Starbucks' Union Blues

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Employees involved in the New York case insist the company went to great lengths to shut down union organizers. The "decision shows that Starbucks will go to great lengths to interfere with workers' freedom of association," says 29-year-old Daniel Gross, who has led Starbucks' organizing efforts in Manhattan and helped initiate the case. "It's clear that [Starbucks] Chairman [Howard] Schultz has an animosity for workers articulating an independent voice."

"Direct Action" Union Tactics

Founded in 1905, the IWW has a colorful history of workplace agitation. The "Wobblies," as they were known, included prominent labor leaders such as Eugene Debs, Mary Harris "Mother" Jones, and William "Big Bill" Haywood. Their goal was to bring all workers into "One Big Union" and ultimately to abolish the wage labor system. Rather than try to negotiate with companies through contract bargaining or support political candidates, the IWW engages in what Gross and others call "direct action." It pressures companies like Starbucks by assaulting their public image, picketing stores, and organizing Internet campaigns.

The SWU is especially keen on tarnishing Starbucks' image as a "socially responsible" company. Gross says Starbucks has a systematic problem with low wages, irregular working hours, and a lack of reliable health care. One statistic the union likes to point to is that only 42% of Starbucks workers use its health-care plan—even lower than the rate at Wal-Mart. Starbucks maintains that it pays competitive wages and is among the first large employers to offer health insurance to part-time employees, who make up 100% of its workforce.

Generally speaking, consumers don't stop patronizing companies that encounter labor problems. But Starbucks, with its carefully cultivated reputation for social responsibility, may be an exception. "Bad news is bad news," says Robert Passikoff, founder and president of the retail consulting firm Brand Keys in New York. "People who are paying attention to [employee relations] tend to be in Starbucks' core audience. It's part and parcel of the image of a brand that is wonderful being green, promoting free trade, and helping people, and not being an oppressor of labor."

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