Saturday, May 7, 2022

Starbucks: The Fight for Unionization (2022)

Case Controversy

Gen Z battles to bring unions to Starbucks. https://www.bbc.com/news/business-58540250

With over 350,000 employees spread between more than 30,000 stores, Starbucks is the largest and most industry-dominating coffee company in the world. Since 1971, they have been undergoing rapid expansion and development, quickly growing into the coffee giant it is today alongside other names like Tim Horton’s and Dunkin Donuts. One reason businesses like these can grow so fast is the ready supply of low-skilled and low-paid labor. When opening a new store in a new area, workers of practically any background and skill level can work at Starbucks with no prior experience. The lack of skilled work and experience in environments like Starbucks can cause a lack of job security and fear of being replaced. Workers at businesses like Starbucks have rapidly been attempting to organize and form unions to have a louder voice within the company. “After years of low pay, tough working conditions, and few benefits, unionization is having a moment in the food and beverage industry,” (McCarthy). Another factor influencing the desire to organize for higher pay and better conditions is the COVID-19 pandemic. With the cost of basic needs like food and gas going up, and wages remaining stagnant, unions are beginning to have greater appeal to underpaid and overworked employees in all sorts of industries.

Workers' rights to form a union were officially made a law in the United States in 1935, with the passage of the National Labor Relations Act (McCarthy). The act stated that employers are required, in good faith, to negotiate and bargain with any officially recognized union of their employees. The company may choose to recognize these unions voluntarily, or in cases like Starbucks’, may not recognize the union. If this is the case, then it is up to an election process within the National Labor Relations Board, the government agency responsible for managing union elections and disputes between workers and employers.

The drive for unionization within Starbucks has gained momentum since December 2021, when two stores in Buffalo, New York became the first to unionize (Hsu). Now, more than 60 stores in over 19 states have begun to push for unionization to secure better wages, benefits, and safer conditions, and Starbucks has started pushing back (McCarthy). As soon as the workers in the Buffalo stores filed for a union election with the National Labor Relations Board, Starbucks asked that the vote be delayed. In addition to asking the NLRB to delay the union election, Starbucks also asked the agency to prohibit Starbucks workers from organizing individually, arguing that all 20 Starbucks stores in the Buffalo region should be required to vote together (McCarthy). Both requests were denied by the NLRB, and the vote went forward in favor of the union. In early February, seven Starbucks workers were fired from their jobs as baristas in Memphis, Tennessee. The company claimed this was due to “multiple violations of company's safety and security policies,” but for fired barista Kylie Throckmorton, it was not a coincidence that all seven of those fired from the store were involved in starting a union.

These are just some examples of Starbucks Corporation trying to slow or stop the forming of unions amongst its employees, but these attempts have not been very successful. These efforts to stop unionization have even been observed to have the opposite effect, like for Hayleigh Fagan who cited her reason for unionizing as receiving a company-wide letter from the Starbucks Vice President Denise Nelsen telling employees not to unionize. A similar example of high-ranking members of Starbucks showing their disapproval of the unionization was on April 11, 2022, when acting Starbucks CEO Howard Schultz “...lashed out at a coffee chain barista who was leading a unionization drive at one of the company’s California locations, telling the worker: ‘If you hate Starbucks so much, why don’t you go somewhere else?’” (Zilber, 2022). This comment sparked even further controversy. The following weekend saw six more shops in the New York area alone and one in Boston, Massachusetts deciding in favor of unionizing (Zilber). It seems the more Starbucks attempts to lash out against unions, the more positive attention these unions are gathering

