Add Starbucks’ chief executive officer to the list of business leaders in favor of an increase in the U.S. minimum wage. True, Speaker of the House John Boehnor will turn into an albino before the House of Representatives passes a law lifting the minimum wage from $7.25 an hour, but the chatter over such an increase grows louder. Starbucks’ CEO Howard Schultz is the latest high profile executive to voice support for increasing the hourly rate for America’s lowest paying jobs.
Last week Schultz voiced measured support for another minimum wage hike, which would be the first reset since 2009. Schultz expressed caution for such an increase due to its possible negative effects on some businesses. His comments follow those of Costco’s CEO Craig Jelinek, who on balance also supports a minimum wage increase.
Do not count on a surge of support for a change in federal minimum wage laws from the business community, however; last week Subway’s founder Fred Deluca suggested a spike in the minimum wage would increase costs of franchises and, therefore, prices. CEOs of other large companies, such as Landry’s Tillman Fertitta during a recent Fox Business interview about his opinion of a potential hourly wage increase, stridently oppose the idea.
The minimum wage issue ties in to Schultz’s approach to business at Starbucks since he landed at the company in the mid-1970s. He faced a difficult upbringing in the Brooklyn project in which he grew up after his father broke his ankle and could not work and support his family. As a result, Schultz has long beat his own drum as a corporate activist. Starbucks has spent more money on health care than on coffee beans; in 2011, he and the company spearheaded a jobs campaign that raised $15 million; and he has been a sharp vocal critic of the political shenanigans in Washington and their effect on the economy.
Speaking of job creation, while hipsters and foodies are quick to slam Starbucks for a bevy of reasons, the fact is the Seattle giant has spawned its own economic growth and opportunity machine. Rather than putting indie coffee shops out of business (the biggest of the many myths about this company), Starbucks has accomplished the opposite–coffee shops and chains have proliferated because imitation, and innovation to do even better, are the sincerest forms of flattery. Of course, the same minimum wage increase that Schultz and Jelinek support would also have impact on those same indie shops, many of which operate on the thinnest of margins.
As a road warrior who has spent more time at Starbucks around the world than I can shake a coffee stirrer at, the overall experiences of my barista friends shape my cautious optimism about Schultz’s views. Starbucks employees with whom I have spoken over the years have generally raved about their health care plans and are grateful they qualify if they work a minimum of 20 hours a week. But, at an hourly wage averaging less than $9 an hour (minus tips and benefits), living off of Starbucks’ wages is a stretch for many workers. “When I started seven years ago,” said one employee to me recently, “our raises were bigger and now it seems like I’m at a plateau.” In Boston, in fact, shift supervisors at local Starbucks’ stores fought for a pay raise after a court decision banned them from sharing tips during their shifts.
A huge increase in the minimum wage is hardly a perfect solution to addressing the issues of poverty and employment in America. But as more consumers wish to patronize companies who do good not only for the environment but their workers, companies such as Costco and Starbucks set a standard too many retailers and food service companies are far from equaling.
Published earlier today on Triple Pundit. Leon will speak at San Francisco State University on climate change, the media and business on Wednesday, April 3. You can follow Leon and ask him questions on Twitter or Instagram (greengopost).
[Image credit of Starbucks in downtown Palm Springs: Leon Kaye]