How Howard Schultz Made Starbucks the Poster Child of Corporate Abuse

Yves here. There’s a lot competition for the title of “Nastiest CEO”. And just by weight of numbers, Amazon has a strong claim. Starbucks has only 400,000 employees while Amazon has just over 1.5 million, and one would think at least half work in its warehouses. As bad as working for Starbucks can be, it does not seem to result anywhere near as often to physical exhaustion and joint damage.

But current Amazon CEO Andy Jassy has been low profile. Jeff Bezos still remains a billionaire to scorn even though he is no longer in the saddle at Amazon. So Howard Schultz as founder and still head honcho of Starbucks is arguably a prime target. But has the well-deserved criticism of Starbucks’ union busting reached the mainstream? And on top of that, customers who have antipathy for Starbucks the company or Starbucks the coffee may find themselves bereft of alternatives, say in an airport. Reader sanity checks appreciated.

By Sonali Kolhatkar, an award-winning multimedia journalist. She is the founder, host, and executive producer of “Rising Up With Sonali,” a weekly television and radio show that airs on Free Speech TV and Pacifica stations. Her forthcoming book is Rising Up: The Power of Narrative in Pursuing Racial Justice (City Lights Books, 2023). She is a writing fellow for the Economy for All project at the Independent Media Institute and the racial justice and civil liberties editor at Yes! Magazine. She serves as the co-director of the nonprofit solidarity organization the Afghan Women’s Mission and is a co-author of Bleeding Afghanistan. She also sits on the board of directors of Justice Action Center, an immigrant rights organization. Produced by Economy for All<, a project of the Independent Media Institute

Starbucks CEO Howard Schultz, in a recent interview with CNN’s Poppy Harlow, proudly showed off his newest invention: a tablespoon of olive oil added to a cup of coffee to bring out rich, complex flavors. The conversation took place in Italy and was meant to showcase Schultz’s commitment to the innovation and quality of Starbucks coffee as he gets ready to step down as CEO of the company for the third time.

When Harlow asked him why he was in Italy doing interviews rather than sitting down with representatives from Starbucks Workers United (SWU) to negotiate a contract, he responded, “We want to and are willing to enter into bargaining, but we want to do it face to face. That’s what we think is the right thing to do.”

Schultz was referring to the fact that negotiating meetings were taking place virtually over Zoom—the way that most meetings took place during the height of the COVID-19 pandemic, and the way that many continue to be conducted. The union sees his demand for in-person meetings as an excuse to delay negotiations. According to Axios’s Emily Peck, the issue could end up being decided by a court. However, she pointed out, “Arbitration is often done virtually, as are court hearings. It would be unusual for a court to prohibit this at the bargaining table.”

Indeed, Schultz has been playing dirty during his latest tenure as CEO, operating as union-buster-in-chief of the iconic corporation while trying to paint himself as a sympathetic character.

Harlow’s interview with Schultz began in Sicily and ended in Brooklyn, New York, at the public housing project where he grew up—an obvious juxtaposition intended to showcase how the CEO of one of the most well-known American brands knows what it’s like to struggle in a working-class environment. CNN’s camera remained trained on Schultz’s face as he pointed out the stairwell in which he would hide from an abusive father. “I could almost cry, actually,” he said.

This sort of sympathetic profiling of self-made billionaires—Schultz is worth $3.7 billion—is intentional. The implied narrative is that if someone from a low-income background who faced abuse at the hands of a parent could turn into a successful billionaire, surely Starbucks’s young, educated workers could improve their circumstances on their own.

In fact, in Schultz’s worldview, hardship was the impetus for his success. “I never would have had the drive to do what I’ve done and have the success I’ve enjoyed if I didn’t come from this place,” he said. There is, once again, an implied narrative: hardship builds character, and Starbucks workers ought to be grateful for the chance to struggle.

But workers, rightly, think they deserve better. Since the first group of Starbucks workers unionized a café in Buffalo, New York, in late 2021, more than 278 stores have done the same, according to SWU. Still, the number of unionized cafés remains a tiny fraction—about 3 percent—of all stores.

Apparently, Schultz takes even this tiny trend personally, as if Starbucks’s failure to keep workers happy was a design flaw rather than an inherent characteristic of corporate America. He addressed workers early on in the union campaign and said that the company had failed to give them the tools they needed, such as better staffing and training, according to a New York Times report. Schultz admitted to Harlow that he returned to Starbucks as CEO in April 2022 directly in response to the wave of union activity at cafés across the United States.

But instead of responding to workers, Schultz’s strategy was to create an uneven playing field and punish workers for daring to demand better conditions.

In 2022, Schultz reportedly rewarded nonunion workers with better wages and benefits, as well as credit card tipping, and denied the same to people working in union stores. As a result, the New York Times reported, “Filings for union elections dropped from more than 60 a month in March and April to under 10 in August.”

In other words, the drive to unionize worked to improve conditions—at least for some workers. But Schultz’s petty punishment also worked to slow down the union’s momentum.

