Starbucks Unionization Drive in NY Fails

From: THE
AGRIBUSINESS
EXAMINER
August 18, 2004, Issue #366
Monitoring Corporate Agribusiness
>From a Public Interest Perspective

EDITOR\PUBLISHER; A.V. Krebs
E-MAIL: avkrebs@earthlink.net
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UNHAPPY STARBUCK'S N.Y. EMPLOYEES FAIL IN EFFORTS TO UNIONIZE

TANIA PADGETT, NEWSDAY: Inside the Starbucks store on the corner of [New
york's] 36th Street and Madison Avenue, baristas bustle behind the half-moon
counter wearing the company's trademark green aprons and pouring dark
aromatic brew into familiar green-and-white paper cups. They smile, take
orders and serve up Frappuccinos, topped with mounds of swirled whipped
cream, and slices of cake with thick and gooey icing.

Music is playing from the speakers, and some customers are nodding to the
tune; others are hunched over laptops, cups of cappuccino nearby, steamed
milk drifting like half-melted icebergs in a black sea.

"This is such a great place to go," said Alexis Becker, 22, a headhunter. "I
go to Starbucks everyday. It has a nice atmosphere. And I like the coffee."

That feeling is exactly what Howard Schultz, the chairman of Starbucks
Corp., and now considered one of the savviest executives around, wanted to
create when he bought a small equity stake in a tiny Seattle coffee bean
store 22 years ago.

But lately something's been brewing at Starbucks, and it isn't just the
coffee.

Starbucks' image as a hip and fair place to work or as a great company to do
business with is just that: image, according to some employees.

A group of employees in New York have tried to affiliate with a union to
give them strength in negotiations over wages, work conditions and benefits.
Although they have hit snags in their early attempts to form a bargaining
unit, employees at the store at 36th Street and Madison Avenue in Manhattan
have vowed to continue trying to organize. If they are successful, it would
be the first Starbucks in the United States to unionize.

Starbucks officials rebuffed several attempts by Newsday to seek comment
from them about these issues.

Newsday spoke with more than 20 employees from 15 stores around Long Island,
Queens, Brooklyn and Manhattan about the company and working conditions.

Most of the employees interviewed said they did enjoy working for the
company but had complaints about physical problems or issues regarding wages
and hours. All but two of the workers asked not to be identified for fear of
retribution from the company. Many said they were concerned about losing
their jobs. In some cases, the workers talked freely but stopped after being
told by a manager that they could not talk with a member of the press.

When a small band of workers tried to start a union 2 1/2 months ago at the
Madison Avenue store, the company launched a strong opposition, employees
there said.

Daniel Gross, a Starbucks barista at the store and an organizer of the
effort to create a union, said the employees decided to establish a union to
address benefit and health issues. "Starbucks pays us poverty wages," he
said, "and makes it difficult to get benefits."

Three years ago, Starbucks had to pay $18 million to settle a class-action
lawsuit from managers charging that the company wrongfully denied them
overtime pay. This past June, two Starbucks managers from Boca Raton,
Florida., filed a lawsuit against the company for similar reasons.

But even some industry analysts say that employee dissatisfaction could hurt
Starbucks' image.

"Scandal can do real damage to companies with powerful brands," said Nancy
Koehn, a professor of business administration at Harvard Business School.
"Today's consumer not only wants to know about the company's product, but
how it is run."

Despite several requests from Newsday, Starbucks spokeswoman Audrey Lincoff
said Schultz and other executives were not available for comment. She also
declined to make baristas available to talk on the record about conditions
of their work. However, Lincoff did say Starbucks is "pro-partner."
Starbucks refers to its
employees as partners because they have the opportunity to buy equity in the
company.

Still, the company's history of progressiveness as far as workplace and
social issues is undeniable, said Sharon Zackfia, an analyst at brokerage
firm William Blair in Chicago who studies Starbucks, as well as other
analysts interviewed. When many companies are slashing pensions, asking
employees for givebacks and forcing workers to pay for more of their health
insurance, Starbucks, particularly among larger retailers, shines brighter
than the squeaky clean counters its baristas burnish so diligently.

So it is no surprise that for much of its 14 years as a public company,
Starbucks has avoided being labeled a greedy corporation, an epithet that
often is used against large profitable U.S. companies.

