RENTIER CAPITALISM

Toronto's new wealth gap is driven by real estate, not income | The Star

Date: 2022-04-16 

When Giulio and Antonia Cescato bought a brand-new, modestly sized condo-townhouse in downtown Toronto in January 2015 they paid just under $600,000.

They made $150,000 at the time, a combined salary that, along with equity from Giulio’s condo, allowed them to put down a 20 per cent deposit.

The two-bedroom home at Dundas and Sumach streets that they share with their six-year-old son, Gabriel, is near schools, transit, grocery stores, daycares, barbershops, banks and restaurants. Their payments right now leave enough room to splurge once in a while, and take the “occasional vacation,” without feeling stretched.

They had wanted to upsize eventually, but even with the increased value of their home, re-entering the housing market at the current sky-high prices would leave them “mortgage poor.”

“Even if the bank was to give us a mortgage, it doesn’t seem sustainable in our minds to take on that much debt,” Giulio, 42, said.

By today’s standards, the Cescatos are lucky. They were able to buy their house when the average cost of home was about $620,000. This year to date the average is $1.3 million.

The high cost of real estate has led to a widening wealth gap threatening individuals’ security and the long-term prosperity of the GTA — a divide not based on income, but on when and if you were able to buy into the real estate market.

That difference determines more than if a family scrapes by, scrounging for rent or mortgage payments, or whether it can comfortably cover its housing costs, and afford restaurants and vacations.

It also impacts the biggest life decisions, says University of British Columbia professor Paul Kershaw — whether to move out of your parents’ home; live with a partner; have children.

On Monday, federal Finance Minister Chrystia Freeland called Canada’s housing affordability challenge an “intergenerational injustice.”

“We cannot have a Canada where the rising generation is shut out of the dream of home ownership,” she said, referencing her government’s budget measures to increase housing supply and affordability.

It was an acknowledgment of how, in less than a generation, buying a home has gone from a financially challenging but relatively common milestone, to a pipe dream for many people, especially those without family wealth. The fevered housing market of the pandemic has only exacerbated those challenges.

Ontario home prices are 22.5 times the average disposable income, up from 12.1 in 2010, and 9.7 in 2005, according to a report from Oxford Economics released by Mortgage Professionals Canada in March.

“Maybe not 10 years ago, but 15 years ago, if you grew up in Toronto and you were fortunate to get a good education and get a good job, you could buy a house and you could live in a neighbourhood either where you grew up or in another neighbourhood of your choice,” says University of Toronto professor Matti Siemiatycki.

Now the tension between what people earn and the price of a home is pulling at the fabric of the city.

“People who grew up here can’t live in the neighbourhoods they grew up in anymore. They can’t afford to buy and often can’t afford to rent either,” he said.

The gentrifying of neighbourhoods risks “severing deep meaningful social ties as people hustle to make ends meet,” said Siemiatycki, citing soul-sapping commutes and “painful decisions to leave a place that they often love and call home.

“If young families and workers can no longer afford to live in Toronto or people feel precarious in their place here, the city risks losing the work and dynamism they contribute,” he said.

It also cements inequality within generational cohorts, says Kershaw, a founder of Generation Squeeze, a group that advocates for intergenerational equality, noting there is an entire swathe of people who don’t have access to wealth.

About a quarter of older Canadians are not homeowners, said Kershaw. That means their family members can’t rely on intergenerational wealth for housing assistance.

---

Canadians have one of the world’s highest rates of home ownership. In 2016, 67.8 per cent of Canadian households owned their dwelling. In Toronto it was 53 per cent.

New census data won’t be available until summer, but the most recent statistics suggest home ownership is down among younger people. The 2016 Census showed half of millennials owned a home at age 30, compared to 55 per cent of baby boomers who owned at that age.

And the trend seems to be more prominent in Toronto. The 2018 Housing Survey by Statistics Canada found while half of first-time homebuyers nationally were under the age of 35, only 41.2 per cent of first-time buyers in Toronto were under 35.

Toronto couple Karan Kumra, 33, and fiancée Erin Prisciak, 32, have given up vacations and live frugally in order to the make the mortgage payments on the upper Beach semi they bought late last year for just over $1 million.

The couple — who have a combined salary of $150,000 — say they wouldn’t have been able to enter the market if it weren’t for sizable help from family.

Prisciak, a radiation therapist, said for her, with $50,000 in student loan debt after graduating, buying a house in Toronto was “never an option.”

The couple were only able to purchase because of a gift of $250,000 from Kumra’s parents. That reduced their mortgage to around $805,000, which still means $3,000 a month in payments.

“We pretty much can’t plan trips outside the country, or we’ll fall behind on our mortgage. So, we do small trips in Ontario and maybe later we’ll get to other parts of Canada,” said Kumra, an entrepreneur who manages retail operations for a cannabis outlet in Toronto.

They’re thankful for being able to buy their home, which they view as a retirement asset.

“We’re very privileged, very lucky … to have that kind of assistance from family. We’re absolutely thrilled that we got in when we did because (the market) is getting (more expensive),” Kumra said.

That kind of gift isn’t the reality for most first-time home buyers. Ipsos research for the Toronto Regional Real Estate Board found only 17 per cent of buyers were counting on gifts from family or friends. And while the proportion of buyers expecting family support has been consistent since 2015, the value of those gifts has grown along with “the meteoric rise of housing,” said Ipsos senior vice-president Sean Simpson.

“There’s no amount of hard work or pulling yourself up by your bootstraps that is going to help most people (get into the market),” added Prisciak. “If you don’t have some kind of wealth from family, I don’t think buying a house in Toronto is an option.”

Kershaw agrees.

“We’ve created an economy where full-time work in a reasonable period of time cannot secure housing. I don’t even mean home ownership — even access to a rental with enough bedrooms to have a family,” he said.

Kershaw calls himself a prime example. During his 17 years as a professor, he figures he’s paid about $500,000 into his defined contribution pension plan.

“Last year, while I was sleeping, my home went up by $500,000,” he said.

The impact is personal and public. In the hot real estate markets of Toronto and Vancouver, Kershaw said the high cost of housing will make it increasingly difficult to attract the best and brightest workers.

“Why would you want to come where your wage is going to buy you a fraction of the property? You’re pushing that 30- or early 40-year-old away from cities because they’re looking for space, they’re looking for the access to the ground to send their kids out to play,” he said.

While families moving further out of the city to smaller communities rejuvenates more affordable places, it also spreads the contagion of unaffordable housing and wealth inequality by driving up the prices there.

---

For economist DT Cochrane, the Toronto region’s housing crisis isn’t a sudden, isolated problem — it is a symptom of an issue that has been brewing for years.

It is “maddening,” he said, that people have been talking about the wealth gap since long before the pandemic.

In the GTA, there are few social issues that better illustrate the growing divide between rich and poor than the lack of affordable housing.

And while governments and the housing industry mainly focus on a supply shortage, analysts and economists, including Cochrane, who works with Canadians for Tax Fairness, say the high cost of housing has to be viewed in the context of other factors including wages, pensions, interest rates and the commodification of homes.

If we ignore those issues, the wealth gap will only widen as people increasingly view housing as their retirement nest egg or an asset for a corporation.

