Is Starbucks Beyond Reproach?

There has been a spate of books celebrating the remarkable rise of Starbucks, but the latest, by Kim Fellner, stands out from the pack. Unlike the others, which are mainly addressed to appreciative shareholders, consumers and business analysts, Wrestling with Starbucks is an appeal to critics of the coffeehouse chain.

Fellner, an long-time friend and colleague of mine, places the origins of the book in late 1999, when she was in Seattle for the protests against the World Trade Organization and was surprised to see Starbucks attacked both figuratively and literally (when the front window of one of its outlets was shattered by demonstrators). Because she had a favorable impression of the chain, whose stores she frequented for her caffeine fix, Fellner wondered, she writes, “how had a coffee company with a liberal reputation come to symbolize the ills of globalization?”

Fellner spent much of the following eight years trying to answer that question. Her journey took her deep into the world of coffee – from the hillsides of Costa Rica to the Starbucks roasting plant in Kent, Washington to the various company outlets she visited in her travels at home and abroad. Fellner provides a wealth of anecdotes, but she keeps coming back to the issue of whether Starbucks should be viewed as a force for good or evil in the world.

Defying the tendencies of the labor and social justice circles in which she dwells, Fellner finds much to praise in the behavior of the coffee behemoth: good conditions, including health benefits, for its part-time baristas; strict environmental standards and fair prices for its third-world suppliers; high-quality products and appealing ambiance for its customers that have helped expand the demand for upscale java to such an extent that independent coffeehouses benefited as well.

Fellner is not blind to the company’s faults. She acknowledges the company’s strong anti-union animus; the fact that most of its workers (which it refers to as “partners”) don’t work enough hours to qualify for medical insurance; the inferior working conditions at the large number (more than one-third) of its outlets that are run by licensees at places such as airports and turnpike rest stops; the fact that it had to be pressured by groups such as Global Exchange before it began to purchase significant quantities of fair trade beans; and the clumsy way it responded to Ethiopian coffee growers unhappy that the company was asserting trademark claims over traditional names for their products.

The reason I (and I suspect many other corporate critics) part company with Fellner is that she is surprisingly tolerant of these shortcomings. She is convinced Starbucks–and especially its charismatic head Howard Schultz–is either trying hard to rectify the problems or has a sincere alternative view, such as the company’s insistence that what it considers its enlightened personnel policies are better for employees than union representation.

Fellner is uncomfortable with the latter stance–which prompted Schultz to encourage a decertification drive that removed the unions that existed at Starbucks before he took over the company in 1987–but she does not seem outraged. Schultz’s attitudes on unions, Fellner says in an oddly mild turn of phrase, “chafe me like an itchy sweater.”

Fellner seems to have a more seriously negative reaction to the unions that have tried to organize Starbucks outlets, especially the anarchist-inspired modern incarnation of the Industrial Workers of the World. She digresses into a discussion of alternatives to traditional labor organizing but ultimately concludes that unions fail to address the “psychic need” of today’s workers for “recognition and approval.” She lauds Starbucks for addressing that need through practices such as giving out “appreciation cards” to its “partners” when they do a good job.

Just when I thought that Fellner had gone over to the dark side, her book switches its focus from Starbucks to the broader issue of corporate social responsibility (CSR), which is so much the rage in business circles these days. Here her discussion is more nuanced. She acknowledges that CSR is often bogus and affirms that there are malevolent corporations–Wal-Mart, Big Oil, Big Pharma, etc.–that should be targeted. It turns out her real problem is not with anti-corporate campaigns in general, but rather with the frequent decision of campaigners to go after high-profile companies (like Starbucks) rather than the worst offenders in an industry. She worries that if “good” companies are continuously slammed for not doing better, they as well as their less diligent competitors will have little motivation to improve.

This is a legitimate issue, but the problem, as I see it, is that it’s not always clear who the good guys are. Fellner clearly believes Starbucks is one of them and Wal-Mart is not. Yet in the past couple of years, the giant retailer has made a mighty effort to boost its CSR credentials, especially in the environmental realm. It has made modest improvements in working conditions but remains vehemently anti-union. Does Wal-Mart now qualify to be exempt from vilification?

