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Howard Schultz: There will be ‘unintended consequences’ of $15 minimum wage

Following an announcement that Starbucks would be paying for its employees to get a college education, Howard Schultz joined “The Daily Show” and the topic of Seattle’s $15 minimum wage surfaced.

“I don’t know if that’s the right number or not,” Schultz said of the city’s plan to raise the minimum wage to $15 an hour. “(Starbucks will) follow the law. I think there will be unintended consequences of small businesses not being able to support that, but that’s not the issue. The issue is that we have to provide not only a good wage, but we have to provide total compensation.”

Schultz said total compensation includes company ownership (shareholding,) health care, and his latest plan to provide college tuition.

“Companies need to do more for their people and the communities they serve,” he said.

While Schultz appeared somewhat unclear on the plan in place to raise Seattle’s minimum wage, he did say successful companies need to be focused on more than the bottom line.

“You can’t just focus on profitability. An enduring, great company has to be based on more than that.”

Starbucks is partnering with Arizona State University to make an undergraduate education available at a steep discount to 135,000 U.S. employees who work at least 20 hours a week. Workers will be able to choose from 40 educational programs and they won’t be required to stay at Starbucks after earning the degree.

For freshman and sophomore years, students would pay a greatly reduced tuition after factoring in a scholarship from Starbucks, ASU and financial aid, such as Pell grants. For the junior and senior years, Starbucks would reimburse any money that workers pay out of pocket.

Tuition reimbursement is a rare benefit for low-wage workers in the retail industry. In 2010, Wal-Mart Stores Inc. started offering partial tuition grants for workers at American Public University, a for-profit, online school.

Starbucks already has a program that reimburses workers for up to $1,000 a year at City University of Seattle or at Strayer University. Starbucks says that will be phased out by 2015 in favor of the new program, which is far more generous.

The Seattle company doesn’t know how many of its workers will apply, and it isn’t saying how much the program might cost it. Tuition for an online degree at ASU is about $10,000 a year, although it can vary depending on the program. Many Starbucks workers would likely qualify for a Pell grant, which can be worth as much as $5,730.

The Associated Press contributed to this report.

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