“What’s happening in the housing market is going to turbocharge the process,” he said.

“Owning a house becomes an important source of leverage to then buy another house and another house. To go from owning one house to two houses is much easier than to go from owning zero houses to even one house.”

A 2020 report from the Toronto Region Board of Trade and WoodGreen Community Services found people earning $40,000 to $60,000 a year have been priced out of Toronto. Among them: personal support workers, grocery clerks, social workers, nurses and teachers.

Anyone who works in the city should be able to afford to live in the city, said Cochrane. “Otherwise, they’re just fly-in slaves.

“The fact that a teacher can’t afford to buy a house in Toronto should be really worrisome to the people of Toronto,” he said.

If more workers had union protection, stronger pensions and higher wages, people would be less reliant on rising home values for their financial futures, added Cochrane.

“We don’t think about corporations having obligations to their workers at all, whereas in the immediate postwar era there absolutely was that perspective.”

U of T professor Siemiatycki says it’s also important to put rising housing costs through the lens of inclusivity and diversity — who is able to buy into the market and who is excluded.

“We are running the risk of gentrification in some neighbourhoods that have really historic ties to racialized communities and continue to be hubs of those communities,” he said.

“If the market is just left to run wild, those communities have often had a very hard time buying in.”

Mike Moffatt, senior director of policy and innovation at the Smart Prosperity Institute, who also teaches at the Ivey Business School at Western University, adds that households could face another kind of crisis. He is among those who say it is possible home prices will eventually fall, although he won’t speculate on when that might happen.

If they do, he says, “There is a good chance we end up with the worst of both worlds where we have a significant enough correction to put people underwater (having a mortgage that’s higher than the value of your property), but prices are still so high that first-time homebuyers can’t get into the market.”

Moffatt fears it could take five to 15 years to sort out the region’s housing supply issue — which he believes is the main driver of unaffordability. Asked if that means an entire generation has been sacrificed, he says, many people have already been priced out for years.

“I do think there’s a problem,” he said.

“Most of my research associates are in their mid- to late 20s. They all feel like they’ll never be able to get a home. They’re not happy about it and I get where they’re coming from. I share the concerns.”

Meantime, says Kershaw, Canada’s aging population, which had better pensions, has the lowest rate of poverty and low income of any age group in the country.

“It’s not like today’s retirees are depending on housing but they do get accustomed to the extra wealth,” he said.

Kershaw says Canada has to think about how we build back better in terms of housing because we’re not as productive when it comes to output of work compared to other countries. Instead, our economy relies on real estate, rental and leasing which produces relatively few jobs.

“With low interest rates, Canadians have borrowed more money and bid it into the price of housing,” he said.

---

Watching the struggles in the market, the Cescatos, who bought their townhome in 2015, are staying put — choosing not to stretch their finances in order to move up.

The couple say they’re fortunate they had the money for a decent down payment — “Which was all our free capital,” said Giulio, a planner with a firm in the city — and that their home had room for when their child came along.

They had hoped to parlay their unit into something larger, but that plan is “kind of laughable right now,” Giulio said. Even though the Cescatos earn larger salaries now and their unit has nearly doubled in value in the last five years, a move into a larger home isn’t in the cards because everything else on the market has soared too.

“Even a modestly priced house close to where we live now, we’d be looking into the couple million dollars range, if not more and tripling our mortgage,” Giulio said.

“The accountant in me says ‘absolutely not,’” added Antonia, 43.

So at this point they are looking at making improvements to their unit to make it their “forever home.”

“We have a European-style fridge, it’s small for a family. I had a friend who choked when she saw my refrigerator,” said Antonia. “So we might want to think about doing some kitchen renos down the road, to actually fit a full-sized refrigerator.”

Tess Kalinowski is a Toronto-based reporter covering real estate for the Star. Follow her on Twitter: @tesskalinowski

Donovan Vincent is a housing reporter based in Toronto. Follow him on Twitter: @donovanvincent

PROPERTY IS THEFT

HOUSING IS A RIGHT

New project shows ‘the terrible human cost’ of house-flipping



APRIL 19, 2022

VANCOUVER—The Berlin Wall hadn’t even been down for a full year when Paul Kroeger moved into his small house across the street from a cemetery in Vancouver. For more 32 years, the 67-year-old has paid rent there — $700 a month when he moved in.

Now, standing underneath a patch of plywood on the ceiling left exposed when the finish peeled off, Kroeger is preparing to leave. The weathered house has been sold, for almost $1.6 million, and he’s been evicted.

“I haven’t moved much in my life, so I’m not one to consider homes to be temporary,” he says. “I’ve got a certain attachment to the building and property and such.”
advertisement

After three decades in the house, Kroeger is moving into a basement suite a few blocks away he found by leafletting his neighbourhood. He happens to be one of the foremost mushroom experts in the province and with that comes research equipment, specimens and a reference library he now has to move.

Even though he has a new place secured, the experience is stressful, he said, especially because the developer who took the property over initially wanted him out much sooner. The house will soon be torn down.

Housing is becoming temporary for more Vancouverites, and the phenomenon has even started spreading across the country. As landlords seek to cash out amid record-high property values, more people like Kroeger are being told to find somewhere else to live.

The problem is much bigger than people realize, a Vancouver housing activist said. Rohana Rezel’s latest research has discovered hundreds of cases in the city in the past year where houses were flipped months after residents were evicted.

The work builds on a previous map Rezel’s Open Housing project built showing properties in Metro Vancouver already up for sale after being purchased less than a year prior. Some of the new listings represented a 70 per cent increase over the property’s purchase price in the previous listing.

Now, Rezel has taken it a step further.

His project looked at homes recently put up for sale if they had already been sold within the past year. Then, he tracked down their old listings from the first time they were on the market.

If those listings said the home had tenants and the new listing says they do not, Rezel counted them as likely having renters who had been evicted. So far, he’s found 372 such homes in Metro Vancouver and mapped them out.

“Flipping has a terrible human cost,” he said. “I’m not even talking about how it’s driving up prices and making homes unaffordable, it’s throwing people out into the streets.”

Rick Pedersen knows the costs.

At the end of the month, Pedersen and his wife have to find a new place to live. They haven’t even been in their 1,700-square-foot apartment 18 months.

Before they moved in, they say, they were told the owner wasn’t interested in selling anytime soon. When they sought to renew their lease late last year, they were told the owner now wanted to go on a month-to-month basis, but still wasn’t planning on selling.

Six weeks later, the couple in their 50s say, they were given an eviction notice.

“That’s how quickly the scenario changed on us,” Pedersen said.

It’s not the first time — Pedersen said he’s been put out of his home eight times in the past 14 years by landlords who were selling. But this time it stings more as rents in the province have spiked tremendously in recent months.

A recent report from the website Rentals.ca, crunching data from its own postings, found rates in British Columbia for one-bedroom apartments increased 17 per cent year over year as of February.

“Similar townhouses in the region here — same sort of square footage, pretty much cookie-cutter — we’ve seen as high as $3,750,” Pedersen said. “We’re talking about a $1,600-1,700 jump from what we paid just over a year ago.”

Now, the couple’s next apartment will either be hundreds of dollars a month more each month, or much smaller, which means they will have to off-load some of their possessions, likely at a loss.