Stakeholders

          The Stakeholders in this case are the employees at Starbucks, Starbucks as a company, CEO Howard Schultz, Vice President Denise Nelsen, shareholders of Starbucks, Starbucks consumers, and the general public. The employees at Starbucks will be deeply affected by this case, since they are fighting for their rights. Some of the employees, such as Reese Mercado and Hayleigh Fagan, are organizing large-scale protests and voting to ensure these changes follow through. Starbucks as a company is also a stakeholder because they are the ones that keep denying the wants of their employees. Howard Schultz, CEO of Starbucks, made it clear he will not support unionizing. Schultz explains, “I’m not an anti-union person. I am pro-Starbucks, pro-partner, pro-Starbucks culture. We didn’t get here by having a union,” (Lucas). Schultz wants his employees to have faith in him, avoiding unions. He believes that he is a leader who listens to his employees. Denise Nelson, Vice President of Starbucks, wrote a companywide letter telling Starbucks employees not to unionize. Starbucks consumers are also involved because consumers may dislike Starbucks if they find out that Starbucks is mistreating their employees. This may cause people to stop drinking Starbucks coffee which may lead to a decline in the sales at Starbucks. Shareholders of Starbucks are also stakeholders in this case. The shareholders disagree with the company, “A coalition of more than 70 shareholders wants Starbucks to change its response to union drives, citing labor groups’ growing popularity, as a growing number of the coffee giant’s locations seek to unionize,” (Lucas). If Starbucks doesn’t conform to the benefit of their shareholders, this could be a big loss to the company. Starbucks may lose many investments that were put into their company and shareholders may withdraw from the company. Since everyone can be affected by unions, this case affects the general public. Many people may read about the hardships of the employees at Starbucks and about how they are trying to form unions. Most of the world wants to be informed about unions and how workers should be treated the right way in the workplace. Starbucks executives must cautiously monitor their decisions and behaviors, because it is very easy for publicity to villainize them.

Buffalo-area workers celebrate after learning via virtual hearing they had earned enough votes to unionize the Elmwood Avenue location. https://www.wbfo.org/2021-12-09/buffalo-starbucks-store-votes-to-become-companys-first-unionized-store 

Individualism

Tibor Machan states that “Classical Individualism” is, the only direct goal of business is to profit, and the primary obligation of the businessperson is to maximize the profit (Salazar). Analyzing the case from Starbucks for this theory, individualists would say that Starbucks did not follow the theory. Starbucks’ annual revenue for 2021 was $29.061 billion, a 23.57 percent increase from 2020. The big question is now whether Starbucks employees were being treated under the law or if they were being treated illegally.

Individualism does require that it is within the law, and that means that what Starbucks did was unethical according to individualism because they fired those people. The primary concern of union organizers is acquiring better training, better staffing, and better pay that will increase over time, as well as more respect from management (Hsu). Under individualism, employees were treated ethically. Starbucks’s primary goal was to profit, which was placed through the employee's working conditions. But a National Labor Relations Board judge ruled that Starbucks had illegally fired three baristas and otherwise violated federal labor laws in seeking to beat back unionization efforts at several of its Manhattan locations. The administrative law judge, Mindy E. Landow, found that Starbucks had also broken the law by issuing negative job evaluations to union supporters and prohibiting employees from discussing the union even though the employees were allowed to discuss other subjects not related to work (Greenhouse).

Utilitarianism

If a utilitarian oversaw Starbucks, they would handle it with restoring happiness for everyone. The theory of utilitarianism maximizes happiness for all beings. Utilitarianism states that actions or behaviors are right if they promote happiness or pleasure, which are the only values according to utilitarianism. The values of utilitarianism include, “happiness of all conscious beings, often interpreted hedonistically as pleasure and the absence of pain, but also sometimes interpreted as the satisfaction of desires,” (Salazar). It takes everyone into account and wants the overall good for all people. Utilitarianism also has strong support for civil liberties and civil rights. All decisions made should benefit the entire population. A utilitarian would say that Starbucks is unethical.

Starbucks is lacking awareness for all its stakeholders. The employees at Starbucks are not happy with their working lives and the fact that the company is against unions. If Starbucks allowed unions to improve the working conditions of their employees, they would be maximizing happiness throughout the entire population. They are not happy with their pay, the control of their managers, and their staffing. Erika, a shift supervisor in Ohio explained her work life, “We are tired, we are worn out, and people are not nice to us," (Meisenzahl). There is very short staffing at Starbucks which is putting a strain on their employees. Employees are pressured to complete the work of multiple people. For Reese Mercado, “the decision to unionize came after they watched a customer physically assault a former coworker over enforcing vaccine requirements at their Starbucks store,” (Molla). These employees don’t take pleasure in the ways that they are treated in Starbucks.

