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How coffee giant Starbucks, poster company for the 'new age' of employee relations, got itself ground, roasted - and certified - by the Canadian Auto Workers union
In a pint-sized Starbucks in the Hornby Street lawyers' ghetto, a harried looking legal type in standard issue grey wool glances at his watch as he places an order for a double tall latte. If the bright-red bow tie around his neck constitutes an everyday act of minor rebellion, then the twenty-something woman who takes his order is clearly in full sartorial revolt: cutoff jeans, nose ring, orange Charlie Brown T-shirt with the characteristic sigzag stripe, and a baseball cap festooned with buttons boldly emblazoned with the words CAW - UNSTRIKE.
It's May 16, 1997 and members of the Canadian Auto Workers Local 30000 are engaged in their first job action protesting the lack of a contract. Out in Burnaby, picketing workers have shut down the pastry distribution centre, stopping delivery of backed goods to Starbucks stores in the Lower Mainland. Out on the Hornby Street sidewalk, an off-duty employee dressed in sandals, shorts and shades is handing out bright green leaflets outlining key union demands on things like wages, seniority and sick leave. A full-page ad in the pages of The VancouverSun provides the company's spin on the dispute: Starbucks's unique work environment precludes any need for a standard union contract, according to Starbucks VP Roly Morris, and anyway, the employees' wage demands are way too high. Nonetheless, the company remains committed to the collective bargaining process.
In the wider world, industry watchers and academics are lining up with their own pet theories as to what could have pushed a company with a continent-wide reputation for progressive 'new economy' employee relations into an old-fashioned labor dispute. Aggressive union bosses looking for a foothold in the service economy is the theory favored by the Canadian Restaurant and Food Services Association, which fears union expansion into its own ranks. A generation of economically disenfranchised youth looking for a bigger share of the recovery pie, say the labor historians, who always seem to favor the workers. T-shirts, says Laurie Bonang, as she hands out another green CAW flier to a passing customer. To be exact, white cotton T-shirts, emblazoned with the Starbucks corporate mermaid, and, until last summer, worn every Friday on casual day. 'When they took away our casual Fridays and said no more T-shirts, that was it,' says Bonang. 'That was like the last ray of sunshine in my life and they took it away. Something had to change.'
A 23-year-old ex-Albertan, Bonang is one of the key participants in the drive to organize the Seattle-headquartered coffee giant. It's something she never would have imagined doing only a couple of years ago. "When I started working at Starbucks it was great," says Bonang. "Great benefits, great coffee, great working environment. They actually cared about me. I really bought into that."
That was in 1995. Bonang had arrived in Vancouver after a stint in the theatre production program at Alberta's Red Deer College. A subsequent bit of real world experience convinced her that theatre production, while occasionally lucrative, was also a very uncertain way to make a living. "I did it for awhile to pay off some of my student loans," says Bonang, "but I realized I couldn't handle the way you have to work like a dog for a really long while, and then you do nothing for awhile. I didn't like that. I wanted a steady job, with a steady income."
Her arrival in Vancouver coincided with the ongoing expansion in British Columbia of the Seattle success story, Starbucks. Tapping into the aging baby boomers' increasing willingness to pay top dollar for quality and service, Starbucks took a relatively simple idea - high-quality coffee served in small street-front shops - and parlayed it into a worldwide coffee empire with nearly 700 stores and sales in the $600-million range.
Bonang applied at the Homby Street store and got a job as a barista, the trendy Latin American name given to Starbucks coffee makers. Her starting wage was $6.75 an hour, 50 cents an hour over minimum wage. If it wasn't quite what she had expected when she began college, it was a steady living. Just.
Working hours varied from 15 to 45 hours a week, depending on demand. Bonang's monthly income (before tax) averaged around $1,200. Just under $400 of that went for her share of the rent in a two-bedroom east side apartment. A few hundred more went for food and clothing, and some more after that for a bus pass and utilities. Savings were next to non-existent. Her co-workers were in similar situations: twenty-somethings, many with university degrees, stalled in the workforce by the same demographic bulge that provides the bulk of the Starbucks clientele.
The company seemed to recognize that its workers weren't just teenagers looking for pocket money. Indeed, Starbucks's reputation for progressive employee relations was based on the fact that it offered its Gen-X workers grown-up benefits like dental, vision and particularly important in the U.S. - health care. Starbucks was also one of the few service companies to offer its workers stock options and a stock purchase plan, benefits hitherto reserved largely for the professional class.
The benefits were given in recognition of the fact that in a high-tech high-touch world, the personnel providing the service are as important an ingredient in the company's success as the quality of the beans. As a token of their importance, Starbucks referred to its people not as employees but as 'partners'.
As Bonang's Starbucks career entered its second year, however, she began to note signs - some relatively minor, some less so - that her 'partnership' was perhaps only token. For one thing, the benefits package wasn't turning out to be that much of a boon. "If you ask them, most people will take a cut in benefits for a better wage. Ask anyone. I mean, the medical coverage is a nice gesture, and it's appreciated, but most of us aren't really at the stage where we need a lot of operations or anything." As for the stock program, says Bonang, "I personally got 56 shares worth $33 [each], and after a year I can cash in 20 per cent of that, at whatever level it happens to be trading at. So thank you, but I'd much rather have that money now when I can use it to buy stuff I really need, like food."
She also noticed that some of the Starbucks rhetoric about contributing to the community seemed to be just that: rhetoric. "They're celebrating their 10-year anniversary doing business in B.C.," says Bonang, "so they gave $10,000 to Children's Hospital, which is all very nice, but they took out a full-page ad in the Sun and Province to tell everyone about it. Do you have any idea how much a full-page ad in the paper costs? About $20,000, I bet." ($22,000, actually, if it's a color ad on a weekend.)
More seriously - to Bonang a least - the company began recruiting managers for its rapidly expanding store base from outside the ranks of experienced baristas. Bonang, who was by this point a shift supervisor but not - as she seems to have hoped - a manager, was obliged to train and then take orders from management 'partners' who had never actually served in the ranks of the true latte steamers.
More seriously for the baristas as a whole, in the spring of 1996 Starbucks unilaterally rolled back the wage scale. The previous October - concurrent with the raising of the B.C. minimum wage to $7 - Starbucks had sent letters to all employees announcing an across the board increase of 50 cents an hour. New hires would start at $7.50. Less than six months later, the company dropped the starting wage back to the $7 minimum wage mark.
Starbucks's 'partners' - new and old - discovered the situation only by chatting amongst themselves. No explanation was given for the move, possibly because it would be difficult for a company with profits in 1996 of $42.1 million, with plans to double in size to 2,000 stores by the year 2000, to plead a need for austerity.
A few months after wages had been rolled back the company began implementing a new computerized scheduling program. The new system had been developed at head office and installed in every store in the chain. "The manager used to go into the back for an hour and figure out everyone's shifts for the week," says Bonang. "Now he plugs your availability and rating [from one to 10] into the system and it spits out a schedule." Starbucks won't comment about the programming details of its system, but according to Bonang, it was clearly set up to favor the newer- and therefore cheaper - baristas. "People who had been there four years suddenly found themselves with 20 hours a week. That's not fair."
And then there were the T-shirts and the end of casual Fridays. This was perhaps the most minor thing of all, except when you consider who Starbucks's 'partners' are. Though they schlep lattes for a living and live on the east side, Starbucks employees, many with a post-secondary education, most with middle-class parents, seem to consider themselves honorary members of the middle class. Like lawyers and software engineers they have stock options, health plans, RRSPs and dress-down Fridays. If the first three were proving to be of nominal benefit, taking away the fourth sent a clear message: you are not middle class. You are not like the professionals who come in to buy coffee every day. You are not partners. You are workers.
So, like workers, Bonang and her fellow baristas began to think of organizing a union.
Joining a union was not the first choice of action. Bonang considered moving on, but rejected it. "In reality where else am I going to go? I'm going to get a job somewhere like Starbucks, but I won't have as much authority. as I have here, and I'll be making even less money. Is that any better?" She also considered taking her concerns to the company. A friendly manager warned her that that was a good way to end her Starbucks career.
So late in August 1996 Bonang and co-worker Steven Emery. went to the Labour Relations Board (LRB) office to find out how to form a union. Inside the LRB they ran into an organizer from the Canadian Auto Workers, who clearly knew a good thing when he saw one. The service sector- and particularly small businesses within that sector - has been growing increasingly attractive to industrial unions in the past decade. The CAW itself has organized about 35,000 new workers in the past 10 years, about half in the service sector. It is now Canada's largest private sector union, with more than 205,000 members.
Nor is the CAW the only union interested in smaller service sector companies. Figures from the BC Labour Relations Board show that of the 421 new union certifications that took place in B.C. last year, 51 per cent occurred in workplaces with 10 or fewer employees, and a further 22.5 per cent took place in shops with between 10 and 20 employees. Fully 60 per cent of all new workers certified were in the service sector.
Industrial unions have organized in the most unlikely places: 19 clerks at the Rogers Video store in Abbotsford are now members of the International Brotherhood of Electrical Workers; 13 employees of Lenscrafters in Victoria now pay dues to the United Steelworkers of America; and the solitary jewelry helper at Collins of Kerrisdale is now a proud member of the Service Employees International, Local 244.
According to BC Federation of Labor spokesman Bill Tieleman, this is but a taste of things to come. "The small business community has said repeatedly and for many years that they are the engine of the economy and they're creating all the jobs. Now they seem to be surprised when unions show up in the engine room. They shouldn't be. That's where the jobs are being created and that's where workers are calling for the services of a union."
CAW organizer John Bowman set up a secret meeting with Bonang and her nine coworkers at the Hotel Vancouver, where he explained the benefits of belonging to his union. The pitch was obviously convincing - all 10 baristas at Bonang's Hornby Street store signed union cards. In the days that followed the organizing drive spread to Starbucks stores on Denman and Robson Streets and Commercial Drive. The pastry distribution centre in Burnaby signed on.
To keep the drive moving, Starbucks's new CAW members were sent into nonunion stores disguised as job applicants, with orders to leave copies of the proposed collective agreement lying around in the employee lounge where fellow baristas might see it and join the drive.
Twenty-nine-year-old Liz Cart heard about the union drive through the media and contacted the CAW directly. A graduate of Carleton University's Soviet Studies program, Cart says she too was motivated by a growing disillusionment with the company. "At the beginning there were some things that really impressed me, like the same sex medical benefits. At the time not even the federal government offered that," says Cart. "Then some unilateral decisions were made - like rolling back wages and changing insurance carriers- and I got to wondering why this touchy-feely '90s kind of company was doing all this without even consulting the people working there."
Carr signed up 13 of the 15 employees at her Cambie Street store. Three other stores on Howe and Davie Streets and in the Royal Centre joined up. Then things began to stall. As the union drive continued through September, it became clear that by no means all, or even the majority, of Starbucks staff were heeding the union call. An attempt at the older of the two Robson Street stores failed to garner the 55 per cent of employee support required under B.C. law. Out at the Deep Cove store the union drive foundered after a number of employees who had initially signed union cards sent letters to the BC Labor Relations Board retracting their CAW membership. When the certification drive came to a halt in October, only 110 employees in eight of 92 B.C. stores (and one pastry distribution centre) had been CAW-certified.
Why the drive stalled is still unclean The CAW's head office in Toronto is reportedly still receiving calls from interested workers. Bonang believes intimidation by Starbucks stalled the drive. A spokesman for Starbucks, on the other hand, suggested the drive smiled because workers at other stores are entirely content with their current situation. Neither explanation seems entirely satisfactory. Likely, prospective union members are waiting for the outcome of the current round of collective bargaining before they decide what their next move should be.
The bargaining session to negotiate a first contract was convened in October '96. Starbucks hired an experienced negotiator, Doug Quinn of Quinn, Martin, Gallagher Consultants, to represent its interests at the bargaining table. The employees were represented by veteran CAW negotiator Roger Crowther, along with a bargaining committee made up of one Starbucks employee from each of the union stores.
Crowther's opening proposal was a contract copied almost intact from the one negotiated for the CAW's 500 unionized Kentucky Fried Chicken workers. Demands included a rise in the starting wage from $7/hour to $10/hour, shift scheduling based on seniority, paid sick leave for all employees, a clothing allowance and what Laurie Bonang calls "the rights and dignity stuff' - essentially an end to workplace harassment.
Starbucks didn't respond. No counter offer was made on money, nor on scheduling, nor sick leave, nor the 'rights stuff'. "They're the least prepared company I've dealt with in 20 years of bargaining," said Crowther early on in the negotiations. "It's like they're still in a state of shock."
That, or Starbucks was stalling. The company itself won't comment in any meaningful way on the negotiations. Repeated calls to Starbucks marketing director Launi Skinner, human resources VP Shelley Silbernagel, VP Roly Morris, and negotiator Doug Quinn were not returned. Mat Wilcox - from the outside PR company Barr and Wilcox Group - did call back, but only to say, "It always takes a long time to work out a first contract." Stalling, however, is one of the classic strategies when dealing with a new and potentially weak union. The idea is to hedge and prevaricate until everyone is tired and the main organizers have quit for other jobs, or simply given up.
November and December passed and the new year began with no substantial counter offer and only sporadic negotiations on minor issues like the size and prominence of union bulletin boards in the company staff rooms. Attrition began to take a toll. Steven Emery fled for a job in Whistler and another of Bonang's co-workers landed a career-oriented job and left for better opportunities.
To speed things along, on March 27 the CAW called for a strike vote, nearly six months after bargaining began. Not surprisingly, it passed with a margin of 92 per cent.
Starbucks hit back with the clearest possible indication that, far from being paralyzed with shock, it was more than interested in a bit of hardball. The company announced it would be closing the pastry distribution centre, putting nine newly unionized workers permanently out of work. B.C. labor law prohibits a company from closing down a workplace because it has been unionized.
