Starbucks counters unions with $1 billion investment in workers

By August, average hourly pay at Starbucks will be nearly $17 nationwide

Interim Starbucks CEO Howard Schultz, facing growing union efforts nationwide, promised Tuesday to up his investment in employees. 

Schultz, who has been traveling around the country to better understand and address employee complaints, is allocating $1 billion throughout the fiscal year to enhance pay, modernized training, and collaboration as well as store innovation, according to the company. 

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Effective Aug. 1, all U.S. employees, otherwise known as partners, will get a base pay of $15 an hour. The average hourly pay at Starbucks, though, will be nearly $17 nationwide. Employees that were hired on or before May 2 will get a 3% raise or be bumped up to $15 an hour, whichever is higher, according to Starbucks. 

The Seattle-based coffee giant said it will also add incremental pay increases which will "apply to all partners, while recognizing and rewarding tenure."  

Starbucks CEO Howard Schultz

Starbucks CEO Howard Schultz speaks at the coffee company's annual shareholders meeting in Seattle in 2015.  (AP Photo/Ted S. Warren / AP Newsroom)

Employees with two to five years of experience will get "at least a 5% increase or move to 5% above the market start rate, whichever is higher," according to the company. Meanwhile, those with over five years experience will receive a minimum "7% increase or move to 10% above the market start rate, whichever is higher," the company continued. 

The coffee giant will also increase training time for all employees. New baristas will get double the training time, with more hands-on practice, starting June 21. New shift supervisors will get double the training time beginning Aug. 30. Baristas and supervisors that are already employed with also get additional training, Starbucks said.  

"The transformation will accelerate already record demand in our stores," Schultz told investors during the first quarter earnings call. "But the investments will enable us to handle the increased demand – and deliver increased profitability - while also delivering an elevated experience to our customers and reducing strain on our partners." 

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The changes come just a month after Schultz took over, replacing Kevin Johnson. Schultz, had served as chief executive from 1986 to 2000 and again from 2008 to 2017. This time, however, he is taking over when there is a growing number of Starbucks stores filing petitions to unionize with the National Labor Relations Board. 

During his first month back on the job, Schultz launched collaboration sessions with employees around the country to figure out how to "build this next Starbucks." While doing so, employees "spoke bluntly of the challenges" they faced over the past two years. Tuesday's changes are based on the suggestions for improvement as a result of their experience. 

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The company also plans to launch a new app this summer, which it says will create a digital community for all U.S. employees "extending collaboration sessions to support partners, plants, retail leaders and to every store."