“My wife and I am sitting here going, ‘What are we going to do?'” he said.

Rezel said his project shows unfettered house flipping in Vancouver isn’t just driving up prices, it’s displacing people, and all just so flippers can turn around and try to sell them again for big profits within months.

British Columbia’s rent-control regime limits annual increases for existing tenants to a modest rate — this year, 1.5 per cent. (A pandemic rent freeze was allowed to expire as of Jan. 1.)

So it’s more appealing to sell a house without tenants, Rezel said — if the new owners choose to rent it out they can charge the going rate. Otherwise, a landlord could be getting far less than that if a tenant has been in the unit for a long time.

According to provincial regulations, if the buyer plans in good faith to occupy the unit, or have a close family member occupy it, the tenant can be given an eviction notice effective in two months. If a new owner plans to use the unit for another purpose, like a shop or a caretaker suite, the tenant can get a four-month eviction notice once the title has been transferred. In both cases, the tenant must be compensated one month’s rent.

Michael Golden, a lawyer who deals with landlord-tenants disputes, said in a case where a person has been evicted so a new owner or their family member can live there and no one actually moves in (or stays fewer than six months), the The former renter can pursue the owner for a year’s rent through the province’s Residential Tenancy Branch for a $100 fee.

“The proceeding is a one-hour hearing which is done by telephone conference,” he said. “So, if you’re a tenant who thinks your landlord hasn’t followed through with what they were supposed to do, you pay $100 and a one-hour phone call and you could get a significant judgment.”

Golden said often people find out their place is up for rent again by keeping in touch with neighbors, or they see it advertised online. (According to the Residential Tenancy Branch website, the same compensation applies to those given four months notice.)

Rezel said the quick, high yields from flipping homes aren’t as abundant in Vancouver anymore and flippers have slowly moved east of the city.

Now that flipping has naturally started to cool in some parts of the Lower Mainland, he expects governments to try to take credit for it. But, he said, they haven’t done enough.

Rezel said a new anti-flipping tax proposed by the federal government and meant to apply to all homes bought and sold within a year won’t likely won’t make a difference unless the rate is immense.

“The solution is a real flipping tax to make the situation unprofitable,” he said. “And we also need vacancy control so that if you evict a person the new owner shouldn’t be able to just jack up the rents. If you make evicting unprofitable it’s just not going to happen.”

In a February poll by Vancouver-based Research Co., 41 per cent of British Columbians aged 18 to 34 said housing, homelessness and poverty are the most important issues in the province. But Pedersen said he doesn’t believe the government is serious about curbing housing costs.

He said one reason so much speculation is happening is that landlords can make money off short-term rentals — a phenomenon whose very existence tells him no one in power cares about his troubles.

“It is the biggest lie being told to the public, that they want to get a handle on housing. It’s absolute rhetoric from government. I don’t care which party we’re talking about,” Pedersen said.

“If they had the stones to do it, the first thing that they would do is they would ban Airbnbs.”

Jeremy Nuttall is a Vancouver-based investigative reporter for the Star. Follow him on Twitter: @nuttallreports

Source: www.thestar.com

CANADA

New housing data connect immigration and property ownership

INVITING LANDLORDS TO BE CITIZENS

APRIL 21, 2022

The Canadian Housing Statistics Program released 2020 data that show investors to the Quebec Immigrant Investor program owned, on average, a single property in Metro Vancouver valued at $1.940 million – the highest property value out of all admission categories.

New housing data offer a first-time view of the relationship between immigration and property ownership in cities where real estate prices have climbed highest, Vancouver and Toronto.

The data released last week show the degree of property ownership, as well as values ​​and total family incomes, for every category of immigrant. Out of all immigrants, those who obtained citizenship through the controversial Quebec investor immigrant program have the highest assessed property values, either as a single property or multiple properties. Many have long suspected that the Quebec program has operated as a backdoor for wealthy immigrants who opt to buy properties in Vancouver and Toronto instead of remaining in Quebec, which was the intention of the program.

The Canadian Housing Statistics Program released 2020 data that show investors to the Quebec Immigrant Investor program owned, on average, a single property in Metro Vancouver valued at $1.940 million – the highest property value out of all admission categories. The average family income for that group is $70,000. By comparison, the average income for immigrants who owned a single property in Vancouver was $130,000.

The Quebec investors also had the highest average total assessed value for multiple properties in Vancouver, with an average total assessment of $4.6-million in properties. The average multiple property immigrant owner had a total assessed value of $2.7-million. The average family total income for multiple property owners for Quebec investors was $100,000, compared with the average of $190,000 for all admission categories.

The CHSP, which is part of Statistics Canada, provided the data as a valuable glimpse into the realities of Canada’s housing market. The data also included the finding that 15 per cent of individual owners (as opposed to institutional investors) own 29 per cent of all British Columbia’s housing stock.

Investors flock to Vancouver property market

Vancouver’s low-density neighborhoods bypassed in development plans

The intent behind the Quebec program is that investors, who must have net assets of at least $2-million, among other requirements, intend to settle in Quebec. Critics argue that, while they’re supposed to stay in Quebec, it’s impossible to stop investors from moving elsewhere. It’s a passive investment – ​​requiring $1.2-million injection into the provincial government to be returned interest-free after five years – without having to set up an actual business. (The investment amount had been $800,000 but was increased in 2018). In return for the loan, those high-net-worth individuals are pretty much guaranteed permanent residency in Canada.

It has proven to be a hugely popular program. Immigration lawyer Colin Singer describes it in a video online as the most popular investment visa program in Canada. The program began in 1986 and had been processing 1,900 applications a year before it was put on pause. Quebec, which has its own immigration policy, won’t take new applications until April 1, 2023, pending review.

Critics say the problem with the program is that while Quebec has enjoyed the investment money, other provinces have funded health care and grappled with the flow of foreign capital into their housing markets – particularly BC and Ontario.

In Toronto, the Quebec investor multiple property owner had an average assessment value of $2.4-million. Average family income totaled $90,000 for that same group.

There was a parallel federal immigrant investor program, also hugely popular, that ran for 28 years, but that program was canceled in 2014 amid concerns that investors were not paying their fair share of taxes and there was little economic benefit for Canada. However, the program’s long-term effects show up in the CHSP data as well. The average total assessment value of the federal investor immigrant who owns a single property in Vancouver is $1.580-million, with an average family income of $75,000. The average total assessment value of multiple properties held by a federal investor in Vancouver amounted to $3.8-million. That category of immigrant had an average family income of $110,000. Approximately 30,000 people purchased property in Vancouver through both investor programs, according to the data.

It is important to note that these investors are not deemed “foreign buyers,” because they are homeowners who hold citizenship, says Andy Yan, director of Simon Fraser University’s city program. The foreign buyer statistics that are routinely cited by the provincial government, for example, do not include this group.

The new data illustrate the importance of considering capital flows from foreign sources and not just the number of foreign buyers. The new temporary ban on foreign buying included in last week’s federal budget, for instance, deals only with foreign buyers, not foreign capital inflows. The ban also exempts foreign students, which has raised eyebrows. Several years ago, student homeowners made headlines for owning some of Vancouver’s most expensive properties. The most controversial example was the UBC student who bought a $31-million house. Students living in Vancouver appeared to be proxies for foreign wealth, and lenders were giving them preferential loan terms.

