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Starbucks Is Handing Out Raises To All U.S. Employees Beginning Later This Year

By Aaron Homer
Published on: 07:13 PST, Jul 11, 2016

Starbucks is handing out raises to all of its employees in the U.S., the company announced Monday. Along with changes in how long-term employees are rewarded with stock options, that means that every Starbucks employee in America can expect a raise of between five and 15 percent.

As AOL reports, news of the company-wide raises came directly from Starbucks CEO Howard Schultz himself. In an open letter posted on the company’s website, Schultz announced the specifics of the wage increase plan.

“First, effective October 3, all partners and store managers in U.S. company-operated stores will receive an increase in base pay of 5% or greater… Second, to recognize the contributions of our tenured partners in our ongoing success, we will be adding a future annual enhancement to our Bean Stock program. Specifically, we will be doubling the annual bean stock award for partners that reach two years of continuous service with the company. The combination of these changes will result in compensation increases between 5% and 15%.”

Schultz framed his announcement in the context of the difficulties that have faced Starbucks baristas and other employees working in the U.S., by first mentioning the “tragic violence” that has dominated the headlines in the past few days.

AOL Business writer Miles Udland notes that Starbucks may have other motives besides the goodness of Schultz’s heart for handing out pay raises. For one thing, new minimum-wage laws will be taking effect in places throughout the country in the next few months, and Starbucks will need to not just be complaint with the law, but to be competitive.

In Starbucks’ home town of Seattle, for example, the minimum wage in the city is $15 per hour, according to Politifact — nearly double the federal minimum wage of $7.25 per hour. Calls for an increase in the federal minimum wage are being heard across the country — the Obama administration is on board with a minimum wage increase. Presumptive Democratic nominee Hillary Clinton also supports raising the minimum wage, according to Slate.

Further, the U.S. economy is approaching what is known as “full employment” — that is, the point at which wages will begin to accelerate, according to Udland.

“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.”

In fact, wages in the hospitality sector — of which Starbucks is a part — have been rising steadily in recent months: in June, 2016, they were up four percent from the same time a year ago. Across the U.S. labor force as a whole, wages have risen about 2.6 percent over the past year.

Starbucks is not the first major company to announce pay raises for its low-wage employees this year. In March, according to CNN, Costco announced that all new hires and existing entry-level workers would be getting a 50-cent pay raise, from $13 per hour to $13.50 per hour. Similarly, in January, Walmart announced company-wide pay increases that would bring its nationwide hourly wage to $13.38 per hour.

Starbucks customers can expect to see the cost of the higher wages passed on to them. The company announced last week that, beginning July 12, prices on some of its beverages will rise by up to 30 cents.

Are you willing to pay more for your favorite Starbucks drink to help pay higher wages for the company’s employees?

[Image via Shutterstock/Sorbis]

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