Howard Schultz’s fight to stop a Starbucks barista uprising

The Washington Post / Greg Jaffe

11:13 JST, October 9, 2022

SEATTLE – Howard Schultz, the billionaire founder of Starbucks, stood alone beside the auditorium stage at the company’s global headquarters. The room was packed with 200 of his top executives, all waiting for him to speak.

But first Schultz wanted them to hear from their employees across the country. The lights dimmed and their recorded voices filled the room.

“My last three shifts I’ve cried,” said one barista.

“We’re stressed out at work. We’re stressed out at home,” said another.

“I was told by a customer that I was a disgrace to my heritage,” said a third as Schultz walked onto the stage and settled into a chair.

The 69-year-old CEO had always seen himself as the good guy of American capitalism, believing that his own wealth and Starbucks’s rise to become one of the most ubiquitous brands on the planet was a direct outgrowth of the company’s concern for its workers and their well-being.

Only now all of that was being challenged. Across America, workers who had labored through a once-in-a-century pandemic were concluding that they deserved better and were quitting or demanding more from their bosses, or in the case of some Starbucks workers, unionizing. An organizing effort that began in Buffalo in August 2021 with a handful of cafes had, by the time Schultz took the stage in early July, spread to more than 225 of Starbucks’s 9,000 U.S. stores, sparking hopes of a revived labor movement.

On picket lines outside the stores, pro-union workers were slamming Schultz as a greedy, out-of-touch billionaire with a $130 million yacht. The National Labor Relations Board was accusing Starbucks in court filings of carrying out a “virulent, widespread and well-orchestrated” anti-union campaign that relied on firings, threat and surveillance. Democratic senators who once praised Schultz as a “pathbreaking” and humane leader were now castigating him for undermining his workers’ rights.

To Schultz, the unionization drive felt like an attack on his life’s work. In previous speeches to his employees, he had cast the union as “a group trying to take our people,” an “outside force that’s trying desperately to disrupt our company,” and “an adversary that’s threatening the very essence of what [we] believe to be true.”

The stress of it all was weighing on Schultz, who had been back on the job for three months and had told Starbucks’s board that he didn’t have the energy to stay for more than a year. That gave him 12 months to convince his nonunion workers that his version of benevolent capitalism could offer them more than any union. In his mind, he had 12 months to save his company.

“Why is this so personal to me?” he asked the executives in the room. Schultz stared down at the ground, his arms resting on his knees and his shoulders bent.

“I know what it has taken to build this place. I know what’s at stake right now,” he continued, struggling to get the words out. “And we have to show – . . . to show up in a different way.” The room fell silent. Schultz steadied himself.

“And let me be honest with you,” he told them. “Time is not on our side.”

***

From the beginning, Schultz said he was building a different kind of company, unlike anything that had ever existed for low-wage, service workers. In the early 1990s, he offered health insurance and stock options to his employees – even the part timers – and insisted they be called “partners” to show that they had a stake in the company’s success. He worried that his employees were carrying too much student loan debt, so Schultz teamed with Arizona State University to offer free online college to all of his employees.

He told his baristas that they weren’t merely selling drinks, they were creating a sense of belonging for customers in an increasingly atomized world. In interviews, he cast Starbucks’s mission in spiritual terms.

“We’re not in the business of filling bellies,” he told Scott Pelley on “60 Minutes” in 2006. “We’re in the business of filling souls.”

If Schultz’s evangelizing about “achieving the fragile balance between profit and benevolence” sometimes came off as paternalistic, it was because Schultz had seen the way his father, a truck and taxi driver in New York City, had been treated by his employers. They had broken him, Schultz believed, turning him into an abusive man who was unable to provide for his family. Schultz told his employees that he wanted them to find meaning in their jobs and that he was offering them a pathway to the American Dream that had been denied to his dad.

His vision was also shaped by the 1990s when he came of age as a CEO and everything in America seemed possible. Profits were rising, wages were growing and globalization seemed to promise an era of endless prosperity. In those days, a Starbucks cafe with its fancy Italian drinks was something new and sophisticated, a sign that your city or town had arrived.

Starting in 1992, Starbucks recorded 190 consecutive months of comparable store sales growth. The company went from 165 U.S. locations to more than 15,000 scattered across the world. Every year brought a new market: Japan, Malaysia, Qatar, Lebanon, Chile and China.

