- Starbucks is giving all US employees a pay raise of at least 10%, according to an internal memo viewed by Business Insider.
- “This announcement is the next phase of its commitment to ensuring the well-being of partners with one of the most significant investments to hourly pay in the U.S. in the history of the company,” Starbucks representative Reggie Borges said.
- However, some employees say that pay bumps are not enough, as they demand a $US15 minimum wage across the US.
- President-elect Joe Biden has said it is necessary to raise the federal minimum wage to $US15.
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Starbucks is giving workers raises. But, some employees want more â€” and, with minimum wage hikes looming, restaurant giants may be forced to pay up.
Starbucks is giving all employees at least 10% raises, which will roll out across the US by December 14, according to an internal memo viewed by Business Insider. In the memo, Rossann Williams, the president of Starbucks’ company-owned US stores, said that the company is “making one of the most substantial investments in pay in our company’s history.”
Wage hikes include:
- A pay increase of at least 10% of all baristas, supervisors, and cafe attendants
- At least an 11% pay bump for workers (who Starbucks calls “partners”) with three years of continued service
- At least a 5% pay increase to all start rates
- An increase to the premium that Starbucks pays above minimum wage in every market
Starbucks representative Reggie Borges confirmed the raises, saying in a statement to Business Insider that Starbucks has been a leader in worker benefits for nearly 50 years
“Continuing in that tradition, this announcement is the next phase of our commitment to ensuring the well-being of partners with one of the most significant investments to hourly pay in the U.S. in the history of the company,” Borges said. “We have a multi-year aspiration to make more meaningful investments in pay as it continues to rebuild and grow the business.”
Baristas are celebrating, but some workers want more from Starbucks
Multiple petitions are circulating online to raise Starbucks’ pay, including one demanding $US15 starting pay for all employees. Max, a Starbucks worker in Chicago, was one of the more than 8,800 to sign the petition. A few weeks after signing, Max said, Starbucks alerted employees about the raises.
“I think it’s Starbucks reacting to social media and not actually listening to the people until a petition blows up,” Max told Business Insider. (Business Insider agreed to only use Max’s first name to allow the employee to speak freely about the situation.)
The pay increase follows significant investments Starbucks has made around worker safety during the pandemic. In late March, the company announced it would be paying employees to stay home if they felt unsafe working during the pandemic. The company is allowing employees to take an unpaid leave of absence through March 2021, while keeping existing benefits.
Still, Starbucks workers continue to face challenges during the pandemic. Employees say they are facing harassment from anti-mask customers, as well as stress-related to working as COVID cases surge.
“If we’re labelled as essential workers, we should get paid essential,” said Jay Josef, who has worked at Starbucks for nine years. “That’s why [we want] a $US15 minimum wage increase.”
Minimum wage hikes could hit Starbucks hard
With President-election Joe Biden’s victory over President Donald Trump, the question of how much workers should be paid is a hot topic in the restaurant business. Biden has said it is necessary to raise the federal minimum wage to $US15, which would boost how much many low-wage restaurant workers make.
“One other thing that people may not realise is we’ve raised the minimum wage in weak economies in the past,” Jared Bernstein, an outside economic advisor to Biden and formerly a top aide during his vice presidency, told Business Insider in October. “The results have been the same.”
The likelihood of a $US15 minimum wage passing under Biden declined after Republicans won several key Senate seats, leaving the government divided. However, with more states passing regulation to increase minimum wages, the topic remains top of mind for many restaurant executives.
In the past, the restaurant industry has fought hard against raising the minimum wage. However, recently, some fast-food giants have relaxed their opposition. McDonald’s, for example, stopped lobbying against minimum wage increases last year.
“We’ve been pretty clear for a while now that we are not against a conversation about the minimum wage,” McDonald’s CEO Chris Kempczinski said in an interview with CNBC. “We work in 120 markets around the world with wage rates all over the place, from over $US20 to less than that.”
Starbucks’ bottom line could suffer more than McDonald’s or Dunkin’s if all workers start making $US15. In late October, Stifel analyst Chris O’Cull said in a report that Starbucks, along with Chipotle and Shake Shack, are among the three restaurant stocks that could be most impacted by a $US15 minimum wage.
According to O’Cull, Starbucks would be hit hard by minimum wage hikes because it is not a franchise. Roughly 9,600 of the chains’ locations in the US are owned by the company, about half of total Starbucks locations across America.
As a result, higher pay would cut into the company’s bottom line instead of being covered by franchisees, who own and operate most locations of fast-food chains in the US. Further, O’Cull wrote, sit-down chains are more likely to have workers that already make over minimum wage or are in tipped positions (which would not be impacted by the same regulation).
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