Mar 16, 2022 - Economy

New Starbucks CEO will set the tone on worker unionization efforts

Illustration of the Starbucks siren holding up a fist.

Illustration: Aïda Amer/Axios

Starbucks is poised to get a new CEO — and the pick could signal whether the company takes a hostile stance or welcoming approach toward sporadic unionization efforts at its coffee houses.

Why it matters: Starbucks’ reputation as a benevolent chain is on the line — and the fate of the labor movement’s attempt to get a foot in the fast-food door is at stake.

Driving the news: Starbucks CEO Kevin Johnson announced Wednesday that he would relinquish his post beginning April 4, becoming a special consultant through September.

  • Starbucks doesn’t have an immediate replacement, so ex-CEO Howard Schultz will slide back into the role on an interim basis until the company announces a permanent leader — likely in the fall.
  • "Unionization publicity could be a factor pushing the company to look externally," Cowen analyst Andrew Charles wrote Wednesday.

State of play: In a complaint, the National Labor Relations Board accused Starbucks “of retaliating against two employees who sought to unionize their coffee shop in Phoenix,” the Washington Post reported Wednesday.

  • "Kevin’s decision to retire is not related to this," Starbucks spokesperson Reggie Borges tells Axios in an email.
  • Johnson had made comments indicating opposition to organizing efforts.
  • Schultz, for his part, has a history of downplaying the need for unionization at Starbucks due to the company's close working relationship with employees.

The big picture: Starbucks’ ultimate choice for its new CEO will send a message on how it intends to approach unionization efforts as organized labor advances.

  • “This is a pivot point for the company,” Robert Bruno, an employment relations professor at the University of Illinois, tells Axios.
  • “What we’ll learn is whether or not the company wants to take on the old fixtures of a corroded and old-school approach to employment and to firm identity — or whether they really want to stay up front and out front as this more insightful, thinking, cooperative” company.

Context: With employees feeling increasingly empowered, Starbucks is coming under pressure to give in to their demands.

  • In a letter sent Tuesday to Starbucks leaders, a coalition of more than 75 major investors, including Trillium Asset Management and the New York City comptroller, called on Starbucks to take a neutral approach with labor organizers.
  • “Benefits may include lower turnover, more resilient and risk-tolerant operations, more effective feedback loops, higher employee satisfaction and productivity, and, in turn, higher quality and more innovative products and services,” the investors wrote.

Of note: Facing worker shortages and inflation concerns, Starbucks announced in October that it would raise its minimum wage for hourly baristas to a range of $15 to $23 in summer 2022.

The bottom line: The status of the relationship between Starbucks and its workers is closely linked to the selection of the company’s next CEO.

  • “If they’re paying attention to what workers have said in the stores that have organized, it’s been far more about having a voice than it is negotiating a pay structure that somehow is outside the industry,” Bruno says.
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