In 2018 Schultz cut ties with Starbucks to explore a run for president that never got off the ground. Three years later he was overseeing his family’s philanthropic endeavors when the first stores in Buffalo filed for union elections. The pandemic had exhausted Starbucks workers, driving attrition to the highest levels in the company’s history. At the same time, a nationwide labor shortage had given the baristas some real negotiating power.

Kevin Johnson, a former Microsoft executive who succeeded Schultz as CEO in 2018, never visited Buffalo, but Schultz, who held no official position with the company, made two trips to the city in the fall of 2021. On his first, store managers told him of broken equipment that the company never seemed to fix and flooding in their cafes: “things that I had never heard before,” Schultz recalled in an interview.

A month later Schultz returned to beg a ballroom full of baristas to give Starbucks a chance to fix the problems without a union. His plea failed, and in December 2021 the first Buffalo stores voted to be represented by Starbucks Workers United. By early April Schultz was back as CEO, explaining to tens of thousands of his employees watching online and in person at Starbucks’s headquarters his understanding of the problem. It wasn’t that Starbucks was losing money or that demand for its beverages was waning, but that corporate executives hadn’t listened to their employees. They hadn’t understood the strain the pandemic was putting on their lives.

Almost immediately Schultz hit the road to meet with baristas, shift supervisors and store managers across the country. The sessions typically began with an admission from Schultz that the company had failed them and a plea that they speak frankly.

“I need to hear everything,” Schultz began a session in San Jose, “as much as you can share.”

Baristas told him that they weren’t making enough money to pay their bills. They complained about equipment that had been broken for weeks, understaffed stores, insufficient training and supply chain snarls.

Some of the problems seemed bigger than Starbucks, rooted in a country that had taken a dark turn during the pandemic, Schultz said. He visited Nashville, Phoenix and Long Beach, Calif. Workers routinely told him that their customers had grown angrier, more aggressive and demanding. He traveled to New York, Chicago, St. Louis and Denver. He heard more and more from baristas about frightening encounters with homeless people and drug addicts in their store’s bathrooms.

“I didn’t know it existed,” he said. “I didn’t know our people didn’t feel safe.”

All the while the union was growing. In Schultz’s first month back, 65 stores petitioned for votes. Union officials, who had hoped that Schultz might reluctantly make peace with their movement, were baffled by his increasingly hostile tone. “I’ve never met a businessman like him,” said Richard Bensinger, a longtime organizer who was working with the Starbucks baristas. “He hates unions more than he loves money.”

Schultz struggled to see his unionizing employees as real workers with actual grievances. After the Starbucks Reserve Roastery in Seattle, a sprawling store that serves freshly prepared food and alcohol, voted 38-27 to unionize, Schultz alleged in an interview that 20 employees had gone to work there just to vote for union.

Union leaders at the store said they had no idea what he was talking about. “Maybe there were 20 people that quit, but literally nothing else he said is true,” said Melissa Slabaugh, a nine-year Starbucks veteran who led the roastery organizing effort.

To Schultz, unions existed to protect workers from bad companies, like the ones who had abused his father. “That’s why unions were created,” he said in an interview. A union had no place at a company that cared about its workers like Starbucks, Schultz believed. It would pit employees against their bosses, turning partners into adversaries.

It was “anathema,” he said, to the culture of shared success that he had sought to build over the course of decades, and he was determined to stop it.

***

If any visit had reminded Schultz of what Starbucks at its best had been and what he believed it could still be, it was a trip he made to Texas in July.

Schultz or his top executives had already taken part in about 60 listening sessions when his jet touched down in San Antonio. His day began at a conference room by the airport where about two dozen Starbucks baristas, shift supervisors and store managers were waiting for him.

A young woman with a nose ring and a long braid told Schultz about her struggle to get the 30 hours a week that she needed to “survive.” “It’s really hard to pay bills, buy groceries and take care of my son,” she told Schultz. “My paycheck – it’s so inconsistent.”

Others complained about the chaos in their cafes. “I found meth in the bathroom,” a shift supervisor said. “And after we closed, the person came back and was beating on the windows and doors. He was obviously on drugs.” She said she called the police three times before they came.

“How long did it take?” Schultz asked.

“Over two hours,” the young woman replied.

Schultz told them that he had just announced the shutdown of 16 profitable stores because local police and elected officials weren’t able to keep them safe. And he worried that more closures could be on the way.

“These aren’t the kind of issues that Starbucks has ever faced before,” he said. “They’re systemic. They’re societal.”

