Howard Schultz, the three-time Starbucks CEO and current board member and significant shareholder in the coffee company, testified yesterday to the US Senate Committee on Health, Education, Labor and Pensions about the company's anti-union positions and whether it has violated federal labor laws.
Schultz's position , essentially, was that a) employees have the right to unionize, b) the company has a right to offer a non-union future, c) Starbucks is more generous and benevolent than virtually any other US company, d) the company has adhered to the letter of the law, and e) his personal involvement in the union issue was minimal, since he spent the last year focused on the operations side of a company that had "lost its way" under the previous CEO, focusing more on Wall Street short-term targets as opposed to “playing the long game.”
• Some context from the Wall Street Journal:
"U.S. baristas across 291 Starbucks stores have voted to unionize, representing roughly 3% of the chain’s 9,300 U.S. locations, the National Labor Relations Board said Monday. The federal agency said it had certified defeats for unionization votes at 58 locations. The single-store unions represented around 7,000 Starbucks employees, the NLRB said.
"Starbucks hasn’t signed a collective bargaining agreement since it began negotiating with the Starbucks Workers United union of baristas last October. The company has restricted most new perks allotted in the past year to nonunion stores, saying unionized locations need to bargain for the benefits."
• All Things Considered on National Public Radio set the scene:
"It was a hearing for the history books: Billionaire Howard Schultz, the resolutely anti-union architect of Starbucks, faced Sen. Bernie Sanders, the outspoken champion of the union movement in Congress.
"Schultz was once a prominent Democrat hailed as a progressive corporate pioneer of better pay and benefits for service industry workers. On Wednesday, under threat of subpoena, he appeared in the Senate to address allegations that Starbucks has been breaking labor laws as it fights its employees' nationwide unionization push."
• From the Seattle Times coverage:
"The hearing, named 'No Company Is Above the Law: The Need to End Illegal Union Busting at Starbucks,' had Democrat senators criticizing Starbucks’ alleged labor-law violations and Republican senators defending the company’s actions, slamming Sanders for being biased, and criticizing the National Labor Relations Board. The crowd in attendance included Starbucks workers and union representatives.
"Sanders said in his opening remarks that he would ask Schultz if he would commit to exchange proposals with the union as a first step toward collective bargaining. Schultz declined.
"'What Starbucks is doing is not only trying to break unions, but even worse,' Sanders said. 'They are trying to break the spirit of workers who are struggling to improve their lives. And that is unforgivable.'
"During the testimony, Schultz said several times that Starbucks will abide by the law and respect workers’ right to unionize. He said Starbucks will prove NLRB complaints, totaling 80, are untrue allegations … 'I support the law, and I also take offense with you categorizing me or Starbucks as a union buster when that is not true,' Schultz said."
• From Fox News:
"In his opening statement to the committee, Schultz listed off a series of benefits Starbucks has offered its employees over the last four decades, noting it was the first company in the nation to offer share ownership to both full and part-time workers starting in 1991, which he called 'unprecedented.'
"He said employee retention at Starbucks is twice the industry average, and the company offers paid sick leave, fully paid parental leave, and an array of other benefits.
"'There's literally no company, no company in our competitive set of retail that offers higher value benefits than Starbucks in the United States,' Schultz told the panel."
• From the Wall Street Journal coverage:
"Mr. Schultz defended the company’s preference to work directly with employees to meet their needs. He said that unionized stores now have twice the attrition rates than those that aren’t unionized, and baristas that had voted for a union often no longer work at company stores.
"Asked about allegations that Starbucks closed stores with union activity, Mr. Schultz said that the company closed many profitable locations because of crime, drug use and homeless individuals that had made its workers feel unsafe."
And, the Journal writes:
"Mr. Schultz said that Starbucks 'unequivocally' hasn’t broken any federal labor laws and he was confident that the allegations would be proven false. 'We treat our people fairly. We have done nothing that is nefarious,' he said.
"Some Senators also asked Mr. Schultz if it was fair to fight against baristas seeking to unionize for better pay and benefits when the company is generating billions of dollars in sales and the ex-CEO is personally wealthy. Mr. Schultz said Starbucks taps its profit to pay its workers an average wage of $17.50 an hour, and that he acquired his wealth through decades of work."
• From the Associated Press:
"'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'."
• From the New York Times:
"When Mr. Schultz appeared … he encountered a Democratic Party much changed since some of his earlier trips to Washington.
"In 1994, President Bill Clinton invited Mr. Schultz to the White House for a private briefing on the company’s health care benefits. Two years later, the president praised Starbucks when introducing Mr. Schultz at a conference on corporate responsibility. At the time, Bernie Sanders was a backbencher in the House of Representatives.
"On Wednesday, Mr. Sanders, now chairman of the Senate committee, appeared to regard Mr. Schultz with something bordering on disdain.
"Before a question, Mr. Sanders, a Vermont independent who caucuses with the Democrats, felt the need to remind Mr. Schultz that federal law prohibits a witness from 'knowingly and willfully making' a false statement relevant to an inquiry. The chairman then asked him if he had participated in decisions to fire or discipline workers involved in a union campaign. (Mr. Schultz said he had not.)"