Dr. David Ley, University of BC professor emeritus, has said that all levels of government have courted foreign money for decades. In BC in 1988, the province began courting Asian money when the resource-based economy went into decline. He says the reach out to Asia Pacific was illustrated best by the sale of the vast Expo 86 site to a Hong Kong property development consortium in 1988.

“It was a sale that put Vancouver on the radar of property investors in Asia and established networks with the Canadian property sector. The development and real estate companies had formed an informal growth coalition with government, designed to sustain off-shore capital flows into BC,” Dr. Ley said in an e-mail.

“Regular trade missions by all three levels of government spread news of opportunities; the federal government alone sent five ‘Team Canada’ missions to Asia in the 1990s. The Business Immigration Program (which included investors) provided the means for both capital and capitalists to enter British Columbia.”

CIBC chief economist Benjamin Tal spoke at the Vancouver Real Estate Forum on April 12, and he said that new immigrants play a key role in the housing market.

An estimated 70 per cent of the 405,000 new immigrants who were admitted last year were already in Canada on temporary visas, which means they speak the language, probably hold jobs and are therefore already well on their way to buying property.

“It’s not just the number of immigrants, but their ability to buy a house and participate in the labor market,” Mr. Tal said.

He said the composition of the immigrants is also important, because there is a labor shortage in the construction industry and so far Canada is not attracting those workers.

“In my opinion, the No. 1 factor limiting supply of real estate now, the new housing in Canada, is labour. You cannot find it. And when you do find it, the charge is enormous. It’s crazy,” Mr. Tal said.

Mr. Yan says the system is failing new immigrants who’ve arrived to work and settle if it also allows new immigrants who are here because they are wealthy and have an appetite for real estate investment. The 110,565 immigrants who came through the federal skilled worker program and purchased a single property had one of the highest total family incomes, at $120,000, and a far lower average property value of $990,000. Although skilled workers outnumber the Quebec investors to Vancouver by a factor of 10, the latter camp has greater spending power, and the ability to drive prices upward.

He’d like to see data on exactly how many properties the wealthy investor group owns.

In this way, immigration policy and housing policy go hand in hand, he said.

“Immigrants from around the world are being sold the dream of Canada, and yet with housing unaffordability where local incomes are so decoupled from housing costs, you’re pulling out the first rungs of that dream. Canada is inviting the world to a dinner party and it turns out to be a potluck for multimillionaires.”

Wages need 'big-time' catch-up in Canada as inflation rages: BMO

Noah Zivitz, BNN Bloomberg

The disconnect between wage growth and inflation is being put under the microscope by the chief economist of BMO Capital Markets.

In a short note to clients, Doug Porter pointed out that wages are only rising around three to 3.5 per cent year-over-year, less than half the rate of Canada’s “steaming” (in Porter’s words) cost of living after Statistics Canada’s consumer price index surged 6.7 per cent year-over-year in April. He described the gap between those two metrics as “simply unsustainable,” particularly given Canada’s tight labour market.

“Either inflation will need to moderate, and soon, or else wages are poised to play catch-up, big-time,” Porter wrote.

“With commodity prices still frothy, supply chains still struggling, and home prices still raging, we don’t expect any quick relief for inflation.”

Porter is one of many Bay Street voices sounding the alarm on inflation that’s racing further and further away from the Bank of Canada’s target range of one to three per cent.

Scotiabank Head of Capital Markets Economics Derek Holt said on Wednesday he thinks there’s a “solid case” for the Bank of Canada to hike as much as full point “in one shot.”

Rising inflation is making us poorer. 

Will wages ever catch up?


APRIL 21, 2022

Wages across all industries have failed to keep pace with inflation, which hit a three-decade high last month.

In March, inflation climbed to 6.7 per cent year over year thanks to the pandemic, supply-chain struggles, and the war in Ukraine.

During the same period, average hourly wages rose 3.4 per cent, just half the rate of inflation, according to the latest data from Statistics Canada. Meanwhile, the cost of certain necessary goods is way up — groceries climbed 8.7 per cent. Gas rose a whopping 39.8 per cent.

Experts call the ratio between prices and wages purchasing power. That power diminishes as the gap grows, which is what is happening now.

Simply put, you’re making less money.

“Workers need a three per cent increase right now to make up for the losses, which is unlikely to happen,” said David Macdonald, senior economist with the Canadian Center for Policy Alternatives.

Instead, he said, workers will likely take a temporary pay cut, in essence, as inflation soars for the next few months as wages fall behind. “It will be difficult to recoup this three per cent difference.”

Some industries are keeping wages up with inflation better than others.

Information and IT workers are seeing consistent wage gains, Macdonald said. Supervisors and wholesale trade workers are also getting salary increases. This includes producers and retailers managing supply chain issues, which have become an ever-present challenge requiring more time and greater resources.

Food and beverage manufacturing also saw an upswing in wages as in-person dining decreased and stacking products in grocery stores became more frequent and necessary to help with higher demand from consumers, Macdonald said.

And real estate agents saw “huge wage gains” with the high cost of housing. Macdonald expects they will continue to do well moving forward.

On the flip side, employees manufacturing durable items such as automobiles saw little in wage increases.

Public sector workers, which include education and health care professionals, also saw "very low wage gains" and likely won't see a substantial wage increase in the near future.

“With the new inflation numbers, now 75 per cent of workers are seeing real wage losses because of how much inflation has gone up,” Macdonald said.

Douglas Porter, chief economist and managing director of BMO Financial Group, said almost every industry will see wages go up at this point, some more than others. “It's reasonable to expect a pretty comprehensive broad based upward pressure on wages.”

He called the sizable gap between wage increase and inflation “highly unusual.”

"It's especially unusual given how tight the labor market is when you look at the low unemployment rate and the number of job vacancies," he said. “Ether inflation is going to run away rapidly or wages will rise rapidly. That gap between prices and wages can't be sustained for long.” If it does, people will be unable to afford everyday goods and the cost of living will be unattainable.

Porter said sectors with high vacancy rates will face the biggest pressure to increase wages. These include the accommodation and food services sectors, which have a 7.5 per cent vacancy rate, and health care and social assistance jobs which have 6.4 per cent vacancy.

“Wherever there is a high vacancy rate there will be increased wage pressures to attract more workers and for retention,” he said.

Anil Verma, a retired professor of industrial relations at the Rotman School of Management, expects the travel, food and hospitality sectors — which are having difficulties hiring — will pass the cost of increased wages on to consumers.

Bea Bruske, president of the Canadian Labor Congress, expects employees and unions across all industries will press for improved wages.

“At the end of the day workers can organize. There's more strength in numbers to negotiate collective agreements," she said.

Many workers have expired collective agreements that are now being negotiated, especially in the public sector, Bruske said.

Jim Stanford, director of the Center for Future of Work, said few collective agreements have a cost of living adjustment, meaning wages don't automatically change to offset inflation.

While employees will ask for higher wages, Stanford isn't optimistic employers will give the three per cent needed.

Look at public service workers in Ontario, for example. They have a pay cap of one per cent for three years, under Bill 124, and will find it legally challenging to ask for higher salaries, he said.