The San Antonio session ended and Schultz, after a short flight across west Texas, touched down in Uvalde, a small ranching community still recovering from one of the worst school shootings in U.S. history. Starbucks had one store in the town, and Schultz wanted to check on his people there.

At Robb Elementary he walked past pictures of the 19 dead schoolchildren and their two teachers, surrounded by big piles of flowers, stuffed animals, candles and crosses. More than a month after the shooting, clusters of mourners were still gathering to offer quiet prayers. Then Schultz visited the town’s Starbucks – a stand-alone building that shared a parking lot with the town’s Dollar General and a farm supply store.

There the store manager, Nancy Martinez, told him how in the hours after the shooting she had rushed with boxes of coffee to Uvalde’s civic center where parents had gathered to find out if their children had survived. She said she had spotted one of her regulars, the father of 9-year-old Ellie Garcia, standing alone. She cautiously approached him and wrapped him in a hug.

Later that evening, she continued, she had scoured Facebook for news and learned that Ellie was among the victims. In the days that followed, Martinez told Schultz that she had delivered drinks to Ellie’s parents at their home. To honor their slain child on what would have been her 10th birthday, she gave away hundreds of free cake pops with the message, “Live Like Ellie” stuck to the stems. She said that another parent who had lost a child had passed through her drive-through every day for a week after his daughter’s funeral to order her favorite drink, a vanilla bean Frappuccino, which he took to the cemetery. Martinez and her baristas decorated the cups with messages. They helped to cater all of the funerals.

Schultz listened. He called the 41-year-old manager “a hero amongst us.” But, in Schultz’s mind, the story that Martinez was telling him was bigger than just her, her workers or her store. To Schultz, it was also the story of Starbucks, which had helped make Martinez and her team great.

“The country and the world need Starbucks,” Schultz often said.

He’d seen it so many times in just the last few months. He had seen it, he believed, in Switzerland when an Ethiopian coffee farmer cornered him on the sidewalk outside the company’s corporate office. “He could not stop talking about the positive impact Starbucks had on his life and on the coffee farmers within his community,” Schultz said.

He had seen it, he believed, in Anacostia, a historic, Black Washington neighborhood that has struggled, amid high poverty and crime rates, to attract retailers. Starbucks had opened a “community store” there that Schultz knew might never turn a profit.

He had seen it, he believed, in a TikTok video recorded by a stressed-out mother of an autistic son who had been anxious about his swim lesson until a Starbucks barista handed him a free cake pop. “You have to see it,” Schultz had said as an assistant pulled up the video. On the assistant’s phone, a woman in a green tank top was saying that Starbucks had restored her “faith in humanity.’ “

And now he believed he was seeing it in Uvalde, where Martinez’s baristas were racing to fill drive-through orders. Schultz wanted his executives at the corporate headquarters to feel what he was feeling too, so he pulled Martinez aside and invited her to visit Seattle.

Before he left, Schultz posed for pictures with Martinez and her staff. He chatted with a mom and her two daughters, who were sipping blended drinks topped with swirls of whipped cream and drizzles of dark chocolate. “Are you going to put those on Instagram?” he asked. They nodded. Soon Schultz was gone.

***

It was another store visit to the Starbucks just blocks from Schultz’s Seattle home that showed what he was up against.

Elise Whisler was still half-asleep when she looked up at 5:30 a.m. and saw Schultz standing on the opposite side of the counter. Schultz ordered his regular drink: a double short latte, three-quarters full. He didn’t know it at the time, but Whisler, the 25-year-old barista making his drink, was the lead organizer at her store.

She and her co-workers were just days away from learning the outcome of their union election. Schultz asked Whisler if her cafe had received the new cold beverage that the company was rolling out for the summer and how it was selling.

“Yep, the Pineapple Passionfruit Refresher,” Whisler replied. “It’s popular so far.”

Since his return in April Schultz had barely spoken with pro-union workers who weren’t invited to any of his listening sessions. Whisler had contacted the union earlier this year after the company’s algorithm, which predicts customer demand, had slashed her and many of her co-worker’s hours. Several workers, unable to pay their bills, found other jobs. Some, Whisler said, were forced to choose between rent and food.

“Starbucks says we’re ‘performance-driven through the lens of humanity,’ ” she recalled thinking. “But where’s the humanity in that?”

