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