Starbucks is giving all of its US employees a raise of at least 5%

Starbucks employees CEOChip Somodevilla/Getty ImagesStarbucks CEO Howard Schultz greets an employee, who if they still work at Starbucks is about to get a raise.

Stop me if you’ve heard this before: higher wages are coming to America

Enter Starbucks.

In a letter sent to employees on Monday, Starbucks CEO Howard Schultz outlined a number of company benefit initiatives that will take effect later this year.

Among them is that Starbucks will be giving all of its US employees at least a 5% raise later this year effective on October 3. 

The company is also doubling the annual stock award for employees that work at the company for at least two years straight. 

Starbucks said these changes will result in pay increases between 5% and 15% for all US employees depending on tenure. 

And while the company is certainly raising wages ahead of expected minimum wage hikes in a number of states, Starbucks’ preemptive wage increase also reflects clear competition for labour in the services economy.

In the June jobs report we saw average hourly earnings in the US rose 2.6% over the prior year, the fastest since the financial crisis.  

Wages in the leisure and hospitality sector — which include Starbucks’ customer-facing employees — are rising faster than the national average, increasing 4% over the prior year in June. 

Again, as we’ve written a number of times, the labour market has been approaching “full employment” over the last couple years, which is effectively the point at which wage increases begin to accelerate quickly.

And a company like Starbucks, which has over 180,000 full-time employees around the world and operates nearly 12,000 stores in the US, is going to feel this squeeze perhaps more acutely than any other business. 

Because as pay increases across the labour market and competition for lower-skill workers intensifies, it is imperative for Starbucks to retain staff in order to keep the customer experience smooth. 

And the easiest way to keep your staff is to pay them more. 

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