Starbucks giving every US employee a raise is part of the biggest economic story in America

Before you go, we thought you'd like these...
Before you go close icon

Starbucks to Raise Wages of All Workers in Its U.S. Stores This Year

Stop me if you've heard this before: higher wages are coming to America.

Enter Starbucks.

In a letter sent to employees on Monday, Starbucks CEO Howard Schultz outlined a number of company benefit initiatives that will take effect later this year.

Among them is that Starbucks will be giving all of its US employees at least a 5% raise later this year effective on October 3.

SEE ALSO: Starbucks continues its push into cold beverages

The company is also doubling the annual stock award for employees that work at the company for at least two years straight.

Starbucks said these changes will result in pay increases between 5% and 15% for all US employees depending on tenure. This announcement follows news out last week that beginning on July 12, the company will raise prices on some drinks by up to 30 cents.

And while the company is certainly raising wages ahead of expected minimum wage hikes in a number of states, Starbucks' preemptive wage increase also reflects clear competition for labor in the services economy.

In the June jobs report we saw average hourly earnings in the US rose 2.6% over the prior year, the fastest since the financial crisis.

Wages in the leisure and hospitality sector — which include Starbucks' customer-facing employees — are rising faster than the national average, increasing 4% over the prior year in June.

Again, as we've written a number of times, the labor market has been approaching "full employment" over the last couple years, which is effectively the point at which wage increases begin to accelerate quickly.

And a company like Starbucks, which has over 180,000 full-time employees around the world and operates nearly 12,000 stores in the US, is going to feel this squeeze perhaps more acutely than any other business.

Because as pay increases across the labor market and competition for lower-skill workers intensifies, it is imperative for Starbucks to retain staff in order to keep the customer experience smooth.

And the easiest way to keep your staff is to pay them more.

RELATED: Starbucks locations around the world

Starbucks locations around the world
See Gallery
Starbucks locations around the world
A woman walks into a Starbucks Coffee, Monday, Jan. 11, 2016, in New York. (AP Photo/Mark Lennihan)
People walk past the first Starbucks to open in Bogota, Colombia, Wednesday, July 16, 2014. The three-floor coffee house in Bogota is the first of 50 that the Seattle-based company plans to open here in the next five years. (AP Photo/Fernando Vergara)
Baristas Truong Nguyen, left, and Ben Ruthruff, right, talk with customers near a display of special Seattle Seahawks Starbucks cards on Wednesday, Oct. 23, 2013, at a Starbucks store in Seattle. The Seahawks began a one-week fund-raising campaign Wednesday with Starbucks to benefit Seahawks head coach Pete Carroll's A Better Seattle program, which seeks to reach at-risk youth and prevent gang violence. (AP Photo/Ted S. Warren)
Starbucks CEO Howard Schultz poses for the photographer before a press conference in Bangkok, Thailand, Monday, May 13, 2013. Schultz, visiting Bangkok this week to mark the coffee giant's 15 year anniversary of opening in Thailand, said Monday the coffee chain's first stores in India and Vietnam have been received positively and it might soon be time to give Myanmar a shot too. (AP Photo/Sakchai Lalit)
Two customers sit outside a Starbucks vandalized by angry protestors in opposition to Mexico's newly sworn-in president, in Mexico City, Saturday, Dec. 1, 2012. Protests began early Saturday morning with violent confrontations in the streets and protest speeches from opposition parties inside the congress, where Enrique Pena Nieto took the oath of office. Protesters continued vandalizing downtown businesses, smashing plate glass windows and setting office furniture ablaze outside. (AP Photo/Eduardo Verdugo)
Pedestrians walk past a branch of the Starbucks cafe chain in west London, Monday, Dec. 3, 2012. A committee of British lawmakers says the government should "get a grip" and clamp down on multinational corporations that exploit tax laws to move profits generated in Britain to offshore domains.The committee says major multinationals including Starbucks, Google and Amazon are guilty of immoral tax avoidance. Starbucks announced it is reviewing its British tax practices in a bid to restore public trust. (AP Photo/Alastair Grant)
In this photo take Dec. 3, 2010, a Starbucks logo is displayed at a store in Philadelphia. Starbucks Corp. said Wednesday, Jan. 19, 2011, that customers with certain BlackBerry smartphones, iPhones and iPod touch can now use those devices to make purchases at all of its U.S. company-run stores.(AP Photo/Matt Rourke)
In this Feb. 14, 2010 photo, a sign outside a Starbucks hangs over the Riverwalk with the Navarro Street bridge in the background in San Antonio, Texas. Starbucks plans to begin paying a 10-cents-per-share cash dividend to investors.(AP Photo/David Zalubowski)
FILE - This file photo made Nov. 2, 2009, shows a Starbucks coffee shop in Arlington, Mass. Starbucks releases quarterly earnings after the close of the market Wednesday, July 21, 2010. (AP Photo/Elise Amendola, File)
Shown Tuesday, August 11, 2009 is a Starbucks Coffee shop at Adriatrica, a development in McKinney, Texas, designed to look like a Croatian Village.(AP Photo/Donna McWilliam)
A worker cleans the sign outside one of many Starbucks outlets in Beijing Friday April 27, 2007. An Internet campaign was started in January calling for the removal of a Starbucks coffee shop from Beijing's famed Forbidden City. Critics say its presence in the former imperial palace is a smear on China's historical legacy. (AP Photo/Greg Baker)
** FILE ** South Korean tourists queue up to buy coffee at an outlet of Starbucks at the Forbidden City in Beijing, China, in this Thursday, Jan. 18, 2007 file photo. A member of China's legislature has revived calls for the removal of a Starbucks coffee shop from Beijing's Forbidden City, saying its presence was a smear on China's historical legacy, the official Xinhua News Agency reported Sunday March 11, 2007. (AP Photo/Ng Han Guan, File)

NOW WATCH: An exercise scientist reveals exactly how long you need to work out to get in great shape

See Also:

SEE ALSO: Definitive proof that wages are on the rise in America

Read Full Story

People are Reading