Starbucks Scuffles With Unions

Starbucks (Nasdaq: SBUX  ) may be in hot water over anti-union practices.

The New York Times reported that The National Labor Relations Board said Starbucks has violated the law a whopping 30 times by trying to deter workers from unionizing in four of its Manhattan stores.

Among the allegations in the complaint, brought about by the International Workers of the World, is that Starbucks managers fired, threatened to fire, or gave negative performance evaluations to workers who were in favor of unionizing. Starbucks said it will defend itself against the allegations, which it described as baseless.

Wal-Mart's (NYSE: WMT  ) critics may consider it the poster child for retail union-busting. But it's interesting that two retailers considered much more touchy-feely, Starbucks and Whole Foods Market (Nasdaq: WFMI  ) , have both displayed similar resistance to organized labor.

In my opinion, Starbucks and Whole Foods can afford to be resistant. It's not exactly easy to accuse them of abusing their workers (although some may consider unions' absence an abuse in and of itself). Both companies provide employees with much better benefits than their peers, including health care and stock programs. Should every retailer's workers unionize, simply because there isn't a union? I don't think so, especially if the employer shows interest in treating its employees well.

Starbucks' latest quarterly profits included costs attributed partly to raises for hourly employees. That doesn't sound too wicked to me. And of course, both Starbucks and Whole Foods placed in the top 20 on Fortune's most recent list of The 100 Best Companies to Work For. I believe employee-friendly policies are part of both companies' competitive advantage. No good deed goes unpunished, I guess.

On the whole, I consider unions a threat to growing businesses. I know many union sympathizers have good intentions; I don't fault them for that, and I can't really blame their presence in some industries. However, unions can also impede innovation and stifle meritocracy. If they become too rigid in their demands and choke off growth, fewer of the workers they supposedly protect will have jobs at all. It reminds you of the old saying about "killing with kindness."

Unions may also summon images movements that grow so politicized, they forget the reality of economics, or even the reality of reality. (For a great discussion of the good, bad, and ugly of unions, check out this 2003 commentary by longtime Fool Selena Maranjian.)

That said, as a Starbucks shareholder, I obviously hope the company didn't break the law. Like it or not, unionization may become a growing issue in American business, with the labor-friendly Democratic Party back in control of Congress. Foolish investors should keep an eye out for further developments.

Starbucks and Whole Foods are Motley Fool Stock Advisor recommendations. Wal-Mart is a Motley Fool Inside Value pick. Try any of our Foolish newsletters free for 30 days.

Alyce Lomax owns shares of Starbucks and Whole Foods Market. The Fool has a disclosure policy.


Read/Post Comments (0) | Recommend This Article (20)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 525020, ~/Articles/ArticleHandler.aspx, 9/20/2014 12:06:40 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement