The New York Times: Starbucks Falls Short After Pledging Better Labor Practices

The New York Times, September 23, 2015

By Noam Scheiber

Last year, Starbucks vowed to provide store employees with more consistent schedules from week to week, and to post their schedules at least 10 days in advance. The company said it would stop asking workers to endure the sleep-depriving ritual known as a “clopening,” which requires them to shut down a store at night only to return early the next morning to help open it.

But Starbucks has fallen short on these promises, according to interviews with five current or recent workers at several locations across the country. Most complained that they often receive their schedules one week or less in advance, and that the schedules vary substantially every few weeks. Two said their stores still practiced clopenings.

The complaints were documented more widely in a report released on Wednesday by the Center for Popular Democracy, a nonprofit that works with community groups, which gathered responses from some 200 self-identified baristas in the United States through the website Coworker.org.

“We’re the first to admit we have work to do,” said Jaime Riley, a company spokeswoman. “But we feel like we’ve made good progress, and that doesn’t align with what we’re seeing.” Ms. Riley maintained that all baristas now receive their schedules at least 10 days in advance.

Starbucks, whose chief executive, Howard Schultz, has long presented the brand as involving its customers and employees in something more meaningful than a basic economic transaction, has drawn fire for its workplace practices. But its struggles to address the concerns of its employees also open a window into a much larger problem.

In the last two years, the combination of a tight labor market and legal changes — from a rising minimum wage to fair-scheduling legislation that would discourage practices like clopenings — has raised labor costs for employers of low-skill workers in many parts of the country.

To help companies navigate this new landscape, a number of academics and labor advocates have urged a so-called good-jobs or high road approach, in which companies pay workers higher wages and grant them more stable hours, then recover the costs through higher productivity and lower turnover.

Even in service sectors where stores compete aggressively on price, “bad jobs are not a cost-driven necessity but a choice,” concluded Zeynep Ton, who teaches at the M.I.T. Sloan School of Management. “Investment in employees allows for excellent operational execution, which boosts sales and profits.”

And yet, as Professor Ton is careful to point out, it is easy to underestimate the radical nature of the change required for a company to reinvent itself as a good-jobs employer, even when the jobs it provides are not necessarily so bad.

The example of Starbucks illustrates the point. Some of the company’s actions reflect an impulse to treat its workers as more than mere cogs in a giant coffee-serving machine.

Starbucks allows part-timers who work a minimum of 20 hours a week to buy into its health insurance plan after 90 days. In April, it pledged to paythe full cost of tuition for them and full-time workers who pursued an online degree at Arizona State University. And workers promoted to shift supervisor — about one for every four to eight baristas — typically earn a few dollars an hour more than minimum wage.

On the question of scheduling, the company, like many large retail and food service operations, uses state-of-the-art software that forecasts store traffic and helps managers set staff levels accordingly, while trying to honor workers’ preferences regarding hours and availability.

Charles DeWitt is vice president of business development at Kronos, one of the leading scheduling software makers, which has worked with Starbucks. He said that using the software to schedule workers three weeks in advance typically was not much less accurate than using it to schedule workers one week in advance. “The single best predictor of tomorrow is store demand a year ago, though other factors can come into play,” Mr. DeWitt said. “If it’s Monday, then you want to look at Monday this week a year ago.”

(Mr. DeWitt and others involved with such software concede that there are exceptions, like stores that are growing or declining rapidly, and that predictions often get substantially better very close to the target date.)

But there has long been a central obstacle to change: the incentives of store managers, who are encouraged by company policies to err on the side of understaffing. This makes it more difficult to build continuity into workers’ schedules from week to week. It often turns peak hours into an exhausting frenzy that crimps morale and drives workers away.

“The mood lately has not been not superpositive; they’ve been cutting labor pretty drastically,” said Matthew Haskins, a shift supervisor at a Starbucks in Seattle. “There are many days when we find ourselves incredibly — not even a skeletal staff, just short-staffed.”

Mr. Haskins said that his store’s manager received an allotment of labor hours from her supervisor, and that the manager frequently exceeded it. But in the last month or so, she announced that she would make an effort to stay within the allotment. “From what I understand, probably someone higher up said ‘You need to stick to that,’” Mr. Haskins said. “I know it’s got her stressed out, too.”

Benton Stokes, who managed two separate Starbucks stores in Murfreesboro, Tenn., between 2005 and 2008, described a similar dynamic.

“We were given a certain number of labor hours, and we were supposed to schedule only that number in a given week,” Mr. Stokes said. “If I had to exceed my labor budget — and I was careful not to — I would have had to have a conversation” with the district manager. “If there were a couple of conversations, it would be a write-up,” he added.

The understaffing ethos sometimes manifests itself in company policies. For example, Starbucks stores are not required to have assistant managers, and many do without them.

Ciara Moran, who recently quit a job as a barista at a high-volume Starbucks in New Haven, Conn., complained of a “severe understaffing problem” that she blamed on high turnover and inadequate training. She partly attributed this to the store’s lack of an assistant manager. “We had issues that we’d try to take to her” — the store manager — “but she had so much on her plate we let it go,” Ms. Moran said. “Problems would escalate and become a big thing.”

In other cases, the scheduling and staffing problems at Starbucks appear to arise from the way individual managers handle their tight labor budgets.

Some of the baristas said that clopenings were virtually unheard-of at their stores, but LaTranese Sapp, a Starbucks barista in Lawrenceville, Ga., said clopenings occurred at her store because the manager trusted only a handful of workers to close, limiting scheduling options.

Ms. Riley, the Starbucks spokeswoman, said the store’s scheduling software required at least eight hours between shifts, but that workers could close and open consecutively if the shifts were more than eight hours apart.

There are alternatives to help avoid such results, according to Professor Ton’s research. One of the most promising is to create a mini work force of floating relief employees who call a central headquarters each morning, as the QuikTrip chain of convenience stores common in parts of the Midwest and South has done. Because store operations are standardized, relief employees can step in seamlessly.

“If a worker gets sick, what happens is you’ve lost a quarter of your work force,” Professor Ton said of companies with small stores that lack such contingency plans. “Now everybody else has to scramble to get things done.”

(Starbucks employees are often responsible for finding their own replacements when they are sick. “A lot of times when I’m really sick, it’s less work to work the shift than to call around everywhere,” said Kyle Weisse, an Atlanta barista.)

Starbucks, which vowed to improve workers’ quality of life after The New York Times published an account of a barista’s erratic schedule in 2014, is far from the only chain that has faltered in the effort to adjust from low road to high road.

In many cases, the imperative to minimize labor costs has been so deeply ingrained that it becomes difficult to sway managers, even when higher executives see the potential benefits.

Marshall L. Fisher, an expert on retailing at the Wharton School at the University of Pennsylvania, recalled working on a consulting assignment for a large retailer and identifying a few hundred stores where the company could benefit by adding labor. Executives signed onto the change, but managers essentially refused to execute it.

“The managers were afraid to use their hours,” he said. “They were so used to being judged on ‘Did they stay within a budget?’”

In many cases companies end up going out of business rather than adapt. Economists Daniel Aaronson, Eric French and Isaac Sorkin studied the response to large increases of the minimum wage in states like California, Illinois and Oregon in the 2000s. In most states, employment barely budged two years after the higher wage kicked in. But that masked dozens of suddenly uncompetitive stores that went under, and a roughly equal number of new stores that opened.

The fact that the defunct stores were replaced by new ones suggests that, in principle, they could have evolved. But they simply were not capable of pulling it off.