I would say emphatically no, but then again I don’t think any company should be given a total pass by labor unions and social justice organizations. Fellner is right to question whether corporations with better track records should be our primary targets, but that’s not to say they should never be challenged. Even companies like Starbucks–whose relatively enlightened policies may falter now that its financial condition is weakening–sometimes need to be pushed to do the right thing.

3 thoughts on “Is Starbucks Beyond Reproach?”

  1. Hi Phil:

    Thanks for the thoughtful and provocative review of Wrestling With Starbucks. However, a few things about it made me, well, a little itchy. It’s often hardest to tackle the things we love the most, and so I kept fretting about and rewriting the labor stuff. Lest your review leave the wrong impression, I take pains to say throughout the book that the ugliest thing about Starbucks is the way it treats unions, and that its behavior when confronted with labor organizing is egregious and inexcusable. Workers have a right to organize whenever, and with whomever, they choose — and management has no right whatsoever to thwart those efforts.

    That being said, the union campaigns involving Starbucks do indicate some of the weaknesses of our labor movement — most notably the problem of organizing a very small subset of workers in a given plant or a very small number of stores in a global corporation. Evidence suggests it just doesn’t work very well. And I do think we need to look at the values that underlie our approach. Obviously, as is explicit in the book, I believe strongly in shifting the balance of power and the burning need for unions if workers are to have a voice not just in their workplace but in the global economy; but I also believe in looking more closely at how we frame and advance that effort. The labor movement is aging, younger workers aren’t joining, and while plenty of blame for that goes to employer obstruction and malice, our own deficits don’t help.

    I totally agree that, with Starbucks under financial pressure, its relatively enlightened policies will be harder to maintain. I’d expect to see more licensed stores, where the employees are not covered by Starbucks benefits, and workers at the Starbucks-owned stores are reporting a lot more unhappiness as the pressure of harder times seeps down.

    Still, it’s worth noting that Starbucks, unlike Wal-Mart, does not lobby against the minimum wage; does not encourage its managers to vote Republican, as has Wal-Mart (in fact, Howard Schultz is a committed liberal Democrat); and, even in its worst financial period since it went public, did not rush to cut its healthcare benefits. As I say in the book, none of that excuses its anti-union behavior, or obviates the right of workers and unions to organize, but it is nonetheless a difference. For now.


  2. Kim,

    I did not mean to suggest that you were endorsing Schultz’s anti-unionism, but you do run a risk of inadvertently encouraging that attitude when you are so critical of organizing efforts — however imperfect — at a company whose other personnel practices you praise to a considerable extent. I, too, believe we need to make unions more effective and relevant to today’s workers, but I want to have that discussion entirely apart from those, like Schultz, who think that selective paternalism eliminates the need for collective bargaining.


  3. A comment on the worry ‘that if “good” companies are continuously slammed for not doing better, they as well as their less diligent competitors will have little motivation to improve.’

    The evidence for this is always anecdotal, which means it’s impossible to distinguish it from being merely a way for frustrated corporative executives to make critics question their own tactics. Besides, isn’t it unethical for a company to give up doing what it sees as right because it receives criticism from NGO or labor critics? We should start calling then out for admitting this is a factor in their decisions about responsible behavior.

    A comment on choosing corporate targets:

    For large companies, it is very hard to decide who is “good” and who is “bad.” There is value in targetting the emblem of an industry, such as Nike, WalMart or Starbucks, whether or not they are the worst.

    First, because of the hypocrisy factor. For example, Shell is more enlightened than Exxon on climate, but then again Exxon never claims to be the leader is combatting global warming. Shell has made that claim, and it’s a lie. Both companies are legitimate targets of climate and oil activists.

    More importantly, some corporate campaigns have the potential to spark reform of an entire industry, not just the specific corporation. If that can be achieved, we should not waste sympathy on Kathy Lee Gifford, Nike or Starbucks, even if perhaps they received a little more than their fair share of attention.

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