For some, it might be easier to negotiate a higher salary at a new job than to get a raise from an existing employer.

Perhaps with that in mind, some employers are being proactive in light of the latest data.

At Ascend Fundraising Solutions, a software company that helps charities raise money, CEO Daniel Lewis announced a cross-board five per cent bonus for employees the day before the latest inflation numbers were released.

“It's not an act of retention. It's just the right thing to do,” Lewis said.

Clarrie Feinstein is a Toronto-based staff reporter for the Star. Reach Clarrie via email: clarriefeinstein@torstar.ca

Rosa Saba is a Toronto-based business reporter for the Star. Follow her on Twitter: @rosajsaba

Eyeing a raise as inflation soars? 

It’s a great time to ask, experts say

By Craig Lord Global News
Posted April 20, 2022 

Soaring inflation amid a tight job market could mean good news for Canadian workers hoping to bring home a little bit more to cover the surging cost of living, according to career experts.

Statistics Canada reported Wednesday that the annual rate of inflation hit a whopping 6.7 per cent in March, setting a new 31-year high, while the country’s labour market is at its lowest point on record, dropping to 5.3 per cent last month.

Experts say this has created a perfect window for anyone eyeing a bump in compensation to offset the rising cost of living.

“There’s probably never been a better time to ask for a raise,” says Michael French, national director at recruitment agency Robert Half.

Sarah Vermunt, career coach and founder of Careergasm, echoed French. She tells Global News the current economic conditions are a “rare opportunity” where job seekers and those feeling underpaid have a chance to boost their salaries.

“It’s actually a great time to ask for a raise because your company very likely wants to keep you in this job market. So you have a little more power than you usually do if you’re looking for a raise right now,” she says.

READ MORE: Bank of Canada interest rate hike: How it connects to inflation, job market

A recent survey from Robert Half shows employees are feeling the heat from inflation and might be well aware of their bargaining power.

Of the more than 500 Canadian workers surveyed in early March, half said they plan to ask for a raise this year.

Of those respondents, 31 per cent said adjusting for the higher cost of living was their top reason for wanting a boost, followed by accounting for additional responsibility (18 per cent) and reflecting current market rates (16 per cent).

A survey from accounting firm MNP earlier this week illustrated how hard inflation is hitting Canadians’ wallets.

Some 31 per cent of respondents to that poll said they already don’t make enough to cover their bills and debt payments.

But with the ongoing labour crunch, Canadian employers also have to devote closer attention to how much they’re paying.

A separate Robert Half survey showed 69 per cent of companies are experiencing “pay compression” — longer-tenured employees seeing their salaries look closer to those of new hires as market rates rise.

French says giving an employee a raise, rather than letting them slip away and having to hire a replacement, can be a time and money saver for companies.

“If you’re not keeping up with the market or in many cases, leading the market, you have people leaving you and the most expensive thing you can do is have turnover during COVID,” he says.

But how should you go about asking for that raise? Here are the top tips and biggest mistakes to avoid when looking for a pay bump.

How much money should I ask for?

Before launching into any conversations about compensation, it’s important to know where market rates for similar roles are, Vermunt says.

“Given the job market now, it’s probably higher than it was a year ago. So that’s important to research,” she says.

Websites such as Indeed, Glassdoor and Robert Half itself all have salary trackers that will show you where the industry has set the bar for your position.

When should I ask for a raise?

Vermunt says one of the biggest mistakes people make when they’ve been wanting a raise for a while is to ask when they’re already at their wits’ end.

“Going into the conversation in an overly emotional state is a recipe for disaster. Do not do that. Wait until you have a moment to have a planned conversation,” she says.

Set a meeting in advance for a downtime during the week, Verument recommends. Call it something informal like “career goals” to make sure both you and your manager are in the same frame of mind before launching into raise talks.

Show your value

Don’t focus on arguments related to your tenure at the company, or how much you need the raise right now, Vermunt suggests.

Those kinds of points don’t show your company why you’re worth the extra money.

Instead, focus on three to four examples that show how your performance has materially benefited the company: a time when you earned the company more money, reduced costs, moved the needle forward — anything quantifiable that shows why you should continue to be an investment priority.

“You want to make it about your performance,” Vermunt says.

Avoid ambushing your boss, but put the onus on them

Though your instinct might be to avoid showing your hand, French says the last person who should be surprised by a raise request is your manager themselves.

If you’ve set your expectations for career advancement well, your manager can help you “craft the path to get there,” he says.

“They should be the first person you’ve talked to and they’ll actually, in most cases, help you sort of craft the path to get there,” he says.

“Talk to your manager, have a very frank, transparent conversation, and it usually will pay dividends for you.”

READ MORE: Canadians young and old left behind in pandemic jobs recovery

Vermunt notes that not every raise comes after the first ask. If you’re rebuffed at first, ask for tangible steps you can take to earn the higher pay and set a follow-up meeting in six months’ time to double back on your request.

“That then puts the onus on them to say what they’re looking for if they’re willing to give a salary bump and it gives you something concrete to work towards to then be able to use as evidence when you reopen the conversation a little while down the road,” she says.

“It holds them accountable for doing what they say they’re going to do in the future.”

Look for ‘Plan B’

Sometimes, even when you’ve put in the work and proven your worth, the company’s budget doesn’t have any wiggle room for you.

In cases like that, French encourages workers to look beyond the bottom line when they’re negotiating.

There are some perks and benefits employers can offer in lieu of a raise, such as more flexibility in your work schedule, extra vacation or other quality-of-life improvements.

“What else could they be doing for you? Don’t just focus on the money. Focus on the entire package,” French says.

Vermunt agrees.

“I personally think it’s also important to think about what your Plan B is if they say no or if they give pushback,” she says.

Can I push up a starting offer?

For some people, Plan B looks like alternate compensation. For others, it’s striking out to find a new job.

While Canada might be firmly in a job seeker’s market at the moment, Vermunt says the quitting point is different for everyone.

But even for those who have tested the job market and found themselves with a new offer in hand, Vermunt notes there’s always room for a raise there, too.

READ MORE: Meta’s plans to hire in Canada have the tech sector worried. Here’s why

“People often don’t realize this, but you are in your most powerful salary negotiation position when you’ve just been offered a new job that you haven’t accepted yet,” she says.

Whatever starting salary you accept with a new company, you’re “setting a precedent” for what you’ll take going forward, according to Vermunt. Even if your job performance is off the chart in the first few months of the new gig, she says it would be hard to argue for a raise in that timeframe, so soon into the position.

“You should be doing some good salary negotiation at the beginning of a new job because that’s your power position.”

UK

Rail worker strike would be 'biggest' in history, says RMT

By Simon Browning
Business reporter

A rail workers' union has said it intends to ballot more than 40,000 workers in a dispute over pay and jobs, which could trigger the "biggest rail strike in modern history".

The RMT union said Network Rail plans to cut up to 2,500 jobs as part of a £2bn reduction in spending.

The union claimed that the cuts would mean accidents were "more likely".

Network Rail said it was "disappointed" with the union's move and urged it to "work with us, not against us".

The track operator said it hadn't tabled any proposals or consultation papers and was discussing ideas.

