Howard Schultz And Starbucks' Long History Of Fending Off Unions

Howard Schultz wanted to broker a compromise.

In 2009, progressive Democrats were working on the most significant labor law reform in decades. The Employee Free Choice Act (EFCA) would allow workers to form unions by rounding up a majority of signatures in their workplace ― a process known as “card check” ― thereby avoiding a secret-ballot election and any anti-union campaign from management. Business groups feared a wave of unionization if the law passed.

So in stepped Schultz, then the chief executive of Starbucks, along with the CEOs of Whole Foods and Costco. Billed as a deal to satisfy both unions and employers, the Schultz proposal would streamline union elections and ramp up penalties for illegal union-busting. But it would also get rid of the card check measure, which was at the heart of the reform, and toss out a major provision making it easier for unionized workers to secure their first collective bargaining agreement.

Schultz said his aim was to offer “a voice of reason.” But to those hoping to reverse the steady drop in union membership in the U.S., his plan didn’t seem like much of a compromise at all.

“I remember it was like someone was trying to be extremely unhelpful,” recalled Jody Calemine, a Democratic staffer on the House labor committee at the time. “It went over like a lead balloon. People quickly went back to trying to figure this out.”

EFCA never made it into law ― several moderate Democrats wouldn’t get on board with the card-check measure ― and Schultz’s involvement probably had minimal impact on its fate. But with the billionaire now testing the waters for a presidential run as an independent, hoping to win over middle-of-the-road voters dissatisfied with both parties, the episode says plenty about how he fashions himself a benevolent executive and man of compromise.

Schultz was touting his EFCA alternative as a “third way” to bridge a divide between two intractable sides. But in reality, his idea would have simply preserved a system in which it was harder for workers to join unions ― a system that benefited Starbucks and Schultz.

“I think the proposal reflects a penchant for wanting to maintain the status quo, maintain his power and his ability as a CEO to decide what’s best for working people,” said Calemine, who’s now general counsel at the Communications Workers of America union.

Starbucks has long enjoyed a reputation as an enlightened employer. While the coffee chain pays the lower wages typical of the food-and-service sector, news stories have praised the company and Schultz, its longtime CEO who stepped down last year, for offering stock grants, tuition reimbursement and a health insurance plan to hourly employees. But beneath those progressive trappings there often was a conservative antipathy to collective bargaining by workers.

Erin McPike, a spokeswoman for Schultz, said the former CEO believes unions “have played a critical role where companies have fallen short.” But in the case of Starbucks, “there was not a need for a union because what he was offering was always superior.”

“He strongly believes companies have a deep and abiding responsibility to take care of all their people,” she said.

If Schultz seemed eager to torpedo the EFCA reforms, it may have been because his company had been battling unions for years. The Seattle-based chain’s Washington roastery and a half-dozen of its first stores were unionized in the 1980’s by the United Food and Commercial Workers union. There were maybe 120 Starbucks union members back then, estimates Dave Schmitz, who was head of organizing at UFCW Local 1001 at the time.

In his 1999 memoir, “Pour Your Heart Into It: How Starbucks Built A Company One Cup At A Time,” Schultz recounted how he viewed the union as unnecessary ― and even an affront to his management: “I was convinced that under my leadership, employees would come to realize that I would listen to their concerns. If they had faith in me and my motives, they wouldn’t need a union.”

According to Schultz, a college student and Starbucks employee began a decertification campaign aimed at ousting the union in 1987 ― a move Schultz wrote of approvingly. A majority of store workers eventually signed on. The roasting plant workers decertified their union five years later, according to the book.

Schmitz said the former CEO’s account fails to convey just how much Schultz worked against the union. According to Schmitz, as the parties negotiated over a second contract, Starbucks’ lawyers tried to reduce workers’ health benefits and strip out their right to “just cause,” a standard provision in union contracts that protects workers from arbitrary firings. He said the company also wanted the right to change working conditions without consulting the union.

Schmitz still has a leaflet his union created to pass out in Chicago as the company expanded there, accusing Starbucks of not negotiating in good faith.

“He told people if they got rid of the union… they would do better,” recalled Schmitz, who’s now retired.

Schultz viewed the union’s expulsion as a sign Starbucks was primed for growth across the U.S. and beyond: “Once I had their full support, I knew I could count on them to work as a team and imbue them with the enthusiasm they would need to spread the word about Starbucks coffee around the world.”

Starbucks faced another major union campaign beginning in 2004, when the company was on its way to growing beyond 10,000 locations around the world. The Industrial Workers of the World, a union outside the mainstream labor establishment in the U.S., launched a grassroots organizing effort dubbed the Starbucks Workers Union in a handful of cities. The group wanted to prove it was possible to unionize workers in the all but union-free world of fast food.

Daniel Gross was among the Starbucks employees in New York who soon filed a petition for a union election, seeking higher wages and more stable work hours.

“The very first response that we got from the company was a company-wide voicemail, which management transcribed and posted in stores,” recalled Gross, who is now the executive director of the labor group Brandworkers. “It was a message from Howard Schultz, telling us how disturbed and disappointed he was that this group of baristas at a store in New York had decided to form a union.”

The union election never happened ― the employees eventually withdrew their petition ― but the work of the Starbucks Workers Union led to a slew of cases before the National Labor Relations Board, the federal agency that referees disputes between unions and employers. Testimony revealed that Starbucks corporate executives coordinated a response to the organizing efforts, conducting interviews with employees to determine if they were union supporters. When a store with union sympathies had openings, the company transferred “pro-Starbucks” workers there instead of hiring unknowns.

An administrative law judge ruled in 2008 that several of the company’s tactics ran afoul of the law, including discriminating against pro-union workers and forbidding employees from discussing the union inside the store even though they could talk about other non-work issues. The same judge ruled that Starbucks illegally fired Gross for his union advocacy, forcing the company to rehire him with back pay. A federal judge reversed that ruling on appeal years later, saying the firing was related to work performance.

Erik Forman also claimed to have been fired for his activism. He filed a complaint against the company and was rehired. He said he worked for Starbucks in the Minneapolis area for roughly five years, eventually getting treated for tendonitis due to the repetitive work of making lattes. He thought a union could help workers secure better schedules, noting the company was infamous for “clopenings” ― workers having to close down the store at night then reopen it just a few hours later the next day.

The practice became widely known after a 2014 New York Times story profiled a Starbucks barista and single mother who struggled to weave her life around her erratic work schedule. The article prompted Starbucks to say it would change its scheduling policies throughout its stores.

“[Schultz] is very adept at selling himself as this benevolent patriarch, when in reality the company he built runs on the same model of fast-food exploitation as all of its competitors,” said Forman, who’s now an adjunct professor at SUNY Empire State College.

Schultz’s view of collective bargaining doesn’t appear to have changed much since the Starbucks union in Washington state was decertified some 30 years ago. In an interview to discuss his possible White House campaign on MSNBC’s Morning Joe on Wednesday, Schultz was asked what he would do to rebuild unions in the U.S. as a way to reduce income inequality. He said trying to reform the tax code would make more sense.

“Unions have a role to play,” Schultz said, “but unions are not the answer.”