Starbucks to boost US starting wage to $15 per hour, targeting $17 average by 2022

Wed, October 27, 2021, 3:36 PM

Starbucks (SBUX) on Wednesday became the latest company to hike pay for its workers, announcing plans to increase all U.S. hourly wages to at least $15 per an hour, up from the current $12 rate, by the summer of 2022. Yahoo Fiannce's Brooke DiPalma shares the details with Seana Smith.

Video Transcript

SEANA SMITH: Want to get to some breaking news. Starbucks is raising its minimum wage for all employees, hiking it to $15 an hour. Brooke DiPalma has more on this for us. Brooke.

BROOKE DIPALMA: Seana, that's right. Certainly a game changer or perhaps even happening in the fast-food industry. So now all hourly wage employees or what Starbucks likes to call partners will have a minimum wage of $15 an hour. Now that moves the average wage of Starbucks employees-- or baristas they like to call them as well-- up to $17 an hour and [? influxes ?] that range of $15 to $23. Now, that's up from the average hourly wage of $14 per an hour and a minimum of $12 an hour range.

Now, in order to raise the floor, they must also raise the ceiling, and so what this means for employees who have two-plus years is a 5% increase, and for employees that have five or more years at Starbucks, they will get a 10% increase.

Now, I do want to note in an internal memo that employees-- or partners as I said Starbucks likes to call them-- received today from North America's executive vice president. Williams noted, "Our wage increases from December 2020 and to the summer of 2022"-- which is when they're going in [INAUDIBLE]-- will mean at least a 17% increase for partners and at least 20% for tenured partners in two years." She goes on to say, "I share all of this only to reaffirm our belief that investing in our partners is not a cost. It's an opportunity, and we intend to let our shareholders and peers know the same."

Now, this is the third investment over the last 24 months that Starbucks has made in order to raise the minimum wage for its employees. But I do want to note that other companies are doing the exact same thing. Here we have Target, $15 minimum wage. Disney World, $15. Costco, $16. Ben and Jerry's going along with their local Vermont minimum wage of $18.13. McDonald's, $13. Chipotle, we just heard from them $15 earlier this year.

All note that as of today, October 27, the federal minimum wage still lies at $7.25 per an hour. So lots of work to do all across the board, Seana.

If bosses want workers, they have to actually try


Ryan Cooper, National correspondent
Wed, October 27, 2021

A help wanted sign. Illustrated | iStock

A class of Americans has become lazy and entitled. Too used to a government that caters to their every whim, they're facing a difficult situation not with grit and determination, but by throwing tantrums and demanding special treatment.

That's right, I'm talking about business owners. Complaints about a labor shortage abound, but it's time these coddled snowflakes learned some discipline. Employers need to put in the work to staff their own businesses instead of relying on the government do it for them.

The plain fact is we've had an employer's economy for a decade. After the Great Recession, unemployment was chronically high — only touching something like full employment in 2019, 11 years after the crash. Bosses got used to having the pick of the litter. With so many credentialed people thrown out of work, hiring managers were able to demand extravagant experience and over-qualification for low-level jobs. Many employers came to believe they were owed workers who would take any position and mutely absorb any abuse.

This sense of entitlement is a major reason both state and federal governments were so eager to end the boost to pandemic unemployment benefits. Without people lining up around the block to take crummy, low-wage positions, employers ran crying to the government for help.

But, as I wrote previously, their strategy didn't work. Some workers took early retirement when they got laid off last year; some parents can't find childcare at a reasonable price, so they are staying home; some workers saved up money during quarantine and would rather not work for the moment; and a great many workers are simply dead.

Meanwhile, among those actively in the job market, millions are changing careers. The pandemic has been a nightmare for the workers who keep America's rattletrap society staggering forward — the cashiers, cooks, nurses, truck drivers, meatpackers, child care workers, fruit pickers, and so on. It was one thing for overeducated millennials to scrape by in dead-end, low-wage jobs, like bagging groceries or getting screamed at while waiting tables. It was quite another to do so while at risk of gruesome death.

Simultaneously, the pandemic rescue packages have created a huge spending boom. Americans are buying stuff at a record pace, creating all sorts of snarls in shipping and production (in part because there was little excess capacity, again thanks to weak demand during the feeble post-2008 recovery). Higher-productivity firms are scrambling to expand, offering jobs with much better pay and benefits. This too puts a strain on employers whose business model is premised on exploited, low-wage labor.

Together, all this has given the American working class its greatest leverage in more than 20 years. People are quitting over pay, benefits, and working conditions. Thousands of workers are on strike at hospitals, tractor factories, and elsewhere. Thousands more may strike soon. Job applicants have turned the tables on employers, treating them with the same apathy they received after 2008 — ghosting hiring managers on outreach, interviews, or even job offers.

Employers don't like it, but they're finally recognizing something has changed. "Our governing body became very used to the job market conditions during the recession and for several years after where the employer had all the leverage," one anonymous public sector worker wrote on a manager discussion blog. "They are only now beginning to realize how the roles have reversed."

They need to realize it faster, and they need to learn how to entice workers. Better wages and benefits are the most obvious mechanism — indeed, we're already seeing wages rising strongly in sectors like hospitality, where jobs are notoriously poorly paid. Employers should also ditch the idea that they can always get someone perfectly experienced for every position. They'll need to train inexperienced people and offer extra training, raises, and new benefits to retain their existing workers.

There's also a less expensive strategy many employers may have to consider: shorter hours and employee say in workplace conditions. As Josh Eidelson writes at Bloomberg, one of the common demands of union workers currently striking or threatening to strike at John Deere, Kellogg's, and in Hollywood is more time off and safer working conditions. These workers are often quite well-paid, but they're sick of mandatory overtime, 12-hour shifts, 7-day weeks, and few vacation days. Onerous schedules leave people no time to relax and recharge — and can even be dangerous. A sleepy person should not be operating heavy machinery.

Overwork is also related to the lousy post-2008 recovery and employers' resultant entitlement. With a huge glut of labor, bosses got addicted to running their workforce ragged and economizing on health and safety systems. When grueling Amazon warehouse jobs destroy people's backs and knees, for instance, the company has typically hired new people instead of changing its practices. This cruel and lazy habit will have to be unlearned.

That will be difficult, because these problems didn't originate in 2008, though certainly the last decade exacerbated them. As I show in a paper for the People's Policy Project, average American working hours have barely declined since the 1970s, while hours have plummeted in all other rich nations. When you think about it, that's how things should work: As nations become wealthier and more productive, people should be able to work less and relax more. If Americans worked as little as Germans, for instance, we'd get almost 11 more weeks of vacation every year.

The pandemic has taught us that reasonable work conditions and plenty of time off are just as important as pay and other benefits. Money isn't much good if you can't enjoy it, and no job is worth your health or your life.

American workers know that now. If they want to have staff, American employers will need to catch up.