Do Hot Coffee and 'Wobblies' Go Together?

Tue, 03/21/2006 - 10:44am -- SWU

Wall Street Journal

By KRIS MAHER and JANET ADAMY

March 21, 2006

Unions haven't had much luck organizing Starbucks Corp.'s baristas, many of whom are part-timers or college students with little incentive to sign union cards since they're not planning on building long-term careers brewing venti skim lattes.

The latest to try to organize the company's workers is the Industrial Workers of the World, a union with a long, feisty history and a counter-cultural aura.

Starbucks recently settled a complaint issued by the National Labor Relations Board that contained more than two dozen unfair labor practice allegations brought against the company by the IWW. The settlement stemmed from disputes at just three stores in New York City and will likely have little impact on the vast majority of Starbucks workers. But it illustrates the careful approach the company is taking toward labor activists as Wal-Mart Stores Inc. and other union targets try to rebuild their images after union campaigns tarnished their reputations.

Starbucks prides itself on offering what it considers generous pay and benefits. Part-time workers in its stores are eligible for medical, dental and vision benefits and Starbucks covers eligible same-sex domestic partners. The company's medical plan helps pay for treatments like acupuncture and store workers can get stock options, known as "bean stock," and tuition reimbursement.

Much of the union's strategy is to try to chip away at Starbucks' image as a socially responsible corporation. Earlier this year, Starbucks made Fortune magazine's 100 Best Companies to Work For list, ranked at No. 29.

The IWW has only about 2,500 active members, but its rank-and-file activism is attracting a small but growing number of young members. Labor experts say many Starbucks workers fit the union's profile. In New York, baristas at three stores have told management they have joined the IWW. (Union dues are $6 a month -- less than the cost of the CDs Starbucks sells at its counters.)

The union, whose members were dubbed Wobblies, was founded in 1905 by socialists and anarchists, including Mary Harris "Mother" Jones. The IWW was strongest around the World War I era, but continued even when membership was so diminished, some believed the group had faded away, when it hadn't.

The organization has always emphasized worker solidarity and direct action, such as strikes and boycotts, rather than electing leaders to hash out contracts with employers. IWW officials argue that contracts can weaken a union's effectiveness since they limit when workers can strike or take other actions on behalf of themselves and other workers. Today, the IWW has members at some employers under contract while others, like those organizing at Starbucks, prefer to resolve issues through direct action, without a contract.

At Starbucks, the IWW's demands include wage increases and providing workers with guaranteed hours and lower eligibility requirements and out-of-pocket expenses for health-care benefits. The union's tactics have included publicly confronting Starbucks managers with lists of demands and disrupting store operations by getting supporters to pay for drinks with pennies.

To make its case, the union pushes a comparison between the health-care coverage of workers at Starbucks and Wal-Mart, arguing that about 42% of Starbucks employees get coverage through the company, less than the roughly 46% of Wal-Mart workers who receive employer-sponsored coverage.

"Starbucks has anointed itself a leader in employee health care but the fact remains that a lower percentage of its employees are insured than at Wal-Mart," says Daniel Gross, a 27-year-old IWW union member and an organizer in New York. "We're going to escalate our outreach to workers, and pierce the socially responsible image that the company has so skillfully promulgated around the world."

Audrey Lincoff, a Starbucks spokeswoman, does not dispute the 42% figure but says it's unfair to compare Starbucks' benefits to those of other employers because it has a disproportionately young work force. Moreover, Starbucks contends that the IWW has little support from its workers, noting that the night before workers were scheduled to vote on whether to unionize a New York store in 2004, the IWW withdrew its petition in what Starbucks said was a sign of insufficient support from workers. The union says it withdrew because Starbucks legally challenged the size of the bargaining unit of the election, delaying the vote, and that its strategy at the company has always called for direct action over organizing through elections.

Starbucks won't disclose an average wage for its workers but says that, for example, baristas in New York City start at $8.75 an hour. According to the National Restaurant Association, the average wage for cafeteria, food concession and coffee shop counter attendants was $7.83 in November 2004, the most recent data available. By comparison, Wal-Mart says it expects to pay workers $10.78 an hour on average if, as the company hopes, it starts opening stores in New York City in the near future.

Starbucks' pay "is above the market rate for like chains," says John Glass, an analyst at CIBC World Markets who follows the restaurant industry. "They've done a lot of things that have made this an attractive place to work."

Employee relations are a key part of the Seattle coffee chain's image, but experts doubt that fallout from the recent wrangle with the IWW will taint the Starbucks brand.

"If the consumer's perception is that they're doing anything unfair or inconsistent with that image, certainly it will raise questions about the brand integrity with consumers," says Denise Lee Yohn, an independent brand marketer based in San Diego who has done work for restaurant chains.

And yet the company's efforts to appear socially responsible, from selling fair-trade coffee, helping run a coffee-bean farmer support center in Costa Rica and making cups with recycled paper, will probably trump that, Ms. Yohn says. "They have enough good stuff that kind of causes this halo effect over everything else, so they probably don't need to take it as seriously as a Wal-Mart," she says.

Few big unions have tried to organize at Starbucks, for the same reason they avoid fast-food chains and most retailers: the high turnover and the small number of workers at each store makes it hard to maintain organizing gains.

But some say the company is working hard to stay union-free. The Canadian Auto Workers, the largest private sector union in Canada, represents about 140 Starbucks workers at 10 stores in Vancouver and recently renegotiated a three-year contract. Susan Spratt, the CAW's lead negotiator for Starbucks, alleges the company has fought off further organizing in part by removing managers and promising better conditions at stores where the union has tried to sign up members. Ms. Lincoff would not comment specifically on the union's allegations but said "we always believe we've acted fairly and respected the free choice of our partners."

Under the recent settlement in New York, Starbucks agreed to reinstate two terminated employees who had been vocal union supporters, pay roughly $2,000 in back pay to three employees, as well as change companywide policies related to employees' rights to wear pins and distribute materials in the workplace. The company settled the complaint without admitting any wrongdoing.

Starbucks also promised not to "provide employees with benefits, including after-hours store cleaning services, free pizza, free gym passes, and free baseball tickets, in order to encourage employees to withdraw their support" for the union.

Ms. Lincoff, the company spokeswoman, wouldn't say specifically whether managers at the company had engaged in the behaviors detailed in the settlement but said "there's been no admission of guilt or liability on our part" and that "we believe we've acted fairly." She says Starbucks respects the free choice of its workers but believes that its work environment makes unions unnecessary at the company.

Suley Ayala, a barista at a Starbucks in New York City, didn't know what a "Wobbly" was before she joined the IWW in September. The 23-year-old is a practicing Wiccan, and the union has also filed a religious discrimination complaint with the Equal Employment Opportunity Commission against Starbucks on her behalf. She's worked at Starbucks for four years and she says signed up with the union because she wanted steadier hours to help ensure that she earns enough at her current wage of $9.37 an hour to support her four children.

While her hours have become more consistent thanks to the union, she says "their health care is way too expensive for me, so I took Medicaid."

Since the settlement, Ms. Ayala has been wearing as many as three union pins during her shifts at a Manhattan Starbucks. Some customers have asked if the workers are forming a union, and when she answers that they are, "Most of the time, they say 'good luck,' " she says.

Write to Kris Maher at kris.maher@wsj.com and Janet Adamy at janet.adamy@wsj.com