While Wal-Mart (NYSE:WMT) and McDonald's (NYSE:MCD) have largely been the focus of the Fight for $15 movement, Starbucks (NASDAQ:SBUX) has largely been ignored by the activists looking to see the minimum wage raised to $15 an hour.
In part that's because the giant retailer and the fast-food chain have become synonymous with low wages. In some case that's not fair, but in a broad sense -- at least until recent changes implemented by Wal-Mart and corporate-owned McDonald's -- it was largely true.
Starbucks, however, has skirted attention partly because it has a strong reputation for treating its employees well. The company offers benefits to "partners," its word for anyone who works for the chain, that work more than 20 hours a week. This can include everything from bonuses to 401(k) matching, and discounted stock purchase options. The coffee chain also offers a free online college tuition program, health insurance, and even adoption assistance.
Overall it's a very generous package and a big part of why the company has a better reputation than McDonald's and Wal-Mart, but when it comes down to it, you can't eat health insurance or free college. You also can't use excellent benefits to pay your rent or make a car payment.
A great total package is important, but for many employees, wages are key. Starbucks, unlike Wal-Mart or corporate-owned McDonald's locations (which both have a $10 minimum wage), does not have a standard rate. Instead, what employees make varies and it's certainly not $15 an hour for non-managers, at least when you consider straight wages.
How much does Starbucks pay?
Starbucks recently decided to increase what it pays employees, a raise CEO Howard Schultz detailed in a letter to employees. The increase includes higher hourly wages along with an increase in the company's "Bean Stock" program, which grants shares to employees.
"The combination of these changes will result in compensation increases between 5% and 15%," wrote Schultz.
The company, which pays differing rates depending upon the market, does not publicize its hourly rate, but 12,000 Starbucks employees have anonymously submitted salary information to employer rating site Glassdoor, giving a gauge of wages. Glassdoor reports that information from 2,650 baristas shows that they average $9.43 an hour, while nearly 2,000 shift supervisors average $11.65 an hour. (Other employees submitted information using variants on those job titles at Starbucks, and showing similar wages.) If you assume the average worker gets a 10% raise as part of this new deal (factoring in the stock awards) that would put barista pay at $10.37 and hour while shift supervisors would get $12.81.
In the case of hourly workers, there are two wild cards in play that do not impact McDonald's or Wal-Mart employees. Starbucks does sometimes offer cash bonuses and its non-manager workers receive tips. In the case of tips, the numbers vary and Starbucks does not share them, but other Glassdoor information showed 1,500 workers reporting an average of $1,300 a year in tips and a much smaller number of employees reporting another $1,800 or so between bonuses, stock grants, and profit sharing.
If you add $3,100 to each full-time (40 hours a week) worker per year, that adds $1.50 an hour. That would push the company's average baristas earnings to $11.87 an hour after factoring in a 10% bump from the new compensation changes -- better than the lowest pay levels at Wal-Mart or corporate-owned McDonald's even before considering the benefits.
Is this good enough?
Overall, doing the math with the available information shows Starbucks spends more per hour, per worker than most, if not all, of its chain rivals. The company also offers a path to promotion (as do other chains) and what are generally considered to be top-notch benefits with the college program being of special note because it literally offers employees a free Arizona State University degree.
Offering a strong overall package has likely helped Starbucks avoid protests and general scrutiny over its wages. That's smart business even if it's coming from a genuine desire to treat employees well.
Daniel Kline has no position in any stocks mentioned. He wants his 12-year-old son to work at Starbucks as a teenager. The Motley Fool owns shares of and recommends Starbucks. Try any of our Foolish newsletter services free for 30 days. 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.