Starbucks to boost US workers' base pay by at least 5 percent

In a letter sent to workers on Monday, the CEO of the coffee behemoth said that the amount of the raises would vary by geography and other factors.

Ted S. Warren/AP/File
Starbucks workers prepare coffee using siphon vacuum coffee makers at a station in the lobby of the coffee company's annual shareholders meeting in Seattle in March 2016. Starbucks says that it will be boosting the base pay of all employees and store managers at US company-run stores by 5 percent or more on Oct. 3.

Starbucks will raise the wages of all its workers in its US stores, as an online petition with nearly 13,000 signatures alleges the world’s largest coffee chain is in the midst of the most “extreme labor cuts” in its 45-year history.

The chain will increase the base pay for all its workers and store managers at its company-operated stores in the United States by at least 5 percent starting Oct. 3, chief executive Howard Schultz said in a letter published on the company’s website Monday. Starbucks will also double the Bean Stock, or annual stock reward, to hourly employees who have worked at company-operated stores for at least two years.

Combined, these perks will raise the wages of about 150,000 workers in about 7,600 company-operated cafes in the US by 5 to 15 percent.

Starbucks, for the most part, has been above the fray of the union-led “Fight for $15” movement to raise the minimum wage. Yet, Mr. Schultz’s announcement is another example of an international chain’s response to discontent among its lowest-paid workers.

“Striking the delicate balance between profit and a social conscience is a responsibility I take personally,” wrote Schultz, in the letter. “Over the years, we have viewed our total compensation approach as the best way to create long-term opportunity for partners. We believe strongly in this philosophy but also recognize we must do more to help partners take advantage of all the company has to offer.”

Starbucks has a reputation for offering better pay and benefits than many other chains. But its sales growth has cooled.

Schultz’s announcement also comes amid allegations the chain reduced its hours, lowering employee morale and degrading service.

“We understand that businesses have to be profitable to survive. We get it,” writes the petitioner’s author and a Starbucks barista in Los Angeles, Jaime Prater, on “What’s happening is some of the most extreme labor cuts in Starbucks history.”

Commenters on the online petition said they weren’t receiving enough hours to get by or to afford the chain’s benefits, including healthcare and college tuition reimbursement. 

Schultz gave employees his “personal commitment that we will work with every partner to ensure you have the hours you need.”

Meanwhile, the company has repeatedly said there is no nationwide reduction in labor hours, and Schultz, in his letter, did not directly reference the petition or employee concerns about labor hours.

Other chains, including McDonald’s and Burger King, have been the targets of the “Fight for $15” movement, now going into its fourth year. Protests have been organized across the world, driving the minimum wage up in cities and states across the country. Now, it has its sights set on raising the federal minimum wage to $15.

Even though Starbucks typically pays its baristas and shift supervisors well under $15 per hour, Schultz told Seattle NPR affiliate KPLU that raising the minimum wage to $15 would not result in job losses, although he expressed concern that it would hurt small businesses.

Proponents of raising wages and hours for baristas suggest that doing so would improve the customer experience.

“We want Starbucks to ease up, give us room to breathe, to have the proper kind of staff to ultimately, give our amazing and wonderful customers the service they deserve,” writes Mr. Prater, the barista.

This report contains material from Reuters.

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