In fact, its image is just the opposite: Last year and in 2002, Fortune
magazine, which surveyed employees at 269 companies, ranked Starbucks as one
of the 100 best companies to work for. In 2003, after surveying 10,000
executives, directors and securities analysts, it listed Starbucks as one of
the top 10 most admired companies in the world. This year, Business Week
declared Starbucks' president and chief executive, Orin Smith, one of the
year's best managers.

The coffee behemoth can attribute its success to flavorful and varied
beverages, stylish cafes, and, despite some employee complaints, better-
than-average employee benefits and a business model apparently aiming to put
a Starbucks in every nook and cranny of the world.

The company, which has grown from six outlets in Seattle to more than 8,200
stores worldwide since 1987, plans to open 1,500 more next year.

And it doesn't hurt that its profits are brewing up better than the actual
coffee it makes. For the first half of 2004, Starbucks posted $4.2 billion
in sales, up 28% from the same period in 2003.

Benefits for employees aren't easy to scoff at, either. Schultz, who came
out of Brooklyn's Bayview projects, has said he was bent on creating a fair
and equitable workplace for his employees, particularly since his father,
Fred, who worked several blue-collar jobs, died without a pension or
savings.

Even part-time workers can get medical, dental and vision insurance
coverage; Bean Stock, the company's stock option plan, which allows them to
purchase the company's stock at discounted prices; and a 401(k). "That's far
better than what other employees get at other quick-service and fast- food
restaurants," said Zackfia. "Turnover is also going down. So there must be
something the company is offering that they like."

Employees interviewed by Newsday acknowledged that the company has its good
points, but they argued that it is not as worker-friendly as they'd like.

Gross, who is leading attempts to organize a union, said part-time workers
get benefits only if they work 20 hours a week, which is not guaranteed. And
when they do get benefits, they must pay for them. That cost is especially
difficult when baristas are paid $7.75 an hour, $2.60 over the minimum wage,
he said. Raises are also paltry, he said, ranging anywhere from a dime to 60
cents.

But the worst problem that baristas suffer, some say, is the repetitive
motion injuries because of the movements they make when making coffee.

Anthony Polenco, a barista at the Starbucks store at Madison Avenue, said he
hurts constantly from working the espresso machine.

"I suffer from pains in my wrist all the time," said Polenco, who led the
union drive with Gross. "Sometimes hot milk will splash on me. Some days I
can't move my wrists." However, he said he has not filed a workers'
compensation claim.

A former Starbucks manager on Long Island, who asked not to be named and who
is pursuing a workers' comp claim against the company, had to undergo
surgery for tendinitis.

In May, Gross and 12 other employees, with the help of Industrial Workers of
the World IU/660, tried to create a union at the Madison Avenue store,
hoping to communicate their issues to the higher levels of Starbucks
management.

The company responded officially by filing an appeal with the National Labor
Relations Board, arguing that the Industrial Workers of the World should
have far more workers and stores in order to start a union.

Later, Gross and other employees at the store filed a brief with the labor
board, complaining that Starbucks' regional supervisors were trying to
ferret out the identity of those who voted for the union and persuade them
to leave the organization.

"Starbucks respects the free choice of our partners and has no role in the
decision made by some of the partners in this store," wrote Audrey Lincoff,
a company spokeswoman, to Newsday in an e-mail response to questions about
the union.

Two weeks ago, workers at the Manhattan store withdrew their petition to
form a union after the labor board said it would review Starbucks' appeal, a
decision that could "tie up our attempts to become a union for several
years," Gross said.

He added that the Starbucks employees at the store will continue to work
together to ask the company to address concerns about workplace issues.

"We do not legally represent the workers at the store," said Benjamin
Ferguson, branch secretary of the New York City IWW. "But we are still
working with them to address Starbucks' workplace issues."

Starbucks' employees in Canada, who formed a union several years ago, are
not surprised by the difficulties New York employees are facing, according
to a union representative there.

Jef Keighley, of the Canadian Auto workers, which represents 130 Starbucks
workers in Vancouver, said its union is "alive and well" but has been
battling with the company for two years over workers' pay and work
conditions. [ August 9, 2004 ]