In May, the day after Whisler’s store petitioned the National Labor Relations Board for its union vote, Schultz announced new raises for some hourly employees. But he refused to extend the pay increases to workers, such as Whisler, whose stores had unionized or were in the process of petitioning for elections.

Union officials complained that Schultz was punishing workers out of spite, and federal regulators said Schultz’s decision violated the law. Starbucks countered that workers like Whisler had made a choice to form a union and bargain with the company for a formal contract. Starbucks said it was honoring their decision. Ultimately, a federal judge would have to decide the matter, a process that could take months or even years.

To Whisler, Schultz’s decision to deny unionizing workers the seniority raises seemed “petty and bullying.” She stepped behind the bar to steam milk for his drink. Schultz, was standing just a few feet away in the mostly empty store checking his phone.

Tensions between Starbucks and the union had been building all spring and summer. Union officials accused Starbucks of firing more than 120 pro-union workers in retaliation for organizing. The dismissals spanned the country and, in several instances, drew the condemnation of the National Labor Relations Board. In August a federal judge ordered Starbucks to reinstate seven pro-union employees who were fired in February at a Memphis store.

Schultz denied that anyone had been dismissed for union activity. He alleged that Starbucks Workers United was harassing store managers and infiltrating the company’s workforce with paid activists.

The firings and Schultz’s portrayal of the union grated on Whisler and her co-workers. In May, when they petitioned the NLRB for their store election, they aimed a tweet at Schultz. “Dear Howard, you may like your coffee 3/4 full, but we like ours union made,” it read. The goal, Whisler said, was to show Schultz that they weren’t outsiders or paid activists. They were the people who made his coffee and knew his regular order.

“I don’t understand why he’s so emotional about all of it,” Whisler said. “That’s one of the really frustrating parts.”

As Whisler handed Schultz his drink, she weighed whether to vent her frustrations. She didn’t see her decision to back the union as an attack on Starbucks or Schultz. To her, it was an acknowledgment of the facts of their lives as she saw them. He was a billionaire CEO who was under pressure from “shareholders and this massive corporate network” to sell more beverages and grow profits. She was getting by on $17.86 an hour, worked a second part-time job as a pet sitter and was struggling to pay her bills amid spiraling inflation.

“I’m not sure that’s something you can overcome with good intentions,” she said in an interview.

She imagined what she would tell Schultz: “You say you value community and courage. Well, we’re a community of people who are being very courageous in asking for change and you’re refusing to negotiate with us and painting us as outsiders in your own organization.”

But she didn’t say any of it. “What does it do other than put him in a bad mood?” she reasoned. “What does it do other than tell him it’s a personal attack, when it is not?”

Schultz left the store. Whisler walked into the back room where one of her co-workers was waiting for her. “I’m sorry I left you alone out there,” she recalled her colleague telling her. “I just couldn’t bear to look him in the eye right now.”

A few days later, Whisler’s store voted 6-1 to unionize.

***

In September, Schultz took the stage at Starbucks’s headquarters to lay out what he and his team had learned in more than 200 sessions with the company’s hourly workers across the country.

This time, the all-day gathering was for Starbucks’s biggest investors. It was probably going to be Schultz’s last big public appearance as CEO. Two weeks earlier, he had announced that Laxman Narasimhan, the 55-year-old head of Reckitt, a British consumer goods company, would take over for him in the spring after an unusual six-month orientation. Schultz wanted to make sure that his successor understood exactly what made Starbucks so special and different from other businesses.

“I have the distinct honor an absolute privilege of introducing our iconic founder!” Starbucks’s head of investor relations announced.

Schultz bounded to the stage. Projected on a giant screen behind him were photos of Starbucks stores from around the world. “If I had to pick one word to describe what we’re going to share with you,” Schultz began, “it would be ambition.”

Outside in the parking lot several hundred Starbucks workers and supporters from other unions were marching, shouting and accusing Schultz of trying to crush their efforts to organize. “What’s outrageous? Poverty wages!” they chanted. A few held up “Wanted” posters with his Schultz’s face, begging to negotiate with the union.

Starbucks’s security team taped sheets of brown paper over the ground-floor doors and windows to block the protesters from view.

Inside, Schultz was introducing Narasimhan, who talked about his humble origins in India and his arrival decades earlier in the United States with nothing. “Sitting in front of you,” he told the investors, “I am the epitome of the American Dream.”