• From the Washington Post:
"Under oath, Schultz rebutted being involved in decisions about firing or disciplining Starbucks union organizers. He said he had not taken part in closing unionizing stores. And he said he was not prepared to follow an order from an administrative law judge to distribute a video of himself reading a notice to Starbucks’ employees about their union rights.
"'I am not, because Starbucks coffee company did not break the law,' Schultz said."
• From Slate:
"Senator Bill Cassidy of Louisiana, the highest-ranking Republican on the HELP committee, followed Sanders’ opening statement by condemning the hearing, which 'clearly presumes that Mr. Schultz is guilty before the allegations are fully investigated.' He called it a 'smear campaign'."
• And more from the New York Times:
"Senator Mitt Romney of Utah, a former chief executive, said it was 'somewhat rich that you’re being grilled by people who have never had the opportunity to create a single job.' He suggested that while a union might be necessary at companies 'that are not good employers,' that was not the case at Starbucks."
• From The Hill:
"Only a couple of Republicans were critical of Schultz. Sen. Roger Marshall (R-Kansas) said that the large number of unfair labor practice charges indicates there 'may be some smoke and fire together there.'
"'Any large corporation shouldn’t necessarily be bragging about $15 to $20 wages,' Sen. Mike Braun (R-Indiana) told Schultz, adding that smaller, Main Street businesses typically pay more."
• More from Slate:
"Witnesses testified in the second part of the hearing, including Starbucks workers who described in excruciating detail how the company cut hours for union supporters, leading to the loss of benefits. They also detailed how the scheduling system, insufficient wages, and expensive benefits forced many Starbucks employees to work second jobs - which was all the more difficult because the company required them to be on call even when they weren’t working."
• More from the AP:
"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."
• From Politico:
"With over 80 legal complaints from the National Labor Relations Board against the company, though, Democrats on the Hill weren’t buying it. It made for a rough day for the Starbucks CEO.
"'It is akin to someone ticketed for speeding 100 times saying ‘I’ve never violated the law because every single time the cop got it wrong,' said Sen. Chris Murphy (D-Conn.).
"As much as anything else, the hearing laid bare the state of labor relations in the United States today. Popular approval of unions is higher than it’s been in over a half-century. The left is making increasingly more noise about what they argue are unfair labor practices. But for now, management at large corporations need only withstand some tough criticism and the occasional financial penalty as the cost of doing business."
- KC's View:
There must've been a sign on the entrance door to the hearing room:
No nuance allowed.
The hearing also struck me as a perfect reflection of one of my favorite Pete Hamill lines, that ideology is a lousy substitute for thought.
In FaceTime I already talked about this a little bit, but the more I think about it, the more appalled I am by how few exchanges of ideas took place in the hearing. It was all about taking positions and making speeches, not actually trying to learn anything. (When Sen. Rand Paul started quoting Ayn Rand as he defended Starbucks, my hair started to hurt.)
For example, when Schultz talked about the company having lost its way, it never was explored whether that created legitimate reasons for some employees to believe that unionization was a preferred option. Since the union movement started when Schultz wasn't CEO, and he said that he had little to do with anti-union activities when he returned as CEO, and now he's not CEO anymore, I might've asked him why employees should have faith in new management.
I might've drilled down more with questions about actual working conditions at Starbucks stores - the shift from hot drinks to cold drinks, the pandemic pressures created on individual store employees, and the degree to which top management is able to really understand what's happening on the front lines.
I also would've liked to know more about the allegations that the Buffalo area employee who precipitated the unionization movement there was actually on the payroll of organized labor at the same time. (This would strike me as the very essence of bad faith bargaining.)
I also want to see the results of an objective investigation into whether the NLRB is putting its finger on the scale in favor of organized labor. That probe should be expedited.
I walked away from watching the hearing feeling like nobody really was listening. I think it is fair to say that a) Starbucks traditionally has been an enlightened, progressive company, b) size and circumstances have made it harder to work at many of its stores than ever before, c) there is a fundamental disagreement between management and some employees about how to resolve differences, d) and management will do everything possible, walking right up to the legal lines, taking as long as it can, to delay the certification of any union at any store.
I know that in any hearing of this kind, there have to be rules. But I also think that people have to be allowed to complete their thoughts, to answer questions fully, to make their points. Schultz clearly was frustrated by the rules of the hearing, and I don't blame him. He also clearly is frustrated by the laws that govern how companies such as his have to deal with unions, and it remains to be seen how much blame he's going to have to take on that one.
I think there is the lesson in here for every retailer. The one thing that seems incontrovertible - even Schultz seems to acknowledge this, though he doesn't want to take any
blameresponsibility - is that there was a disconnect between company leadership and the front lines. If you, as a leader, let that happen, if you allow walls to go up between you and your stores and front line staffers, then you may experience the same problems as Starbucks. You may not end up in a Senate hearing, but you will suffer the results of what happens when you are not listening.