Defending Starbucks, Schultz spars with party that once embraced him
Howard Schultz faced rancor from Senate Democrats, including Massachusetts Sen. Ed Markey, at a hearing where he chafed at “propaganda that is floating around” about company labor practices.
Howard Schultz was the star witness, but the hearing revealed almost as much about the party in power as it did about the longtime Starbucks chief executive.
When Schultz appeared Wednesday before the Senate Committee on Health, Education, Labor and Pensions, at a session titled “No Company Is Above the Law: The Need to End Illegal Union Busting at Starbucks,” he encountered a Democratic Party much changed since some of his earlier trips to Washington.
In 1994, President Bill Clinton invited Schultz to the White House for a private briefing on the company’s health care benefits. Two years later, the president praised Starbucks when introducing Schultz at a conference on corporate responsibility. At the time, Bernie Sanders was a backbencher in the House of Representatives.
Starbucks in Mass.
On Wednesday, Sanders, now chair of the Senate committee, appeared to regard Schultz with something bordering on disdain.
Before a question, Sanders, a Vermont independent who caucuses with the Democrats, felt the need to remind Schultz that federal law prohibits a witness from “knowingly and willfully making” a false statement relevant to an inquiry. The chair then asked him if he had participated in decisions to fire or discipline workers involved in a union campaign. (Schultz said he had not.)
Sanders noted that an administrative law judge had found “egregious and widespread misconduct” by Starbucks in its response to the campaign, in which nearly 300 of the roughly 9,300 corporate-owned stores in the United States have voted to unionize. And he chided Schultz for what he said was the company’s “calculated and intentional efforts to stall, to stall and to stall” rather than bargain with the union in good faith.
The hearing was held on the same day Starbucks reported that its shareholders had backed a proposal asking the company to commission an independent assessment of its practices as they relate to worker rights, including the right to bargain collectively and to form a union without interference.
Though the proposal is nonbinding, the 52% vote in its favor suggests unease among investors over Starbucks’ response to the union campaign.
Schultz, who recently ended his third tour as the company’s chief executive and remains a board member and major shareholder, seemed as mystified as anyone by his personal change of fortune in the capital. He chafed at what he described as “the propaganda that is floating around” the hearing and told Sen. Bob Casey, D-Pa., that “I take offense with you categorizing me or Starbucks as a union-buster.”
When another Democrat, Sen. Patty Murray of Washington — the home state of Starbucks — said she had heard from constituents about “widespread anti-union efforts,” Schultz reminded her that they had known each other for years and that she had “many times actually talked about Starbucks as a model employer.”
He responded to Sanders’ accusation that Starbucks was not bargaining in good faith by noting that the company had met with the union over 85 times. (The union points out that most of these sessions ended within 15 minutes; Starbucks says this is because union members sought to take part remotely.) And he denied that Starbucks had broken the law; it has appealed the rulings against it.
Aside from the accusations of labor law violations, the question at the heart of the hearing was: Can chief executives be trusted to treat their workers fairly?
Schultz’s answer was an emphatic yes, at least in his case. He highlighted the company’s wide-ranging benefits — not just health care, including for part-time employees, but stock grants, paid sick leave, paid parental leave and free tuition at Arizona State University. He said that the average wage for hourly workers at Starbucks was $17.50, and that total compensation, including benefits, approached $27 an hour.
“My vision for Starbucks Coffee Company has always been steeped in humanity, respect and shared success,” he said near the outset of the hearing.
Republicans on the committee were quick to agree. Sen. Rand Paul of Kentucky called Starbucks an “extraordinary tale of a company that started out of nothing and employs tens of thousands of people all making great wages.”
Sen. Mitt Romney of Utah, himself a former chief executive, said it was “somewhat rich that you’re being grilled by people who have never had the opportunity to create a single job.” He suggested that while a union might be necessary at companies “that are not good employers,” that was not the case at Starbucks.
Democrats’ response came at two levels of elevation. First, they said the company was excluding unionized stores from the benefits that Starbucks had introduced since the union campaign began, such as faster accrual of sick leave and a credit-card tipping option for customers, showing that its commitment to such benefits was tenuous.
The National Labor Relations Board has issued complaints calling the denial of benefits to union stores an attempt to discourage workers from organizing. Schultz said at the hearing that the company couldn’t offer the new benefits at union stores because the law said it must bargain over them first; legal experts have cast doubt on that interpretation.
More broadly, Democrats argued that unions acted as a corrective to a basic power imbalance between workers and management. A company might treat workers generously under one chief executive, then harshly under another. Only a union can ensure that the favorable treatment persists, said Sen. Edward Markey of Massachusetts.
Yet in illustrating how far the politics of labor have changed in Washington in recent decades, there was perhaps no better bellwether than Sen. John Hickenlooper of Colorado, a former business owner and self-described “extreme moderate.”
Hickenlooper conducted himself more respectfully and deferentially than most of his Democratic colleagues, applauding Schultz for “creating one of the most successful brands in American history” and declaring that “you know more about economics than I will ever know.” But in his questioning he aligned himself squarely with his party, pointing out that the rise of inequality in recent decades had coincided with the weakening of unions.
“I certainly respect the desire to be directly connected with all your employees,” he told Schultz. “But in many ways that right to organize, and that opportunity for people to be part of a union, is a crucial building block for the middle class and, I think, gave this country stability.”
This article originally appeared in The New York Times.
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