Starbucks is negotiating with its unionized workers. Here’s why this is good news for America
This month, Starbucks and its unionizing workers set an example that could rewrite the template for how employment serves workers in America by agreeing to sit down at a table together and work out a national deal. If other companies follow suit, we might move toward an economy that works for the millions of people it currently fails.
This moment resolves, at least for now, a years-long battle that started with a single location on Elmwood Avenue in Buffalo. Against all odds, 19 workers in that store voted to unionize. They made international news and inspired thousands of workers to do the same at roughly 400 Starbucks locations (and counting). Unlike the stereotype of disgruntled workers squeezing the company for a few more (often deserved) dollars, these workers generally loved working at Starbucks and wanted to shape its practices, asking Starbucks to live up to its values.
Starbucks was taken aback. It had, until that point, a reputation as an exceptionally good employer. It paid well, offered health insurance, covered the cost of a college degree, offered stock in the company, and more–even calling employees “partners.” However, when some of those partners wanted the power of a union, Starbucks felt it was a step too far.
The company, until the last few months, fought these “partners” at every turn: Howard Schultz flew out to speak personally to workers (scaring them by comparing them to prisoners in a concentration camp), they intimidated and fired organizers (and the government charged Starbucks with breaking the law many times), closed stores, filed lawsuits, and even extended new benefits only to locations that had yet to unionize (arguably illegally). Throughout, Starbucks maintained that it had broken no laws and that it supported its workers’ rights of free association and to bargain collectively.
In fighting workers, Starbucks nearly undid its hard-earned reputation as a generous employer. Many of its own managers, in headquarters and elsewhere, started questioning the wisdom of digging in against the unionizing workers.
And then, under new CEO Laxman Narasimhan, Starbucks began to shift course. The pressure might finally have been enough. At the end of last year, Starbucks agreed to sit down with the parent union, Workers United. This month, they agreed to begin bargaining for a contract with the union workers, among other concessions. For the first time, all the unionized locations across the country can have a single conversation with the company to negotiate a contract with workers. (All while the former CEO, Howard Schultz, cryptically posts about the company losing its soul.)
Starbucks workers have now earned a victory that should inspire those in other companies and other industries. And Starbucks has set a new standard for corporate leadership–assuming the company follows through, stops union-busting, and quickly reaches an agreement with workers.
Other corporations will see that it’s possible to have a functional partnership with this new generation of unions, who often want something more than just higher pay.
Corporations are a partnership between leadership and the workforce. In any good partnership, each party needs to have real power. For too long, businesses have made a prerogative of limiting their workers’ share, destroying the balance of power, and touting the benefits to consumers and shareholders. While this strategy has short-term benefits for individual companies in the form of reduced costs, in the long run, it makes them more brittle.
I’ve spent the last few years speaking to businesspeople about organized labor and teaching the country’s first business school class on leading an organized workforce at UC Berkeley. In my job as a venture capitalist, I want to see companies innovate and grow rapidly. I believe that empowered, organized workers can be part of that, and even–under the right conditions–accelerate it.
Companies such as Microsoft, Ben & Jerry’s, and others are changing the national conversation by being more collaborative with organized labor–and we now have a group of three dozen “labor open” businesses in a group at the Aspen Institute spanning industries from finance to media to construction and more.
When companies and unions form successful relationships, they both benefit. Workers feel like they are part of building something and have a true seat at the table. Companies enjoy improved worker retention and training, better customer service, and–though this flies in the face of most business school curricula–they can avoid stagnation and accelerate innovation by tapping into their workers’ insights.
The last few decades of waning worker power have left the economy in a precarious state. When working people struggle to feel empowered, provide for their families, keep a roof over their heads, get the health care they need, and secure a dignified retirement, this drags the whole system down and makes our society less stable, fair, and dynamic. We’ve seen the extremism that has resulted from this unfortunate trend.
A better future in which workers feel they have true ownership in the companies where they work and can lead a dignified life is possible. This future doesn’t require technological breakthroughs or omnibus legislation. It doesn’t depend on the composition of the Supreme Court. All it takes is a change in the way workers organize and in the way corporations engage with them. Starbucks might just join the club of new corporate leaders treating organized workers with the respect they deserve and the law requires. This is all the more impactful given the reversal of the company’s strategy: A prodigal child has returned to reclaim the goodwill it had lost. Other corporations should follow.
Roy Bahat is the chair of the Aspen Institute Business Roundtable on Organized Labor and a venture capitalist.
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