Starbucks Union Battle: Schultz's Halo Falls Short

The one-time progressive hero is portrayed as an icon of corporate greed as the company he built is accused of union-busting excesses as the company he built has been accused of union-busting.

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The political left has a new corporate bogeyman: Starbucks interim CEO Howard Schultz, who has built the company into a ubiquitous global coffee giant over the last 40 years.

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In an appearance before a Senate committee this week, Schultz and Starbucks were used as stand-ins for corporate greed and union-busting during a hearing that was led by Vermont Senator Bernie Sanders. As it turns out, Schultz narrowly avoided a vote on whether the committee should subpoena the CEO of Starbucks by agreeing to testify at the end of the month about Starbucks' alleged violations of labor law.

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Schultz's abrupt death is a shocking turn for a man who once was thought of as a beacon of progressivism, a man who spoke out about social issues, such as gay marriage, Black Lives Matter, and gun control, long before it became trendy for companies to do so — right before it stopped being perhaps the most judicious thing for companies to do at that time. At least by companies of corporate America's standards, Starbucks considers its employees to be partners and provides them with generous benefits in return. In spite of this, Schultz and the company continue to fight bitterly against employees' attempts to organize, a move that threatens to undermine Schultz's legacy as a leader in the conscious capitalism movement due to the way they handle employee organizing efforts.

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During the Obama administration, Wilma Liebman, a former chairman of the National Labor Relations Board, pointed out that Schultz is showing the "reflexive anti-unionism" often seen among company founders. As a result of their tendency to take the activism of their fellow workers personally, this group of workers is the most vulnerable to anti-union behavior. Starbucks has disappointed Liebman, he says.

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Schultz has openly admitted that he takes the arrival of the union at the company as a personal affront, and that is one of the main reasons that he returned to the company for a third stint as CEO. It has been stated by Schultz that the union was formed because the company had lost its way, in an attempt to absolve him of the blame for his predecessor, Kevin Johnson. The president has also painted his motivation as more grandiose than that, saying he wants to "reinvent the role and responsibility of a public company" — a reinvention that does not seem to include unions in its agenda. 

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Putting Starbucks under the umbrella of a union lumps the company together with the kinds of bad corporate actors that the company used to build a positive image of itself as a good employer by using them as a foil. During a recent interview with CNN's Poppy Harlow, he stated that unions in America, for the most part, have existed and succeeded in the past because companies have done nefarious things on the backs of their workers in the past. Last year he gave a similar answer in The New York Times' DealBook conference to Andrew Ross Sorkin, telling him "The history of unions is based on the fact that companies in the '40s, '50s, and '60s abused the workers in their care. I can assure you that we are not in the coal mining business. We are not abusing people in any way."

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The history lesson Schultz is giving us about the labor movement isn't wrong, it's just wrong in the way he's doing it. But this is not a true reflection of why we are currently seeing a surge in union support, which has reached a nearly 60-year high, and why there is now such a surge in union membership. The sociology of labor professor at the City University of New York, Ruth Milkman, reveals that we are experiencing a generational shift in the workplace: During and after the Great Recession, the leaders of today's labor movement encountered a huge gap between their expectations when they grew up and the realities of the post-2008 job market when they entered the workforce. Many of the highly educated people ended up working in the service sector despite the fact that they were highly trained. It is widely recognized that the pandemic only served to underline the fact that essential workers are often the ones who are both the most vulnerable and the lowest paid as a result of the epidemic.

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It is generally the case that organizing activities tend to occur at companies that have what Milkman describes as a "progressive patina" - for instance, Starbucks, REI, Whole Foods, and Trader Joe's - as their values are the ones that are most aligned with those of workers who have a strong pull toward mobilization. In addition to the racial, gender, and economic issues that they claim to care about and want to address, the same issues that employees believe unions are best suited to address are also issues that they think unions can best address. It is true that employees want a better salary, a better benefits package, and a better work environment. Furthermore, they say that they want to be present at the table and have a voice in the processes involved in the use of their labor. Schultz, however, says that at Starbucks, the union has a different vision for the company than the management and that having a third-party figure in charge of Starbucks' employees would have a negative impact on the customer experience. 

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As shocking as Starbucks' alleged union-busting activities are, they are not exactly out of the ordinary. The point is that they represent an outsized risk for a company that has spent decades building up a reputation as a good corporate citizen. In a decision that was widely covered by the national media, an administrative judge in New York ruled last week that Starbucks had committed hundreds of labor law violations and had demonstrated “egregious and widespread misconduct” by intimidating employees, firing and disciplining organizers, as well as withholding benefits from unionizing employees. According to Starbucks, all claims of anti-union behavior at Starbucks throughout the region are "categorically false."

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The company acknowledges in its annual report that the union fight will taint Starbucks' reputation, but Schultz says he is not concerned. “The company has warned us that union organizing efforts could negatively impact our brand and our business, as well as our financial performance.” In addition to turning off consumers, the risk involves not only corporate employees who have expressed discomfort about what they perceive to be a discrepancy between the company's purported values and its response to the union campaign. The Trade Algo reports that Starbucks employees based in offices in the United States were surveyed by the company's internal survey in October, and 52% of them said they totally agree with the assertion that Starbucks "behaves ethically and responsibly." A group of corporate employees wrote an open letter last week criticizing the way management treated store workers who attempted to organize.

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Schultz played the role of benevolent CEO during his appearance at the DealBook conference last year, in which he talked about the importance of speaking out on the issues that matter most to employees, in an interview with Dealbook. According to him, “you cannot run a company through the lens of your values when it is convenient for you to do so. There are always going to be decisions to make, because people will be looking at you as an individual, particularly your own people, about what you stand for.” But what happens when the values of a company and the CEO differ significantly from those of its employees? Schultz will have to address the question when he appears before Sanders' committee on March 29 to answer the question. It will be his last act as CEO before he is replaced by Laxman Narasimhan on April 1st, so this will be one of his very last acts. It will be yet another opportunity for him to perform on a national stage, but perhaps not before the kind of audience he had hoped for on his farewell tour.