Starbucks employees were trying to form a union at three Buffalo, New York, cafes won a victory Thursday, despite investor opposition to the company’s intentions to hike salaries next year.
The National Labor Relations Board sided with workers on Thursday, allowing them to take a ballot to organize in three specified sites. Starbucks had hoped to allow the whole Buffalo market to vote on a single ballot. The decision means that the stores will hold three separate unit elections, with mail-in ballots due on December 8 and a vote count on December 9. Over 100 employees are eligible to vote.
If workers vote in favor of unionization, it will be the coffee company’s first successful attempt at unionization in the United States, and it might make waves in the industry.
Starbucks Workers United, the group organizing the vote, cheered the decision. “Partners won. With this decision, the partners in Buffalo can win the very first union Starbucks store in the U.S.,” said Richard Bensinger, organizing director, in a statement to CNBC.
The NLRB judgment came on the same day that Starbucks informed investors that its fiscal 2022 earnings would be lower than expected. The business blamed both the ongoing impact of the Covid-19 epidemic and growing costs, including labor.
Starbucks stated on Wednesday that it would raise employee pay based on the market and longevity. By the summer of 2022, its pay floor will be $15 per hour, with an hourly wage of $17, up from the present $14.
Starbucks shares fell more than 7% on Friday as investors responded to the prospect of slower earnings growth. Restaurants jobs have raised rates in recent months to entice workers back into the business. Due to labor scarcity, restaurants have had to cut back on hours and scale back service, resulting in lower revenues. Meanwhile, employees are asserting their newfound power, and labor union activity has increased.
Bensigner said the pay bump is a positive for workers, but the movement is about more than money. “I think they underestimate why people organize a union — not like people have a price in their head. It isn’t one issue or money. Simply if we have a real partnership, why don’t we have a union?” he said.
Starbucks is well-known for referring to its employees as “partners” and boasting that it offers some of the most progressive parks in the fast food and restaurant industry. Over the previous few months, it has been encouraging workers not to vote to unionize. In September, executives including Rossann Williams, executive vice president of North Americas, and Howard Schultz, the company’s previous CEO, traveled to Buffalo to hold listening sessions with workers.
In a statement Thursday, Starbucks said it was reviewing the NLRB ruling and evaluating its options. “We remain focused on supporting our partners as well as maintaining open, transparent and direct conversations throughout the process,” the company said. In an interview on CNBC’s “Squawk on the Street” Friday, Starbucks CEO Kevin Johnson said the company disagrees with the decision.
“We’re going to continue to do what we’ve always done, which is serve our partners,” he said. “We know that success is best when shared, and you know. Certainly, we’re going to stay focused on creating a great experience for them. And we’ll see how this unfolds. We don’t think it is in partners’ best interest to put a third party in between that relationship that we’ve always shared that is grounded in our mission, our values and the culture that created this great company.”
According to workers involved in the unionization movement, working conditions at Starbucks shops deteriorated during the pandemic, according to workers involved in the unionization movement, and are seeking an equal collaboration with the corporation. Last month, Starbucks wrote a letter to Buffalo employees stating that the business was taking steps to get retail operations back up to standard, including bringing in staff support and promptly resolving store concerns.
“Ask us anything – we’re all here to help,” said Allyson Peck, Starbucks regional vice president, Northeast region, in the note to the Buffalo employees. “You have the right to work directly with Starbucks – and if you don’t want to give up that right, you should vote’ no.” He pointed to the Service Employees International Union’s push for higher wages, which has now been normalized but has not led to more workers unionizing.