Schultz and his team then outlined and all they were going to do to “restore trust” with their employees who increasingly wondered if that dream still applied to them. Last year, two months after the first stores in Buffalo petitioned for union votes, Schultz’s predecessor announced $1 billion in raises. The extra pay, which included a $15-an-hour minimum salary, began hitting baristas’ paychecks in August of this year. In small towns, such as Uvalde, the boost registered as a 25 percent raise. In bigger cities such as Seattle where workers were already making more than $15 an hour, the 3-to-7 percent pay increases didn’t cover the cost of inflation.

Now Schultz was promising his employees more.

“There’s a word that’s not used very often in business, and the word is ‘love,’ ” Schultz said. “I spent my life at Starbucks, and my love for the company – my responsibility to our partners – is at the highest level possible.”

Schultz and his team said they were committed to giving employees more stable hours each week, a steadier paycheck and clearer pathways to salaried jobs at the company for those who wanted them.

Schultz had been shocked to learn that, despite the company’s free online college program, many Starbucks employee still carried tens of thousands of dollars in student loan debt that they’d built up before being hired. So, Starbucks was teaming with a company to help its workers refinance their debt and manage their payments.

He’d heard from workers about their struggle to save for unexpected expenses, such as car trouble. Schultz’s answer: a new program that would dole out $25 to $50 incentive payments, up to $250 in total, to encourage employees to build up their bank accounts. Schultz was denying these new benefits to unionizing workers.

At virtually every stop on Schultz’s tour, baristas had complained about how harried their jobs had become as they scrambled to make increasingly complicated cold, blended drinks. Now new technology was on the way that would help baristas work more efficiently. Among the innovations: new blenders and store designs that would cut the time to make a Frappuccino from 86 to 35 seconds.

The changes, Schultz promised, would be good for not only workers but also Starbucks’s profits. Better pay and benefits would cut down on turnover. Better technology would make baristas’ work less exhausting. Both would give baristas more time to get to know their customers, who spent more money when their baristas knew their regular drinks and a bit about their lives.

Between speeches, Schultz, his gray hair swept back, worked the room like a politician tending his base. He draped an arm over the shoulder of one major investor. A few seconds later he was cupping his hand on the nape of another’s neck and pulling him close. Soaring inflation, which was dragging down other companies, seemed to be sparing Starbucks. “So far, we’ve been immune, immune!” Schultz was telling them.

During a quiet moment, Schultz told Narasimhan to call his mother in Britain, so that she could wish her son luck. “It’s like Christmas here,” Narasimhan mused. “Everyone’s so happy.”

Sometimes Schultz struggled to understand why his unionizing workers were so angry. “They’re angry at the world. They’re angry at their situation, which I understand,” Schultz said in an interview. “Our responsibility is to do as much as we can to overcome that, but there are limitations, unfortunately.”

In other instances, he cast the movement in darker terms, as a meticulously planned power grab by organized labor aimed at undermining his company. He accused them of lying and bullying store managers and their fellow baristas. “There’s so much fiction versus truth,” he said. “At some point the entire story will come out.”

To Schultz, the proof of his and Starbucks’s goodness was in its past actions. “We have a 51-year history of building this company the right way,” he said. It was in places like Uvalde and store managers like Martinez. And it was in the numbers. In early September, Starbucks’s U.S. operation recorded one of its strongest weeks in company history. Employee retention numbers were finally returning to pre-covid levels, and the number of stores filing for union election was down from a high of 71 in March to only 10 in September. For the first time his return as CEO, Schultz was sure he was winning.

The day’s events were over. The protesters had vacated the parking lot. The investors were headed to the airport.

Whisler, the barista from Schultz’s neighborhood store, had skipped the demonstrations. “I’d been so burnt out at work lately,” she said. Schultz’s resistance to the unionization push had left her and many of her co-workers doubtful they’d ever get a contract. She wasn’t even sure the union would survive. “I’d love a stable, long-term union, but I don’t know if it’s super likely,” she said. “For me, the be-all and end-all is that people feel supported and can earn a living wage.” She went to sleep a little before 9 p.m. so she’d be able to wake up at 3:30 a.m. for her morning shift.

A few miles away Schultz was also ending his day. Before he turned in for the night, he typed out a message to his staff. “Over my four decades with Starbucks, I’ve been so fortunate to experience so many defining moments for the company,” he wrote. “Today was certainly one of them. What you all accomplished will go down as one of the most important days in Starbucks history.”

“It was a return to the soul of the company,” Schultz said. “A seminal day. A seminal day.”