Tim Shoveller, Network Rail's regional director, said: "We cannot keep relying on government handouts, and so we must work together with train operators and our trade unions to save millions of pounds and deliver a more efficient railway."

RMT said the proposed job cuts include workers who maintain tracks, signals and overhead lines among other things.

It also claimed train operators had been subject to pay freezes and changes to their terms and conditions.

'Safety-critical jobs'

The union's general secretary, Mick Lynch, said cutting the "safety-critical jobs" would "spell disaster for the public, make accidents more likely and will increase the possibility of trains flying off the tracks".

He warned a national rail strike would "bring the country to a standstill" but said union members' "livelihoods and passenger safety are our priorities".

The 15 train-operating companies the RMT will ballot include LNER, Chiltern, Avanti, Cross Country and South Western.

Passenger numbers on the railways are still lagging pre-pandemic levels, with working from home becoming a staple of many commuters' working patterns. This has led to passenger revenues failing to recover and income on the network stalling.

Mr Lynch said railway workers also had to contend with "pay freezes, the prospect of losing their jobs and repeated attacks on their terms and conditions".

"Train operating companies have praised our members for being key workers during the pandemic but have refused to keep staff pay in line with inflation and soaring living costs," he added.

"As a result, thousands of railway workers have seen their living standards plummet and have run out of patience."

Better rail services promised in huge shake-up

Seven ways the rail shake-up will affect you

But Network Rail's Mr Shoveller said the operator would "not consider any changes that would make the railway less safe".

"Our railway has been hit hard by the Covid-19 pandemic, and even as passenger numbers start to recover, we know travel habits and passenger demand have changed and the industry has to change too," he said.

The Rail Delivery Group, which represents train operating firms, said the focus should not be on strikes that would disrupt people's lives, but on adapting to people's new travel patterns.

It said the pandemic had an unprecedented shock on the railways, with the lowest passenger numbers in over 150 years.

"For the sake of our people and everyone who relies on our railway every day, we want the RMT to work with us to bring how we run our services up to date so that it is more reliable, more affordable and inspires more passengers back on board," it said.



The RMT responded to the trade body saying it is "always open for meaningful talks", but added it would not work with "the Rail Delivery Group or anyone else to help distribute the pain of job losses and real terms pay cuts that have nothing to do with securing a thriving railway going forward".

The government said it has spent more than £14bn propping up the railways after passenger numbers and ticket revenues collapsed during the pandemic.

The Department for Transport said it wanted a "fair deal for staff, passengers and taxpayers so the railway doesn't take money away from other essential public services like the NHS".

It said the "kind of irresponsible disruption" a strike would bring "only makes things worse, damaging our economy just as it is recovering".

It has plans to introduce a new state-owned body, Great British Railways (GBR), which will set timetables and prices, sell tickets in England and manage rail infrastructure.

GBR will replace the current track operator, Network Rail, in 2023 and the government says the new system will look more like Transport for London, with multiple operators under one brand.

The systems will differ slightly in Scotland and Wales, where transport is devolved, but GBR will still operate in those nations.

TORONTO

Some delays reported as Union Station workers strike for second day

Starbucks baristas at New Orleans outlet are first in state to file for union vote

BY ANTHONY MCAULEY | STAFF WRITER
APR 21, 2022 - 2:15 PM

Starbucks on Maple Street in New Orleans on Thursday, April 21, 2022. Employees filed with the National Labor Relations Board to form a union, making them the first in the state to join a national organizing effort at Starbucks outlets.

 (Photo by Chris Granger | The Times-Picayune | The New Orleans Advocate)

Workers at a New Orleans Starbucks this week became the first in Louisiana to officially request to form a union, joining an organizing movement that began at a New York Starbucks last year and has spread to several states.

On Tuesday, representatives of the baristas at the Maple Street location of the global coffee chain filed a petition with the National Labor Relations Board, the federal agency that oversees labor law, seeking to hold a vote.

At least 30% of the 16 baristas employed at the Starbucks must have supported the petition for it to proceed. After the NLRB investigates to ensure the petition's validity, Starbucks will be required by law to post notice that a vote to unionize will be held at a future date.

Seeking better pay, benefits

Starbucks workers Caitlyn and Billie, neither of whom wanted to give their last names because of worries about retribution, said Thursday that they had jointly organized the Maple Street petition to push for better wages and conditions.

Caitlyn, 22, a student at Tulane University, said the $12 hourly starting wage at Starbucks' New Orleans outlets "doesn't sound too bad" when compared to the Louisiana and federal minimum wage of $7.25.

But she said there is little chance to grow that wage working for the coffee chain. One of the baristas on their petition was making $17 an hour after working for the company for 11 years. She said also that tipping was low compared to other service jobs, with the split working out at about $30 a week for baristas at the coffee shop.

The employees also are looking for improved benefits, including paid time off. Billie said they currently start accumulating paid time off days after they've been working a year; anyone who leaves employment and returns must start from scratch.
Backed by service employees union

The petition was filed on the baristas' behalf by Workers United, an affiliate of the Service Employees International Union that has been behind much of the Starbucks unionizing effort. The union has about two million members and is the second-largest in the U.S. behind the National Education Association that represents teachers.

Manuel Quinto-Pozos, a labor lawyer based in Austin, Texas, also was a petitioner on behalf of the New Orleans baristas.

Starbucks on Maple Street in New Orleans on Thursday, April 21, 2022. The store's baristas are looking to unionize to push for better wages and improved conditions, including a stronger policy in dealing with abusive customers. 

(Photo by Chris Granger | The Times-Picayune | The New Orleans Advocate)

Starbucks' CEO Howard Schultz, who ran the company during its explosive growth periods over the last three decades and rejoined earlier this month, has called on employees not to unionize and denied reports the company was using strong-arm tactics to deter organizing.

In response to a request for comment on the Maple Street union drive, a Starbucks spokesperson pointed to a letter on April 10, 2022 from Schultz where he addressed recent unionization efforts.

“From the beginning, we’ve been clear in our belief that we are better together as partners, without a union between us, and that conviction has not changed,” Schultz wrote.

"Any claims of anti-union activity are categorically false," he added. "We are fully committed to following the NLRB’s process."

Better offer for non-unionized workers

At a meeting last week with workers, Schultz said Starbucks is planning to expand its benefits package, but that any improvements would not be available to unionizing employees, according to a report in the Wall Street Journal.

Last October, Starbucks promised it would increase base pay for various categories of employee from summer 2022, though it did not make clear at the time if that would include unionized employees.

To date, employees at about 200 of Starbucks' approximately 9,000 corporate-owned U.S. outlets have filed to unionize, with two dozen of those so far voting in favor and two voting against, according to the NLRB. There are also about 6,500 licensed Starbucks stores in the U.S.

Dealing with customers

There are approximately 100 Starbucks coffee shops in Louisiana, about half of which are in the New Orleans area, according to Starbucks' website.

The NLRB said earlier this month that efforts to unionize have grown sharply. The agency said that union representation petitions are up 57% in the six months to the end of March, from the same period a year earlier.

“Right now, there is a surge in labor activity nationwide, with workers organizing and filing petitions for more union elections than they have in the last ten years," NLRB General Counsel Jennifer Abruzzo said in the statement announcing the increase earlier this month. The agency is looking for a budget increase of 16% to deal with the extra volume.

