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Instant Analysis: Starbucks to Raise Employee Pay by at Least 5% in October

By Eric Volkman – Jul 13, 2016 at 5:26PM

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The coffee giant will add an extra shot to worker paychecks starting this fall.

Your local barista is about to get a salary bump. In a letter to its "partners" (employees) written by CEO Howard Schultz, Starbucks (SBUX 0.04%) announced it is to lift the pay of all workers laboring in its company-owned stores by 5% to 15%, beginning Oct. 3.

Image source: Starbucks. 

The salary increases are part of a broader set of measures including a wider choice of health plans, enhancements to the employee stock award program, and a loosening of restrictions in the Starbucks dress code.

In the letter, Schultz wrote that "over the years, we have viewed our total compensation approach as the best way to create long-term opportunity for partners."

Does it matter?

Any company with a nearly 240,000-strong army of employees has a vested interest in keeping the bulk of those workers happy and productive -- particularly when overall U.S. unemployment is so low (4.9%, as of the last reading).

Starbucks is clearly well aware of this, as the upcoming set of wage raises is only the latest in a series of employee-retention moves the company has made. In 2014, it launched a tuition reimbursement plan for its "partners," and for many years has offered even part-time workers healthcare benefits.

With the upcoming salary boosts, Starbucks isn't quite ahead of the pack -- last year McDonald's (MCD 0.63%) upped the wages of employees in company-owned restaurants by 10% and offered a number of them vacation time. Wal-Mart (WMT 0.43%) made a similar move around the same time.

Regardless, with its own set of moves Starbucks seems to be genuinely interested in creating that "long-term opportunity for partners" Schultz refers to. And given that the company continues to grow its top and bottom lines, there should be plenty of cash in the register for the purpose. Investors should cheer the company's announcement.

Eric Volkman has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Starbucks. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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