Starbucks, however, claimed the four-year-old pastry centre had only been an experiment, which had now been found to be uneconomical. Its closure thus had nothing to do with the union drive. It was a claim few outside the boardroom actually believed.
The CAW lodged a complaint with the Labour Relations Board that the company was bargaining in bad faith and filed strike notice effective May 14. Neither move pried anything further out of the company, so early on May 16 pastry centre workers hit the streets. Baristas at other Starbucks locations began the first of a series of job actions by wearing jeans, T-shirts and union buttons in place of the standard uniform of khaki Gap pants and crisp white dress shirts. Union members outside the eight unionized shops explained the union viewpoint to passersby, asking them to call Starbucks to express their concern. The next step is to leaflet other stores, followed by a full-fledged strike or lockout.
How long the job action will last is tough to predict as of writing in mid-May. Even on the first day, the CAW baristas are giving every. indication that they don't really expect to get a three buck raise right off the bat. "We're not going to get the gravy on a first contract," says Bonang, handing out leaflets on the sidewalk. "Right now I'd settle for just about anything." Nor do most baristas have the kind of financial depth necessary to last out a long march on the picket lines. On the other hand, they have little to lose by staying out. CAW strike pay is abysmally low - $125 for the first two weeks, $175 after that - but it's not that much lower than the approximately $250 a week pulled in by a starting barista.
For its part, Starbucks has little incentive to settle quickly. Eight stores aren't enough to seriously jeopardize its B.C. sales, no matter how long they remain closed, whereas giving in would practically ensure that every store in the province went union. That's something the company obviously doesn't want, and other food service companies fear. According to Mark von Schellwitz of the Canadian Restaurant and Foodservices Association, "Starbucks already has one of the most generous benefits packages in the industry. If the CAW can use that as a standard to unionize . . . they can then can go around using the Starbucks collective agreement as something to show to other workers."
The only real danger to Starbucks in shrugging off the strikers is that it may critically damage the most precious thing a service company possesses: its public image. Public reaction will thus be critical. If Starbucks has wagered correctly, the man in the street will look at the issue and decide that $7 an hour is plenty for brewing coffee. Certainly at the Homby Street location, quite a few customers were wandering in as usual, ignoring Bonang and her bright-green union pamphlets.
A sizable number, however, were stopping to lend a word of encouragement. One man in a light summer suit stopped to deliver a 10-minute narrative on how; even though he disliked unions, Starbucks had lost his support after it refused to donate any money to a charity supported by his Lions Club branch. Given all the money it was making, he continued, it could certainly do more the community, including maybe paying its workers 10 bucks an hour. If this reaction is any indication, the dispute may end up costing Starbucks more in damage to its image than it ever could in lost latte sales.
The dispute has already put paid to one bit of Starbucks PR: the notion that Starbucks is a daring 'new economy' innovator with a cooperative new labor relations paradigm. Starbucks is a company. Lofty rhetoric aside, it exists to make money. It has employees. Euphemisms aside, some are managers, and some are workers. East is east and west is west, and though at times the twain shall meet, it is likely to be but every few years, and that over contract negotiations at the collective bargaining table.
Starbucks is not the only service-sector company being targeted for organizations. The following is a sample of the service sector companies unionized in the past several months.
NAME: The Whistler Question newspaper, Whistler
UNION: International Brotherhood of Electrical Workers, Local 213
EMPLOYEES: 20 (approx)
DATE CERTIFIED: pending approval of the B.C. Labour Relations Board
NAME: Saan Stores Ltd., Squamish
UNION: United Food and Commercial Workers, Local 2000
DATE CERTIFIED: 11/12/96
NAME: Elephant and Castle Group, Vancouver
UNION: CAW Local 3000
DATE CERTIFIED: 1/22/97
NAME: Canadian Tire, Kamloops
UNION: United Steelworkers of America, local 700
DATE CERTIFIED: 2/18/97
NAME: Rogers Video, Abbotsford
UNION: International Brotherhood of Electrical Workers, Local 213
DATE CERTIFIED: 11/13/96
NAME: Lenscrafters International Ltd.
UNION: United Steelworkers of America, local 2952
DATE CERTIFIED: 2/18/97
NAME: Beauty Club, Vancouver
UNION: United Food and Commercial Workers, Local 120B
DATE CERTIFIED: 2/12/97
NAME: Tri-City Bingo Palace, Surrey
UNION: International Brotherhood of Electrical Workers, Local 213
DATE CERTIFIED: 11/20/96
Shawn Blore is a Vancouver freelance writer and regular contributor to BCBusiness.
COPYRIGHT 1997 Shawn Blore.