Starbucks’s retaliation against workers has gone further than uneven benefits. The company is firing union leaders such as Starbucks worker Hannah Whitbeck in Ann Arbor, Michigan. Her termination prompted a lawsuit and a federal judge’s decision that, initially, prohibited Starbucks from firing workers for union activity nationwide. Shortly afterward, the judge in question, in a remarkable move, retroactively limited his ruling to just the one store where Whitbeck worked rather than applying it to all Starbucks stores nationwide.

The company has also been understaffing stores that are unionizing, a move that the union says is a deliberate ploy to make workers’ lives more difficult.

Schultz has also been closing down entire stores that have dared to take up union activity, including the first store in Seattle to unionize (Seattle is the city where Starbucks was founded). The company is citing “safety issues,” but SWU sees it as clearly retaliatory. “This is just the beginning. There are going to be many more,” warned Schultz in July 2022.

Schultz is proving workers’ point. As long as an employer can abuse workers as Starbucks is doing, there is a need for unions. And union activity is surging, with a 50 percent increase in strike activity in 2022 compared to the year before, according to the Bureau of Labor Statistics.

The CEO sees himself as above the law. He refused to testify about his company’s 75 documented violations of federal labor laws in front of the Senate Health, Education, Labor, and Pensions Committee, chaired by Senator Bernie Sanders. Sanders responded to the refusal with a pithy observation: “Apparently, it is easier for Mr. Schultz to fire workers who are exercising their constitutional right to form unions, and to intimidate others who may be interested in joining a union than to answer questions from elected officials.”

Sanders has now hinted that he may subpoena Schultz.

Indeed, companies like Starbucks won’t voluntarily treat workers well. They have to be forced into doing so, and unions are a powerful way for workers to stand firm against abusive CEOs like Schultz.

There are lessons for workers and corporations in the recent union negotiation between Japanese automaker Toyota and the union representing Toyota workers. The union asked for its largest pay hike in 20 years. Remarkably, the company agreed to all the union’s demands in the very first round of negotiations.

Toyota’s head Koji Sato said the move was intended as an example “for the industry as a whole,” and that it reflected his “hope that it will lead to frank discussions between labor and management at each company.” It worked. Hours after Toyota’s announcement, Honda accepted its workers’ union’s demands in full.

Schultz has ruined Starbucks’s reputation as a company that cares about its workers and become the poster child, even in the business world, of what not to do when faced with union activity.

Instead of fighting the union tooth and nail, Schultz could take a page out of Toyota’s book and embrace worker demands. In his CNN interview, he admitted that what Starbucks workers want more than anything is “a seat at the table.”

He also said, “It’s hard to walk in someone else’s shoes, but you’ve got to do that a little bit.” Instead of experimenting with olive oil in coffee, he could try something else that’s new for him—treating workers with the same respect that he commands.

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    1. Arizona Slim

      OTOH, Yves’ headnote was on point, as usual. In many instances, I think her headnotes are better than the articles that follow.

      1. Kevbot9000

        It’s like the Onion where the best work is when they don’t bother with an article because the headline is just that good.

  1. Lex

    Side story about Schultz. He’s an alum of the small, state college where I live. But he’s never donated (he did/does operate a Starbucks on campus). Apparently something pissed him off when he was a student, and he may have been a partial scholarship athlete, that the university admin refuses to apologize for or that he refuses to give up his grudge over. So this university that’s desperate for donations and funding has a billionaire alum who refuses to give them a dollar.

    1. TimH

      Interesting… you are talking about a state school. Would wealthy alums be expected to fund their state primary and high schools?

  2. Kurtismayfield

    Why wouldn’t a corporation do everything it could to union bust? The fines are paltry considering the benefits. The fines that were just levied on Starbucks weren’t even in the significant digits of the revenues that the company makes. It’s essentially a rounding error for them.

  3. David in Santa Cruz

    Don’t give Howard Schultz credit for being “founder” of Starbucks. Jerry Baldwin, Zev Siegl, and Gordon Bowker founded Starbucks with advice from Alfred Peet.

    Per Wikipedia, Schultz came along as a young salesman for Hammarplast filter cones after Starbucks had been in business for half a dozen years and became their retail and marketing person. Several years later the founders sold-out to Schultz in order to focus on Peet’s Coffee. Schultz continued to grow the business and took it public, but he wasn’t the “founder.”

  4. lyman alpha blob

    Of course Schultz wants to bargain face to face. Virtually hippy punching isn’t nearly as fun. Intimidation works much better when you can see the thugs who are about to throw a pink slip at you and throw you out the door.

  5. William Verickw

    Impressive person. Overcoming adversity is what made him great. Let’s get added benefit by letting him face more adversity. Let’s tax his wealth. For everything above $1 million, let’s tax his net worth at 90%. Just think of the miracles he’ll produce in overcoming (this round of) adversity. What a great formula for dealing with rich people whose claim to fame is that they overcame adversity. Time to treat people like him as if they are greyhound dogs running around the track for us.

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