Caitlyn at Starbucks Maple Street said that the employees are also pushing for stronger support from the company in dealing with abuse from customers.

"We want corporate to have our backs whenever situations get hairy at Starbucks," she said. "We want a better way to deal with it than giving away free drinks and saying 'we're so sorry' to everyone," she said of the training Starbucks gives for how to deal with abusive customers.

Cecelia, the Maple Street store manager, said Thursday that as management she was not allowed to join the unionizing effort. But she's in favor of any plan that would make things better for Starbucks workers, she said.

"I would back anything that would mean the 'partners' would have a better working experience," she said, using a Starbucks term for employee.

The Starbucks Union Movement Is ‘Unstoppable’

Starbucks workers' union filings make up a shocking percentage of all new union petitions in the United States.

By Lauren Kaori Gurley
21.4.22



PHOTO BY TOBY SCOTT/SOPA IMAGES/LIGHTROCKET VIA GETTY IMAGES
On the Clock is Motherboard's reporting on the organized labor movement, gig work, automation, and the future of work.

On Tuesday, Starbucks workers at five stores voted to unionize in Richmond, Virginia, bringing the count of unionized Starbucks stores to 25 locations out of 27 where votes have been counted. Most of the union wins have been landslide victories, some of them were unanimous in favor of the union.

Despite Starbucks’ very best efforts to prevent the union drives at the coffee chain from spreading—bringing back former CEO Howard Schultz, firing union organizers, holding extensive captive audience meetings—the momentum of Starbucks stores filing for union elections isn’t showing any signs of slowing. More than 200 stores nationwide have filed for union elections with Starbucks Workers United, and new stores are filing most days of the week. According to the most recent data available on the National Labor Relations Board’s website, 26 Starbucks stores across the United States filed for union elections between April 12 and 19. New Starbucks union filings make up a shocking percentage of all new union filings in the United States.

“We are unstoppable!!” Starbucks Workers United tweeted on April 14. “On the heels of four unanimous victories in three days, four more stores in the NYC/Metro area just filed today!!” The tweet went viral.

“I don’t see this campaign slowing down anytime soon,” said Rebecca Givan, a professor of labor studies at Rutgers University. “The pace of election filings and union victories is continuing. There are thousands more stores to go, including plenty more that haven’t filed or gone public in heavily unionized areas, college towns.”

Five months ago, none of this seemed possible. Not a single location of Starbucks' more than 9,000 corporate-owned locations had unionized. For many decades, individual Starbucks stores—like much of the retail and fast food industries—were seen by the labor movement as impervious to unionization because of the company’s anti-union stance, the high turnover rate at stores, and the fact that the workforce is fragmented into small worksites of fewer than 50 workers. Efforts to unionize Walmart and the fast food industry had repeatedly failed. The logic also went that unionizing Starbucks store-by-store, 20 workers at a time, was an imprudent strategy for labor unions looking to rebuild the hemorrhaging labor movement in the United States, because it would require resources that unions could spend more effectively on larger workplaces, such as auto and manufacturing plants.

“Organizing small shops is always hard because the cost of representing small shops is high,” said Givan. “Unions also tend to think about strategic leverage so if you’re organizing small shops in a company with thousands of worksites, it is hard to imagine how you’d build leverage. The company could just close the branches that unionize.”

“The thinking went: if you’re facing super powerful corporations that are prepared to fight until death you’ll never win union elections,” said John Logan, a labor studies expert at San Francisco State University. “A lot of unions have given up on the private sector.”

But the snowballing union movement at Starbucks throws a lot of this logic on its head. Experts say this is due to a few factors: the demographics of Starbucks’ workforce (young, college educated, and left-wing), the resurgence of enthusiasm for organized labor brought about by the pandemic, skyrocketing inflation, and increased leverage for workers in a tight labor market. Each of these factors have made the union movement at Starbucks spread more quickly than anyone had previously imagined it could. In fact, the small size of Starbucks locations now plays to the union’s advantage, experts say.

“At Starbucks, you have a lot of workers who’ve worked on the frontlines during the pandemic. They haven’t been rewarded equitably or treated with respect. You also have a lot of young workers who have been politicized by Black Lives Matter, #MeToo, Bernie Sanders, the Democratic Socialists of America and other leftist organizations and causes. They’re precisely the kind of people who union messages would resonate with. That’s the kind of person Starbucks is hiring,” said Logan. Jaz Brisack, a 24-year-old former Rhodes Scholar and one of the early leaders of the Starbucks Workers United campaign in Buffalo, is one example of this type of worker.

Logan says at worksites such as Starbucks with roughly 30 workers, those pro-union workers can engage directly with others at their store, know who is and isn’t on their side, and work on engaging those on the fence, allowing these movements to spread quickly from store-to-store. “They have the ability to win young politicized workers in a lot of stores where they can reach out to every single person in a store. As long as the campaign has the ability to spread quickly as it has done already, small size is actually a huge advantage,” said Logan. “If it didn’t spread like wildfire, small size would be a huge disadvantage.”

Starbucks sent executives, including the president of Starbucks North America, to the first unionizing stores in Buffalo to intimidate them out of unionizing, but the company can't send executives to individually try to scare workers at hundreds of unionizing stores.

In recent weeks, stores in Seattle; Boston; Richmond, Virginia; Bloomfield, Pennsylvania; Eugene, Oregon have voted unanimously to unionize. Experts say that the greatest momentum appears to be in college towns like Ithaca, New York, and union-dense cities like Boston.

Logan also says the self-organizing, worker-led nature of the Starbucks union drive, as opposed to the style of campaigns led primarily by professional union organizing staff, has also played an important role in the string of victories at Starbucks.

Since Starbucks workers in Buffalo went public with their union drive in 2021, Starbucks has waged an intense campaign to crush union drives that has included flooding stores with executives and regional managers and holding mandatory anti-union meetings. More recently the union has accused Starbucks of reducing workers’ hours nationally to get pro-union workers to quit.

Starbucks Workers United organizers say Starbucks’ anti-union campaign has escalated in recent weeks, as Starbucks reinstated former CEO, one-time presidential candidate, and billionaire Howard Schultz as head of the company. The company has begun blocking pro-union workers and labor leaders on Twitter and circulating fabricated tweets from the Starbucks United Workers account on fliers in some of their stores. In Schultz’s first week back as CEO, the company fired at least four union organizers, for reasons such as allegedly breaking a sink on purpose. Unionizing workers say much of Starbucks’ anti-union campaign has backfired, and isn’t working.

“Since Howard took over, there’s definitely a feeling that anti-union sentiment is less covert in my store,” said Victoria Conklin, a Starbucks barista and lead union organizer in Buffalo whose store recently filed for a union election. “My manager started making lots of statements about not wanting any pro-union people working in our store at all. She won’t speak to me anymore unless she has to.”

Conklin, who has worked at Starbucks since 2017, says that Schultz has long been a beloved figure among a contingent of baristas at Starbucks. When he was CEO the first time, multiple copies of his books were often sent to stores, where workers could read them for free. “It doesn’t seem like a coincidence that Howard took over again. I think it was a direct response to unionization,” said Conklin. “He has a cult following, and there’s a weird culture of workers being like, ‘Oh it’s just Howie, a cuddly grandfather figure who loves Starbucks.' People would brag about how many times they’d met him.”