Even though Starbucks did not want to lose profits and wanted to solve issues through their direct partnership with one another, it is morally impermissible because it does not maximize the pleasure of their employees. The employees do not receive the necessary civil rights and liberties that they are entitled to. Some of the key characteristics of a utilitarian are consequentialist, welfarist, and accountable. Starbucks does not appear to have any of these characteristics. The ethical rule of utilitarianism states that “Business actions should aim to maximize their happiness in the long run for all conscious beings that are affected by the business action,” (Salazar). The actions of the Starbucks company do not give its employees happiness or pleasure which proves that Starbucks is unethical according to the theory of utilitarianism.

Kantianism

A Kantian would consider the push for unionization, or at least the freedom to do so, as the most ethically beneficial. According to the Kantian formula of humanity, the only thing that is truly valuable in itself is humanity and we must respect each other’s. Humanity in this case refers to the rational power within individuals (Salazar). The formula also forbids the use of other people without consideration of their rationality. Salazar further states that under Kantian business ethics topics that concern the poor treatment of individuals in unfair positions of bargaining power and poor working circumstances are also impermissible and immoral. Any action that does not treat people as a mere means, therefore, is permissible. In the case of Starbucks battling unionization, rationality was considered as follows:

Starbucks CEO (Howard Schultz): Howard Schultz, the CEO of Starbucks, is acting unethically according to Kant. This is because he does not consider the rationality of his employees by attempting to limit their voice and ability to make changes within the company. As opposed to listening to the demands of employees and abiding by the law, Schultz has been combating union development in order to maximize profits thus disregarding the rationality of his employees. Since he is treating the store employees as a mere means, and not as an end, his actions are impermissible.

Starbucks Corporate: Starbucks corporate is no different than Schultz, and is following his orders to attempt to slow or stop the spread of unions within the chain. They have been sending out company-wide anti-union letters and encouraging employees to not support unions. People who have attempted to speak out or support unions are finding themselves fired by upper management for reasons that don’t coincide with the situation. In doing so the corporate staff at Starbucks are also treating employees as a mere means, thus acting impermissibly.

Starbucks Investors: The people who have invested in Starbucks as a company will also be affected by the changes taking place. The reasoning behind Starbucks combatting union development is in part to maximize profits, which will most benefit the corporate employees but will also benefit the company’s shareholders. There is nothing morally impermissible about investing in a company, and the stockholders do not make decisions regarding the unions so their ethical impact on the case is negligible.

Starbucks Employees: The stakeholders most affected by the ongoing changes are the workers at the Starbucks stores, particularly the ones undergoing unionization. They stand to benefit from creating unions by receiving higher wages, better benefits, higher job security, and the ability to have an impact on company decisions. Gaining this ability would mean their rationality is being taken into consideration by the company, which according to Kant is the only permissible way to interact with your employees. The employees themselves are not acting in a way that forgoes anyone’s rationality and are attempting to enforce the impact of their own, therefore following the formula of humanity.

General Public: Overall, although coffee prices may increase if more unions arise, the general public would be negatively impacted if Starbucks is successful in fighting the unions. This is because it would set a precedent for companies to have more power over their employees through the ability to combat union development, thus forgoing their rationality in favor of the companies' profitability. This would lead to more companies repeating what Starbucks is doing and pushing against unions, thus acting impermissibly according to Kant.

It is evident from the above analysis that Starbucks is acting unethically from a Kantian viewpoint. The company is using its unfair position of bargaining power to attempt to silence and stop the development of unions of its employees by firing and threatening workers. Since this case is still ongoing and more and more union votes are happening every day, it cannot be stated for sure how the situation will end up.  It is known, however, that Starbucks has been maliciously and intentionally violating the rationality of its workers in favor of higher profit margins and more control over its workers, which is completely impermissible according to Kant and negatively affects more stakeholders than those it positively affects.

Virtue Theory

Virtue theory relates the following proposal tied to Aristotle’s functionalism: whether an act is considered good depends on whether it fulfills its function well or not. If you wonder if something is considered virtuous, ask yourself: given this thing’s purpose, does it function well? Characteristics that help a person fulfill their functions properly are considered virtues, or “good-making features.” Some of these features include the four cardinal virtues: courage, temperance, justice or fairness, and honesty. In exercising rationality, another highly valued virtue, people learn what it means to function well which results in happiness. This differs from utilitarianism in that virtue theory is based on living a flourishing and fulfilling life, rather than strictly maximizing happiness.

