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Starbucks leader grilled by Senate over anti-union actions

Mar 29, 2023, 5:20 PM | Updated: 5:26 pm

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FILE - Howard Schultz, chairman and CEO of Starbucks Coffee Company, speaks at the company's annual shareholders meeting on March 19, 2014, in Seattle. Schultz will face sharp questioning Wednesday, March 29, 2023, when he appears before the Senate Health, Education, Labor and Pensions Committee to defend the company's actions during an ongoing unionizing campaign. (AP Photo/Ted S. Warren, File)
Credit: ASSOCIATED PRESS

(AP Photo/Ted S. Warren, File)

Longtime Starbucks CEO Howard Schultz insisted the coffee chain hasn’t broken labor laws and is willing to bargain with unionized workers during an often testy, two-hour appearance before the Senate Health, Education, Labor and Pensions Committee.

But he also was firm in his stance that the Seattle coffee giant already provides good wages and benefits and doesn’t need a union. And he pointed out that only around 1% of Starbucks’ 250,000 U.S. employees have elected to join a union.

“We’ve done everything that we possibly can to respect the right under the law of our partners’ ability to join a union,” Schultz said. “But conversely, we have consistently laid out our preference, without breaking any law, of communicating to our people what we believe is our vision for the company.”

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At least 293 of Starbucks’ 9,000 company-owned U.S. Starbucks stores have voted to unionize since late 2021, according to the National Labor Relations Board. Starbucks Workers United, the labor group seeking to unionize stores, has yet to reach a contract agreement with the company at any Starbucks store.

U.S. Sen. Bernie Sanders, a Vermont Independent who has been a vocal supporter of Starbucks labor organizers, accused the company of stalling. He said multiple federal courts and administrative judges at the NLRB have found Starbucks guilty of hundreds of labor law violations, including firing labor organizers and illegally closing unionized stores.

“The fundamental issue we are confronting today is whether we have a system of justice that applies to all, or whether billionaires and large corporations can break the law with impunity,” Sanders said.

Jaysin Saxton, a disabled U.S. Coast Guard veteran and former Starbucks shift supervisor, testified that the company fired him in July after he led a two-day strike at his Augusta, Georgia, store, which voted to unionize last spring. Saxton has filed unfair labor practice charges with the NLRB.

Prior to the union vote, Saxton said Starbucks flooded the store with managers who disciplined employees for minor violations and held required meetings where they threatened employees with a loss of benefits if they voted to unionize. After the union vote, he said, seven workers were fired and others at the store saw their hours cut.

“Starbucks and big corporations have a lot of power and money and they are willing to pull out all the stops to deny workers a voice and a seat at the table,” he said.

Schultz denied the company has broken the law and said Starbucks is appealing those charges. He said Starbucks respects workers’ right to unionize but believes the company already provides its workers with industry-leading wages and benefits.

He noted that Starbucks’ average starting wage is $17.50, while the minimum wage in Vermont is $13.18.

“I think unions have served an important role in American business for many years. In the ‘50s and ’60s, unions generally were working on behalf of people in a company where people haven’t been treated fairly,” Schultz said. “We do not believe that we are that kind of company. We do nothing nefarious. We put our people first.”

That comment earned a rebuke from Sen. Mike Braun, an Indiana Republican, who said $17 per hour is not a living wage.

“Any large corporation shouldn’t necessarily be bragging about $15 to $20 wages,” Braun said.

But other Republicans defended Starbucks, saying it has created millions of jobs and is being demonized by Democrats to bolster their support from unions.

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Sen. Rand Paul, a Kentucky Republican, questioned why customers are willing to pay $6 for a Starbucks latte, and said his family is satisfied with Maxwell House. But Starbucks still deserves respect, he said.

“The hearing today is convened to attack a private company for its success,” Paul said.

Sen. Tina Smith, a Minnesota Democrat, questioned Schultz’s respect for employees, noting that the company has refused to add new benefits — like credit card tipping or wage increases — at stores that have unionized. Schultz countered that those benefits are subject to bargaining.

Smith said labor organizers are seeking to address an imbalance of power within the company. Workers say Starbucks cuts their schedules with little notice, for example, making them ineligible for benefits.

“You’re a billionaire and they are your employees. The imbalance is extreme,” Smith said.

Schultz angrily responded that repeatedly calling him a “billionaire” was unfair.

“I grew up in federally subsidized housing. My parents never owned a home. Yes, I have billions of dollars. I earned it. No one gave it to me,” he said.

Sanders had sought Schultz’s testimony for months. Schultz had tried to sidestep the hearing, suggesting that others in the company were more deeply involved in labor matters.

But Sanders argued that Schultz, who stepped down as interim CEO last week but remains on the company’s board, was instrumental in setting the company’s policies. Schultz, who led Starbucks from 1987 to 2000 and from 2008 to 2017, returned as interim CEO last April.

Sanders asked Schultz to commit to providing the union with contract proposals within 14 days. Schultz would not, but said Starbucks remains prepared to meet in-person for bargaining. The union has tried to hold some bargaining sessions over Zoom, which Starbucks has rejected.

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Starbucks’ anti-union stance appears set to continue under the company’s new CEO, Laxman Narasimhan, who took over leadership of the company last week.

“I continue to believe a direct relationship with our partners is the best way forward,” Narasimhan told The Associated Press last week.

Still, the company could face some internal pressure to improve its labor relations. Late Wednesday, Starbucks said its shareholders had approved a measure calling for an independent assessment of the company’s commitment to workers’ rights. Fifty-two percent of those voting favored the measure.

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Starbucks leader grilled by Senate over anti-union actions