In recent weeks, Schultz has reportedly discussed excluding unionized staff from receiving new benefits, said to managers that unionizing workers “don’t really understand, let alone the dues they are going to pay,” and told a pro-union Starbucks worker in Long Beach, California, “If you hate Starbucks so much, why don’t you go somewhere else?”

Experts say the number of unionized stores is growing so quickly that Starbucks, and the union, may eventually opt to engage in regional, sectoral bargaining that would involve negotiating contracts across large swaths of its workforce rather than store-by-store, as some major grocery chains have done.

“I would expect that if unionization continues, Starbucks wouldn’t want to go store by store with contract negotiation,” said Logan. “There’s speculation about what Starbucks will do to prevent unions from developing regional strongholds and winning all the stores in regional markets, which would allow them to bargain in a really powerful way, in a way Starbucks might not be able to control.”

Givan says Starbucks will likely implement raises and benefits bargained in the first Starbucks contract across the country to deter further organizing. “Assuming stores reach a first contract, Starbucks will roll out material improvements to non-union stores like higher wages, but it won’t roll out wins that give workers actual power or a real voice, such as ‘just cause’ for terminations,” said Givan. “They’ll try to make not yet unionized workers think they don't need to organize.”

Conklin, the Buffalo barista, says she’s optimistic that despite Starbucks best efforts to crack down on unions, Starbucks workers won’t stop unionizing. “I think that at this point we have so much momentum and public support that it’s hard for them to stop it,” she said. “It doesn’t mean they won’t try their absolute best to stop it, but they know more stores are filing and winning elections every day and their tactics aren’t working.”

‘Add Personal Story Here’: Starbucks Anti-Union One-on-Ones Fall Flat

April 20, 2022

Post a Comment

A message board at the Hopewell, New Jersey, Starbucks is filled with notes of support from the union from customers and other union members. Photo: Sara Mughal

The last time I wrote in Labor Notes, I described the captive-audience “listening sessions” that Starbucks corporate had attempted to use against me and my co-workers who are trying to unionize our Hopewell Starbucks in central New Jersey. (See (“How We Turned the Tables on Starbucks Union-Busters,” March 2022.)

After corporate failed spectacularly in our first one, they decided to cancel the second, saying they had “no new information to share with us.” We haven’t had any since—even though many of us have requested another, as we have plenty of information to share with them.

Instead, Starbucks corporate decided to skip to the next tactic in its playbook: “one-on-one” meetings between one barista and a manager—or multiple managers. The idea seemed to be that separating us would break our solidarity and make it easier to lie to us. But once again they found Hopewell baristas ready to see through their lies, push back, and support each other.

For our first round of one-on-ones, these meetings were framed as “reviewing our benefits.” Basically, they intended to tell us how great our benefits are—and that they could take them away.

They want us to think we stand to lose all these “incredible” benefits if we unionize. We know we wouldn’t actually, but they genuinely think we’re dumb enough to fall for thinly veiled threats.

A VENTI CUP OF…

Bright and early one day, our manager met with Nye, a barista she must have thought would be easily intimidated and offer little pushback. She boldly told this partner lies she hadn’t even tried with others, including a clumsy analogy I’m sure she was very proud of.

“If you think about it, you’ve got a Venti cup full of benefits,” she said condescendingly. “To make room for more, you’d have to empty some out first, right?”

Nye responded by asking point blank, “Are you saying you’ll take away my benefits?” Our manager saw her mistake, backed off with a “No, of course not,” and moved on.

During my own one-on-one, our manager began by saying she couldn’t find the paper she had her written questions on. Throughout the meeting she mentioned this repeatedly, and kept pausing to think. It was such odd behavior I had to assume it was some tactic the union-busting experts had taught her. What else could it be?

I was wrong. I later found out that she actually had lost her questions, because she’d accidentally handed the sheet corporate had given her to the barista in the meeting before mine.

This sheet had detailed guidelines on how to run a one-on-one, automating heartwarming moments through directions like, “Add a personal story here,” “Share your favorite Starbucks memory,” and “Help barista set up a benefit they showed interest in.”

At another meeting, our store manager and a Partner Resources Manager (an HR executive) followed those very guidelines and attempted to help a barista, Olivia, set up her 401k. They tried a few times and had some technical errors—unsurprising to any partner who has tried to set up benefits.

Then they gave up and awkwardly told her that they guessed she would have to call the company number on her own time. That was weeks ago, and they still haven’t checked in with Olivia or helped her find answers.

For some reason I cannot explain beyond corporate incompetence, management also decided these meetings were the right occasion to inform partners who are under 18 that they are not eligible for many of the best benefits, including Starbucks stocks and a 401(k). (They also don’t get any other benefits to compensate for this, but we’ve since discussed addressing it ourselves in our future contract negotiations.)

A SIX-CENT RAISE

We were prepared for the one-on-ones. One barista, Paul, started off his meeting by responding to the manager’s “How are you?” with “Pretty good. Everyone’s feeling strong about unionizing, Scott just got fired, and Hamilton Starbucks [our neighboring store] just filed [for a union election].” Scott was our former district manager who had bragged about his past experience union-busting in Philadelphia.

Paul also brought up that the “tenured raises” that managers had bragged about in meetings had gotten him an entire six-cent-an-hour increase. Our manager looked upset and said, “That sounds wrong.”

She searched through her computer for a few minutes to find the numbers, realized Paul was correct, and uncomfortably admitted so. In a fortuitous bit of timing, two baristas came to the back at this moment to get their coats, so Paul announced to them, “Hey, I did only get a six-cent raise!” They expressed their disgust while our manager looked anywhere but at them.

In one of her final one-on-ones, our manager chose exactly the wrong barista to try a classic union-busting lie on: “If you guys unionize, I won’t be able to help you out on the floor.” (To be clear, this is something our manager never does in the first place.)

“I’d be able to speak to an unhappy customer,” she said, “but I wouldn’t be able to, for example, remake their drink.”

If you’ve worked at a Starbucks, or really any food service job, you understand how laughable a scenario it is in which a manager bothers to do something as plebeian as remaking a drink. This barista just said, “Honestly, this store could run itself without a manager.”

Corporate had sprung the one-on-ones on us with little notice, likely hoping we wouldn’t have time to prepare for them as we had for the store meetings. As one of my co-workers put it, Starbucks separated us to try to “level the playing field.”

They didn’t take into account the months of long hours we’ve worked together day after day, struggling together to successfully run a busy store with the few resources the company chooses to give us. In the nearly three years I’ve worked at Starbucks, the resourcefulness and teamwork I’ve seen in my co-workers have been truly staggering.

Unfortunately for corporate, Hopewell baristas had built such solidarity and trust—through the shared obstacles and stress Starbucks itself has put us through—that we were already ready.

Sara Mughal is a shift supervisor and member of Starbucks Workers United at the Hopewell Starbucks in Pennington, New Jersey. All other Starbucks workers’ names used in this article are pseudonyms to protect them from increasingly bold and aggressive retaliation by the company.