In the context of the case, if the Starbucks employees are not being supported as they deserve, Starbucks Corporation is not functioning well. The corporation cannot be considered righteous if they do not have the courage to directly approach this conflict or exercise justice by actively listening to the concerns of the baristas. One could argue that Starbucks’ function is to provide customers with their product offerings as best they can, but if the quality of their staff’s work environment is poor, they are not functioning well. A business cannot function well without two of the most important virtues in a business context: trustworthiness and cooperation. Until they gain both of those from their employees, it is arguable that they cannot be considered “good-making.” On the side of the Starbucks employees, they are essentially arguing that they cannot fulfil their primary function well in the conditions they are provided. If the employees had what they are asking for (a higher level of respect from upper management, more sustaining pay, and the guarantee that their voices would be heard), they could function much better (Hsu). From this perspective, the Starbucks baristas fighting for a union can be considered virtuous, since they are striving to perform their jobs as best as they can. However, if union leaders were pushing for a union and unwilling to communicate clearly with Starbucks Corporation, they cannot be considered very just or fair. They are not fulfilling their duty as union supporters as virtuously as they could be. Therefore, neither Starbucks Corporation nor the union supporters can be considered completely righteous.

As long as Starbucks Corporation and union leaders follow the doctrine of the mean, they may fulfill their functions well and, in turn, achieve satisfaction. The doctrine of the mean states that good lies at a point between two extremes, at a “just-right point.” For example, union leaders must show courage in defending their right for better treatment, and courage lies at a midpoint between two extremes: cowardice and rashness. Cowardice on Starbucks Corporation’s end would result in giving baristas the confidence and authority to make any decisions in their favor, which may not align with Starbucks’ overall business model and cause large profit loss. The baristas cannot act rashly because that may result in the executives losing respect for them entirely. Both parties acting extremely would not resolve the conflict and gain satisfaction, which is the ultimate goal.

Action Plan

A Starbucks barista finishes preparing a drink for a customer. https://stories.starbucks.com/stories/2021/key-takeaways-from-starbucks-q2-fy21-earnings-results/

           If we simplify the main problem, we gather that Starbucks employees are fighting for the formation of a union, but executives are against it. Employees have established that their main conditions include better training, better staffing, more respect from managers, and better pay that will increase over time. Realistically speaking, unionizing would be a poor move profit-wise. Prices of products would rise, decreasing the appeal of their product offerings. The reality of union fees would also be unattractive to employees. An agreement could be reached if Starbucks Corporation met the demands of their baristas without unionizing. Just as the baristas have the right to fight for unionization, Starbucks Corporation has the right to settle conflict by “making available full and adequate governmental facilities for conciliation, mediation, and voluntary arbitration to aid and encourage employers and the representatives of their employees to reach and maintain agreements concerning rates of pay, hours, and working conditions, and to make all reasonable efforts to settle their differences by mutual agreement,” (National Labor Relations Board). This means Starbucks will not have a third party between them and their employees, and baristas will be granted the better treatment they requested.

Starbucks’ current mission statement as stated on their website is “to inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time,” (Starbucks Corporation). An excellent first step toward change is to create a new mission statement. Their main message should display an employee-centric mindset. Their new mission statement should be something along the lines of “measuring in the right amount of respect, support, and sweetness.” This will eliminate some negative emotions toward the company, causing people to move forward and continue buying from Starbucks, since “people prefer to do business with and work for socially conscious companies,” (Gross). This is also the first step in advertising to the public that they are focused on improvement. Starbucks can distribute advertisements with themes of unity and open-mindedness, such as graphics of handholding or handshaking and video clips of varying levels of staff conversing positively. A new set of core values must also be established. They should include respect, openness to change, fairness, integrity, and trust. Executives must meet with employees of all levels to hear their concerns and draft a plan. They should include consultants to facilitate conversation and avoid breaking labor laws. They should also distribute objective information to clearly educate everyone working for Starbucks precisely what a union would entail. Some employees may be following the unionizing trend or reading from biased sources. Starbucks should run a vote for every branch to gauge how many locations are truly interested in unionizing. As of April 2022, only around 300 locations have pushed for votes, while about thirty have voted in favor of unions, out of more than 30,000 total Starbucks locations.

