In conjunction with protests at Starbucks' annual shareholders meeting, organizers with the Starbucks Workers Union have released a "Starbucks 2006 Corporate IRRESPONSIBILITY Report" that examines the actions of Starbucks and debunks the idea that they are a socially responsible company (as a contrast, see the Starbucks Corporate Social Responsibility Report). The report focuses on the treatment of farmers growing coffee for Starbucks, its treatment of its baristas in the United States, and its anti-union activities. The issues are at the core of an organizing effort undertaken by the Industrial Workers of the World (IWW) to improve the conditions of employees throughout Starbucks' supply chain.
As part of their ongoing organizing efforts, members of the Star Bucks Workers Union recently met with coffee farmers at the Fero Co-Op who grow beans for one of Starbucks "Black Apron Exclusives"--the company's most expensive coffees. Starbucks has touted this deal as a "partnership" between farmers and Starbucks, with farmers growing a coffee that has been branded "Shirkina Sun-Dried Sidamo" and is a product of what Starbucks has described as "a lot of training, time and commitment" over the course of three years. Starbucks sells this coffee $13 per half pound and in 2005 and 2006 bought a total of 2,400 bags from the cooperative, selling the coffee for a total of $8,236,800. However, Starbucks paid the growers less than $3 Birr per kilo along with a $0.2 Birr per kilo dividend at the end of the season, for a total of $181,000 ($0.57 per pound). This translates to only 2.2% of the retail price. These low prices have put many coffee farmers in extreme poverty while also forcing many families to send their children to work in the fields rather than to school.
Farmers cited in the report want Starbucks to pay a fair price for their coffee, and according to the report, Starbucks can afford to pay fair prices but chooses not to in order to maximize profits. The report asserts that if Starbucks were to pay $5.32 per kilo instead of the current average of $3.12 per kilo, Starbucks' cost would increase from 5.3% of its total revenue to 9.1%. The 3.8% increase "roughly estimates" the cost of "social fairness" to the twenty-four countries that grow coffee for Starbucks. Starbucks could easily pay this price, as coffee prices have doubled in the past five years yet Starbucks has continued to make a considerable profit with earnings per share increasing from $0.26 in 2002 to $0.71 in 2006, its free cash flow increasing from $478M to $1,132M, and its return on equity growing from 13.87% to 26.06%.
Like the treatment of coffee farmers in Ethiopia, the financial reality for employees working at Starbucks is significantly different than what is portrayed by the company. Rather than being "partners" paid equally, Starbucks baristas are paid a starting wage as low as $6.25 per hour with wage caps ranging from $8 to $11 depending on the part of the country where one works. Making it more difficult to earn enough money to support oneself or their family on a Starbucks wage is the fact that 100% of Starbucks' retail employees are part time and scheduling fluctuates greatly from week to week with no guarantee of a minimum number of hours. Employees also have little access to health care, with Starbucks insuring only 42% of its workforce, a number that is less than Wal-Mart's 47%. Employees face difficulties both in securing the minimum number of hours required to enter the program and in affording the co-pays and deductibles.
The Starbucks Workers Union (http://www.starbucksunion.org) has been organizing to demand a living wage, secure work schedules, appropriate staffing, and respect on the job since May of 2004 according to the "Irresponsibility" report's review of union activity. The report touts gains made by the union from increased wages and improved scheduling for union members to improving unsanitary working conditions. However, these gains have been met by "illegal and relentless anti-union reprisals" according to the report. It asserts that Starbucks "systematically violates the right of employees to unionize" despite National Labor Relations Board (NLRB) actions criticizing Starbucks or reinstating illegally fired workers. Nevertheless, Starbucks continues to take illegal anti-union action and has fired five baristas since a March 2006 settlement in which Starbucks had to reinstate to baristas, end its policy of banning union pins and literature distribution, and stop spying on, threatening, and bribing workers to prevent them from joining the union.
