The Value of a Progressive Corporate Image

Would you buy coffee from a union-busting firm?:

Latte Laborers Take on a Latte-Liberal Business, by Daniel Gross, NY Times: On March 30, the National Labor Relations Board’s New York office delivered a stinging accusation against one of the city’s — and the nation’s — most popular retail outlets. The labor board charged that Starbucks ... committed 30 violations of law in ... trying to ward off union activity at four Manhattan outlets. This may be the latest salvo in a new kind of labor battle: union workers versus corporate do-gooders. ...

“The N.L.R.B.’s complaint illustrates that this is a company with a profound disrespect for workers’ rights,” said Daniel Gross (no relation), a union organizer who dished out frappuccinos and mocha lattes at Starbucks before being fired last August. ...

Starbucks strongly denies the charges, and says it will fight them in court. But Starbucks hasn’t suffered anything like the fate that has befallen Wal-Mart, another national chain known for its opposition to unions. ...

Judging by the lines at Starbucks stores in Manhattan, one of the most progressive and union-friendly towns in the country, the accusations of union-busting and poor pay may not matter a lot. New Yorkers will probably continue to queue up in the thousands for the privilege of shelling out $4 or so for a caffeine injection...

Activists are asking consumers to sign petitions and send e-mail messages protesting Starbucks’ practices. But they may have a hard time matching the success of the campaign against Wal-Mart.

One could chalk it up to the nature of the product Starbucks peddles. Many customers feel they simply can’t get their day started without a caffeine-laden beverage. But some powerful, far-reaching trends — like consumers’ viewing their spending choices as political expression — may also help explain why a company can maintain its assiduously polished progressive reputation while also bitterly fighting unions.

Do-goodism is an important component of Starbucks’ brand appeal. Starbucks is regarded as one of the most progressive members of the Fortune 500. It provides health care benefits and stock options to many part-time employees. It says it is committed to paying coffee growers in impoverished countries above-market prices for the beans. And its chief executive, Howard Schultz, called for universal health care coverage long before it became popular for corporate chieftains to do so. ...

The same holds true at Whole Foods. Like Starbucks, the organic foods supermarket maintains what it calls socially responsible sourcing guidelines and supports alternative energy. (In 2006, Whole Foods made what it says was the biggest corporate purchase of green power ever.)

Again, like Starbucks, it has a chief executive, John Mackey, who is hostile to organized labor. In 2003, he told Fortune magazine that unions are “highly unethical and self-interested.” And, like Starbucks, Whole Foods suffers no apparent consumer sanction as a result of its position. ...

Why? One explanation, of course, is that with each passing year, unions occupy a smaller space in our culture. In 2006, according to the Bureau of Labor Statistics, a mere 12 percent of employed wage and salary workers were members of unions, down from 20.1 percent in 1983. In 2006, only 7.4 percent of private-sector employees were union members. As a result, very few of the people who pop into Starbucks each day for a jolt of energy are members of unions themselves, or are related to union members.

A change in the nature of political activism may also explain any possible disconnect. Activism is increasingly taking the form of consumption. “People are interested in doing a little bit better by the planet while they’re shopping,” said Mark Whitaker, the former Newsweek editor who is publishing Sprig, a new Web site for environmentally conscious consumers.

To register their concern about global warming, people can petition their government. Or they can pay above-market prices for reliable, prestigious products that reduce emissions and save energy: a Prius instead of an S.U.V.; compact fluorescent light bulbs instead of incandescent bulbs; wind energy instead of coal-fired electricity.

By the same token, many people are willing to pay a premium for Starbucks coffee and Whole Foods vegetables in part because they swear by the products, and in part because the companies trumpet their “good corporate citizen credentials.” Whether the associates and team members who sell them $4 coffees and $7-per-pound heirloom tomatoes agree with that assessment may not matter.

Another potential explanation is that people do not believe unions are the best or even an effective way in the long-run for labor to increase its share of national output to the extent that they did in the past. Because people see less value from unions, they also see less value in penalizing firms who oppose unionization. See "Market Failure in Everything: The Labor Market Edition."

Comments

[dale]

The trick then, is to get people to understand the relationship between declining unionization and increasing inequality and increasing corporate nce of society. Emphasize the importance of what JK Galbraith called the countervailing power of the union movement over and against capital.

You don't have to like unions to understand their importance. You just have to appreciate the larger social system of checks and balances.

[real person from the real world]

First it was fair trade coffee issues, now it is poor corporate image because Starbucks is engaging in Union Busting. Well why shouldn't they? They would have to add another 50 cents to their overpriced coffee lattees et al. Then, oh the horror of it, maybe some of the overpaid latte drinkers would see cents, quit buying the drinks as often, and start buying those toy Tassimo coffee machines with the RFID creamer and coffee thingies.

[donna]

Can't stand Starbucks. They chased out our three local coffee shops, forced them out by offering fat leases. I miss the local shops. So sick of corporate America taking over everything. I have come to absolutely loathe the chains, and frequent small local stores whenever I can.

[ken melvin]

Just the threat may make a difference. Unions can be self centered, corrupt, ..., while management ...

[robertdfeinman]

Tradition unions no longer offer the type of services that most jobs require. When the bulk of members worked in factories with large numbers doing the same task unions did a good job of protecting their rights.

Now many workers do things on their own initiative. Typical jobs include those in IT, lawyers, financial traders and media creators. They think they are "special" and don't like the idea that they are just worker bees - well paid, but still employees.

So what is needed is a new type of organization that offers services that these people need. These include portable health and retirement plans, job migration services and in-service training.

I proposed such a structure based upon the AARP model. Here's a link to my brief proposal on the idea:
A proposal for a worker's affinity group

Others have recently come to a similar conclusion, Barbara Ehrenrich has started a group for professionals and the AFL-CIO has started a quasi-union.

The only place traditional unions have been making progress is in routine service jobs which have replaced routine factory jobs.

says...

So what is needed is a new type of organization that offers services that these people need. These include portable health and retirement plans, job migration services and in-service training.

What we need to do is phase out the government privileges that unions currently enjoy. Once that happens, labor unions will naturally morph into something quite similar to what you're proposing.

[DRR]

I adore Starbucks & detest cute Mom & Pop coffee shops so I'm a bit impartial in all this. But it seems if Starbucks don't want unions, they should demonstrate how well they treat their employees in absence of them.

[cm]

DRR: These days it is perhaps difficult to say what are "authentic" coffee shops, and what are Starbucks imitators. I imagine to some extent existing shops have felt a need to "upgrade" or sidegrade their ambience, menu, and product to match the big gorilla, install WLAN, etc., all of which adds to the cost basis and loads the product up with a lot of things that somebody who just wants to sit down, relax, and chit-chat (or just contemplate) frankly doesn't need. I'm not frequenting coffee houses much, but I can find little difference in the taste and quality of my lattes between Starbucks and no-name stores.

My take is it is mostly a brand name recognition and brand-name peer pressure effect, and most people cannot really discriminate the quality of the primary product.

[cm]

Afternote, neither can I find much difference in price between Starbucks and other stores. Hereabouts when you have a medium latte you have to be prepared to fork out about $3 (I haven't been to Starbucks lately, but estimate it's probably $3+ too). Of course there are small differences between locations, but then that's true for Starbucks too. So don't hold it to my face when you find two stores within walking distance that show a 50c difference.