs at alcoholic-beverage wholesalers and 42% of jobs in beverage manufacturing.

In Wisconsin, an estimated 32.1% of residents earn less than $15 an hour, about the same percent as nationally, a study by Oxfam found.  That’s their version of the American Dream, and the five-decade surge in low-paying jobs at coffeehouses has helped grow this massive bulge at the bottom of the nation’s workforce.

Stone Creek faced only one union effort, at its Downer Ave. shop and Resch was far more diplomatic in his response. Workers voted it down. By contrast the more combative owners of Colectivo lost the battle after nearly three years and multiple efforts to delay and frustrate the effort. Colectivo now has a union that represents employees at all of its shops in Wisconsin and Illinois. Meanwhile, Starbucks is doing all it can to destroy the union movement, with all the crazed fervor of a Captain Ahab cursing the great white whale.