The accusations of being an inveterate criminal didn’t seem to faze former Starbucks chief Howard Schultz during his testimony Wednesday before a Senate committee investigating the chain’s handling of an ongoing unionization drive. It was the suggestion that he’s forsaken the memory of his father that lit Schultz’s fuse.
“You’re wrong,” Schultz snapped at Sen. Edward Markey (D-Mass.), who had suggested that the elder Schultz would have been just the sort of employee whom his son was hurting with his hostility toward unions. “You don’t understand.”
Markey barked out the accusation again, and a shouting match briefly flared between the two. Committee Chairman Bernie Sanders (I-Vt.) had to insert himself into the holler-fest to restore order.
The heated exchange was part of the fireworks that erupted during Schultz’s 70-minute appearance before Sanders’ Committee on Health, Education, Labor and Pensions, or HELP. There was no doubt that it would be a grilling: The official name given the session was, “No Company Is Above the Law: The Need to End Illegal Union Busting at Starbucks.”
“Let us not kid ourselves: This is not a fair and impartial hearing,” said the highest-ranking Republican on the committee, Bill Cassidy of Louisiana, noting that the committee had already branded Schultz a lawbreaker. “We’re slandering the witness who’s here to testify.”
Sanders indeed made no pretense of being objective. In his introductory remarks, the Vermont progressive accused Starbucks and Schultz of “using their unlimited resources to do everything possible, legal and illegal, to deny these workers their constitutional right to form a union.”
The hearing would determine if a “multibillionaire and the head of a multibillion-dollar company is above the law,” he concluded.
Schultz, dressed in an expensive-looking dark suit and gray tie, with stylish clear-framed eyeglasses, showed no discomfort at the repeated accusations from Democrats on the committee that he was a federal scofflaw. As proof, the senators cited the 80 allegations of illegal activity the National Labor Relations Board (NLRB) has leveled at Starbucks.
Schultz responded to each assertion of wrongdoing with the same retort. “I am aware that those are allegations,” said the son of a diaper-service delivery driver, “and I am confident that those allegations will be proven false. Starbucks has not broken the law.”
Several members of the committee, including Sanders, chastised Schultz for Starbucks’ failure to hammer out even a preliminary labor contract to date with any of the 298 or so Starbucks staffs that voted to turn their store into a union shop.
Schultz countered that a team from the coffee chain had shown up for a face-to-face negotiating session 85 times, only to have the other side back out. According to Schultz, the employees’ representatives wanted the sessions broadcast via a service like Zoom or Teams to rank-and-file membership, while management insisted the negotiations be closed-door and face to face.
He explained that the home office feared that a broadcast of the negotiations would put general and assistant unit managers in physical danger. He recounted how irate employees had descended on some managers’ homes to show their wrath, scaring the salaried employees' families.
Something heard on a Zoom or Teams call, or pulled out of context, could trigger more of those misdirected shows of anger, Schultz indicated. So Starbucks is insisting on face-to-face sessions where participants can speak without worry about drawing outside fire.
Schultz also suggested that Starbucks Workers United (SWU) and the NLRB all but ensured the contract negotiations would eat up a tremendous amount of time. He recalled that Starbucks had requested at the very start of the unionization drive that it be able to deal with employees market by market rather than unit by unit. But the NLRB agreed with the SWU that union votes should be conducted on a per-store basis, in essence creating a distinct union in every cafe.
That's why Starbucks has tried to arrange about 360 meetings to date. “On a single-store basis, we will continue to negotiate in good faith,” Schultz said.
As the floor was given in order of seniority to the 21 senators on the committee for their questions, two views of Starbucks’ relations with employees emerged.
Democrats accused Schultz and Starbucks of such wrongs as spying on pro-union employees and firing the sympathizers outright to shut them up. They portrayed the executive and his company as committed union-busters.
Schultz volleyed back that about 95% of the year he’d spent as interim CEO of Starbucks was focused on operations, and that his involvement in anything pertaining to unions was minimal and consultative, not tactical. Only once did he mention to the committee that he was no longer in day-to-day charge of Starbucks, having ceded the CEO’s duties last week.
He and Republican committee members, in turn, characterized Starbucks as a standout employer that had added such unheard-of benefits as stock grants and health insurance starting in 1987, when the chain consisted of 11 units. Schultz noted that the company has since added such perks as reimbursement of college tuition and mental-health care. He challenged one senator to name a single union contract across all of business that had incorporated such extras.
“Unions have served an important role in American business,” Schultz commented, citing how labor organizing had curbed the despicable behavior of some employers in the 1940s and ‘50s. “We do not believe we are that kind of company.”
He attributed Starbucks’ efforts to balance profits against employee wellbeing to seeing his father lose his diaper delivery job after breaking his leg while working. He had no health benefits, and the company decided not to carry him through the recovery. The loss of income threw the family into poverty and forced the Schultzes to live in a subsidized housing project.
Schultz also cited that background in response to being disparaged for his present-day wealth and how much more he earns than a barista does. “I came from nothing,” he said. “No one gave me anything. I earned it.”
Sanders concluded Schultz’s appearance before the HELP committee by issuing him a challenge. He urged the executive to prove Starbucks’ sincerity in negotiating with SWU by providing at least an outline of a new employment contract within the next 14 days, and then reporting back to the committee.
“Do it,” Sanders said in his staccato style. “Sit down and do it.”
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