A Storied Union Takes On Starbucks

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The union's membership dwindled over the years after numerous clashes with the government over its radical politics. Today, there are a mere 2,000 members nationwide. Its most active campaigns involve organizing bicycle messengers in Chicago, short-haul truckers in Northern California, and warehouse workers in Brooklyn, N.Y. Gross will not reveal the number of Starbucks Workers Union members, but says there is a "critical mass" of IWW members at 10 stores in four U.S. states.

The IWW isn't affiliated with more mainstream labor groups such as the AFL-CIO, and its tactics today are markedly different. Rather than try to negotiate with companies through contract bargaining or to support political candidates, the IWW engages in what Gross and others call "direct action." It puts pressure on companies like Starbucks by taking on their public image, picketing stores, and organizing Internet campaigns.

The IWW emphasizes rank-and-file activities, rather than those by a handful of leaders. Gross says this model is the most appropriate for organizing workers in today's global economy. "It's a way for workers to have an independent voice," says Charles Folstrom, 29, a former Starbucks worker.

Gross says the IWW takes "substantial" credit for wage increases and improved working conditions in stores with a "critical mass" of IWW workers. He points to a 25% wage increase in the New York metropolitan area since the union campaign began. Starbucks' Darrow disagrees. "The only group that can legitimately take credit for the wage increase is our partners," she writes in an e-mail, explaining that workers had asked for a wage increase in a previous survey and that the pay hike went into effect nationwide last year.

Unlikely Target

When it comes to labor problems, Starbucks isn't the first company most people think about. While companies like Wal-Mart have struggled, Starbucks is considered somewhat of a model employer. It routinely makes Fortune magazine's list of the "100 Best Companies to Work for," and is known as the first major U.S. employer to offer health coverage to part-time employees.

Darrow says the criticisms are inconsistent with the company's principles. "Starbucks respects the free choice of our partners and remains committed to complying fully with all laws governing the right to organize collectively," she wrote in an e-mail. "We also are confident that our progressive, pro-partner work environment, coupled with our outstanding compensation and benefits, make unions unnecessary at Starbucks."

The August hearing is not the company's first NLRB encounter with the IWW. The board found merit in the IWW's allegations that Starbucks discharged two workers for union activity, banned union pins, and prohibited workers from discussing the union while on company property. In lieu of continuing with the trial, Starbucks settled the case without admitting guilt in March, 2006, paying $2,000 to former employees and offering their jobs back. Starbucks also signed a consent decree promising it wouldn't threaten union supporters with negative performance reviews or transfers to other stores. It also agreed that it would not foster an atmosphere in which "union activities are under surveillance."

Broader Questions

Supporters of Starbucks say the IWW may be raising interesting points about the service industry and employee compensation, but that it could be wrestling with the wrong company. "People feel good about working at Starbucks; it has a great culture of employee involvement," says Joseph Michelli, a consultant and author of The Starbucks Experience: 5 Principles for Turning Ordinary into Extraordinary. "I think opening the discussion about living wages vs. entry-level wages and employer health insurance is a worthy one, but [the union] has picked the wrong target."

What is at stake for Starbucks in its legal and public relations battle with the Wobblies? If the NLRB finds against the company, Starbucks could be asked to reinstate fired employees and publicly state it will not try to break unions. But some experts say even a guilty verdict won't create the waves of public support Gross and the IWW are hoping for. "Would it render the brand undrinkable? No," says Robert Passikoff, president of Brand Keys, a New York marketing and brand consulting firm. "The unfortunate truth is that the general consumer doesn't base his/her brand loyalty on issues like employee coercion."

Herbst is a reporter for BusinessWeek.com in New York.