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Starbucks’ Howard Schultz was the gold standard for good bosses everywhere. Then Gen Z worked for him.

Howard Schultz at the ribbon cutting of Starbucks' first store outside of North America, in Tokyo, in August 1996.Howard Schultz at the ribbon cutting of Starbucks’ first store outside of North America, in Tokyo, in August 1996.

AP Photo/Koji Sasahara

  • In Starbucks’ early days, Howard Schultz was seen as a leader in corporate responsibility. 
  • He faced tough questions Wednesday from some senators who accused the chain of union-busting.
  • Americans’ support for unions is the highest in decades, while confidence in large companies lags.

In 1996, President Bill Clinton introduced an audience at Georgetown University to “a remarkable Seattle-based company” that offered even its part-time employees health insurance. 

The company was Starbucks.

Howard Schultz, the CEO of Starbucks at the time, then appeared with Clinton on a panel to discuss corporate responsibility. Schultz discussed his 1987 decision to offer Starbucks employees stock options and what he said was better healthcare than rivals, among other benefits. At the time, these sorts of benefits were rare for hourly employees in the US. 

“It was not going to be justifiable to us as a management team if a group of white-collar workers and a group of shareholders, private then and public today, won at the expense of our employees,” Schultz said, drawing applause from the audience. 

Schultz found himself in Washington, DC, again last week, but this time, senators grilled him on accusations that Starbucks attempted to interfere with unionization and collective-bargaining efforts at its stores while he was CEO. Schultz recently stepped down after two stints as CEO, with Laxman Narasimhan replacing him in the role.

Schultz repeatedly said that Starbucks had not broken any laws — despite an administrative judge in New York ruling in March that the company had done so dozens of times at stores around Buffalo, New York, The New York Times reported.

During the three decades since his chat with Clinton, Schultz’s image has morphed from a model of corporate responsibility to what critics have described as a union buster. At the same time, Americans’ attitudes toward unions and large companies have also evolved. The shift is most pronounced among Gen Z, or people born from 1997 to 2012. This is also the generation that Schultz hopes to attract to work at his coffee shops, doing what he described last week as “probably one of the best, if not the best, first job in America.”

In a statement to Insider, Starbucks spokesperson Rachel Wall told Insider said that Starbucks strives to address a wide range of relevant issues with its employees.

“Listening to and learning from our partners is core to our Mission and Values and has helped to differentiate Starbucks as a supportive, partner-first company,” she said. Starbucks refers to its employees as partners.

Schultz and other executives attend “hundreds of voluntary collaboration sessions and other open forums” where they interact with employees. Starbucks favors “a direct relationship with our partners,” Wall added. 

Starbucks workers participate in November's Red Cup Rebellion, a nationwide strike demanding the company fully staff union stores and bargain in good faith.Starbucks workers participate in November’s Red Cup Rebellion, a nationwide strike. Public support for unions is at a historic high.

Derek Davis/Portland Press Herald via Getty Images

Public support for unions is at a historic high

For decades, Schultz has argued that Starbucks’ benefits are so good that its employees don’t need a union. 

On Wednesday, he cited perks ranging from hourly pay well above state-minimum wages (average pay for store employees is $17.50) to stock options and tuition assistance. Starbucks’s health insurance option for part-time workers originates in a 1986 contract for unionized Seattle Starbucks workers that Schultz fought against at the time. 

“If you look at the ’50s and ’60s unions generally were working on behalf of people in a company where those people have not been treated fairly, where there’s been, in some cases, nefarious acts by the employer taking advantage of the employee,” Schultz said. 

Starbucks is not that kind of company, he said.

Senators and Starbucks workers at the hearing did not agree. Current benefits, they said, were beside the point: Federal law guarantees employees the right to form a union and to bargain for a contract regardless of benefits.

Starbucks’ critics have growing support.

An August Gallup poll found that 71% of those surveyed approve of labor unions. The last time support for organized labor was that high was in 1965, Gallup said.

Gen Z, who make up a significant part of the fast-food workforce, is the most supportive generation.

Still, only about 16% of respondents said they or someone in their household was part of a labor union. And of the 84% of respondents who had no connection to a union, just over half said they were “not interested at all” in joining a union, according to Gallup. 

 

Howard Schultz, the interim CEO of Starbucks, is one of the most vocal business leaders against unions.As Starbucks has grown into a massive global company, Americans’ mistrust for those large corporations has also grown.

Jim Bennett/Getty Images

Schultz touts Starbucks’ values as Americans grow more distrustful of big business

In 1996, Schultz told the corporate-responsibility panel that Starbucks built its business around values to win favor with employees.

“Unfortunately, there is a lot of distrust among employees when they go to work for the first day of any company in America,” Schultz said. “Management is now called on not only to talk about its products and services but to talk about its values.”

Over the years, as Starbucks has grown into a massive global company with over 36,000 stores and 402,000 employees, Americans’ mistrust for those large corporations has also grown. The share of surveyed people who said they have “very little trust” in big business increased to 40% last year, up from 26% in 1996, Gallup found.

Members of Gen Z also have the strongest negative opinions of businesses and their leaders.

Daniel Cox, the director of the Survey Center on American Life, described Gen Z’s mistrust of businesses, among other institutions, in a recent piece in Insider. He credited this mistrust, in part, to an age gap.

“Every generation of young people at some point feels that older people don’t understand them, but the leaders of America’s institutions across culture, business, and government have never been older, which introduces an unprecedented age gap between young people and the people who control the levers of power in their lives,” he wrote. 

On Wednesday, Schultz  tried to challenge the notion that he doesn’t understand the plight of workers with a story he has told in the past. It centers on his father, who broke his foot while working and was subsequently fired from a job as a driver.

Schultz said that he “built the kind of company that my father never got a chance to work for.”

But instead of applause, that anecdote drew pushback from Ed Markey, a Democrat from Massachusetts. Markey said that by unionizing, Starbucks workers are “just looking to be someone who can protect themselves in the way your father could not.”

Read the original article on Business Insider
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