Who knew labor had a demand curve? Raise the price of it, and less is demanded by those doing the hiring, even when the employer is as saintly as Starbucks. From Tyler Durden at zerohedge.com:
One year ago, when the political push to raise the minimum wage hit a crescendo, the CEO of Starbucks had some words of caution. Howard Schultz told CNN that minimum wage “should go up across the country”, however he warned that “it will be very difficult for small business in the country at a $15 level to pay those kinds of wages.” What about for his own company? “For Starbucks come January 1 we are taking wages up across the country and we will pay above the minimum wage in every state we operate. Starbucks is way above the minimum wage. I have always looked at total compensation.”
His conclusion: “I have always believed that our success as a company is best shared.”
One year later, something “unexpected” has happened as a result of the Schultz’ all too eager push to “share” his company’s success by hiking minimum wages, namely the realization by the company’s employees (if not so much the CEO, management and certainly shareholders) that total compensation is a function of two things: hourly wages and number of hours worked.
As Reuters reports, an online petition accusing Starbucks of “extreme” cutbacks in work hours at its U.S. cafes, hurting both employee morale and customer service, has been signed by more than 9,000 people. Suddenly Starbucks’ eagerness to raise its wages becomes all too clear: after all, it would merely have to reduce work hours, to keep profitability humming.
The world’s biggest coffee chain, trying to address cooling growth at its U.S. shops, recently introduced technology that allows customers to order and pay from mobile devices. That service aims to boost sales and reduce bottlenecks in stores; it also aims to reduce work hours.
In short: Starbucks is finding itself in a sales and profit squeeze (its shares have gone nowhere for the past year), and having been such a fervent supporter of minimum wage hikes, is now far less willing to “share” its success as a company, especially if it means a stagnant stock price for the foreseeable future.
Starbucks CEO Howard Schultz and other top brass have spoken with Jaime Prater, a Southern California barista and the online petition’s creator, the Seattle-based company said. It declined to give details but Starbucks spokeswoman Jaime Riley said it is not uncommon for Schultz to reach out to members of its 160,000-strong U.S. workforce. She said that Starbucks has a software system that determines labor needs based on business trends.
In which case, one wonders what the company’s attempt to squeeze out every last penny from the bottom line by implementing “extreme” cutbacks to work hours says about business trends in the US, and the economy in general.
But back to the disgruntled employees who don’t share Schultz’ optimism that this is all merely orindary course of business. Comments on the petition painted a picture of broad discontent at the company known for offering better wages and benefits than other chains, including healthcare coverage, retirement account contributions and paid vacation days.
Prater and many signers say they noticed cutbacks in U.S. staffing hours after Starbucks in April reported a deceleration in quarterly cafe sales growth. Several of them said store managers were under pressure to comply with the dictates of Starbucks’ software system.
Translated: boost profits by reducing overall pay.
To continue reading: Something “Unexpected” Happened After Starbucks Raised Minimum Wage
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Thank you thank you thank you thank you thank you thank you someone needed to say it. This world is becoming more and more an idiocracy every day. Do whatever you can to stop it, sir. I commend you.