When Starbucks and their baristas finally reach an agreement, what will it entail? What practices will be implemented? Starbucks should work closely with baristas to develop a more effective and elaborate training program for new hires. Moving forward, they should also look to hire people in positions of power whose values align with those of the company. Anyone on the Starbucks decision-making team who will not work in favor of the new values and practices will not contribute to future success and should be let go. Even after meeting a compromise, baristas must still meet regularly with business leaders so their voices can continuously be heard. This will foster more respect toward employees from upper management. One suggestion is to create a committee of full-time baristas from Starbucks locations all around the nation who meet regularly with executives to voice concerns. Last of all, Starbucks should proceed with increasing baristas’ pay. At the very least, employees who have been with the company for one or two years should be making at least $15 an hour and get a pay raise annually. If Starbucks wants to regain trust from their partners, they must support them in any way they can.

These steps will increase profits in the long run since reassuring advertising methods will earn back most, if not all, customer trust. Acting quickly and implementing change shows initiative. Customers will be impressed, and employees will feel heard. There is potential for operations to continue thriving as they were before the original conflict arose. The monetary costs of making these changes is necessary to maintain good ethics. These plans are ethical because they strive to keep every party happy; Starbucks Corporation will no longer deal with the threat of unionizing, employees will receive better treatment, and profits will return to their previous flow. Pro-union workers will receive the listening ears and just treatment they were pushing for. Starbucks will be more fit to carry out their duties, which is considered virtuous. After considering many other options, this approach is visibly the most ethical, resulting in the most positivity as possible.

Authors: Allie Provost, Julia Ferrentino, Max Phaneuf, & Paul Riccio

References

Greenhouse, Steven. “Starbucks Loses Round in Battle Over Union.” The New York Times, The New York Times, 24 Dec. 2008, https://www.nytimes.com/2008/12/24/nyregion/24starbucks.html.
Gross, Daniel. “Latte Laborers Take on a Latte-Liberal Business.” The New York Times, The New York Times, 8 April 2007, https://www.nytimes.com/2007/04/08/weekinreview/08gross.html
Hsu, Andrea. “Three More Starbucks Locations in Buffalo Area Vote to Unionize.” NPR, NPR, 9 Mar. 2022, www.npr.org/2022/03/09/1085583068/three-more-starbucks-locations-in-buffalo-area-vote-to-unionize.
Lucas, Amelia. “Starbucks CEO Howard Schultz Says He's Not Anti-Union, but His Past Tells a Different Story.” CNBC, CNBC, 9 Apr. 2022, www.cnbc.com/2022/04/09/starbucks-ceo-howard-schultz-has-history-of-opposing-unions.html.
McCarthy, Amy. “Everything You Should Know about the Starbucks Union Wave.” Eater, Eater, 10 Feb. 2022, www.eater.com/22925565/starbucks-union-wave-explained.
Meisenzahl, Mary. “Starbucks' CEO Says Employees Are in Good Spirits, but Some Workers Say the Chain's Benefits Don't Make up for Understaffed Stores and Low Pay.” Business Insider, Business Insider, 1 May 2021, www.businessinsider.com/starbucks-employees-say-they-are-under-understaffed-and-underpaid-2021-5.
Molla, Rani. “How a Bunch of Starbucks Baristas Built a Labor Movement.” Vox, Vox, 2 Apr. 2022, www.vox.com/recode/22993509/starbucks-successful-union-drive.
National Labor Relations Board. “Guidance: National Labor Relations Act.” National Labor Relations Board. 2022. https://www.nlrb.gov/guidance/key-reference-materials/national-labor-relations-act
Salazar, H. The Business Ethics Case Manual. N.d.
Scheiber, Noam. “Union Wins Election at a Second Buffalo-Area Starbucks.” The New York Times, The New York Times, 10 Jan. 2022, www.nytimes.com/2022/01/10/business/starbucks-union-election-buffalo.html.
Starbucks Corporation. "Living Our Values.2022. Starbucks Corporation. https://livingourvalues.starbucks.com/en-us/
Zilber, Ariel. “Starbucks CEO to unionizing baristas: Why don’t you go somewhere else?” The New York Post, NYP Holdings, Inc., 11 Apr. 2022, https://nypost.com/2022/04/11/starbucks-ceo-lashes-out-at-unionizing-baristas/ 

No comments:

Post a Comment