CapitalismEssays

Starbucks Goes to College

I wrote a book about Starbucks a few years ago, so my email started to buzz with Google alerts when the company announced that it would help to provide free education for its employees. The New York Times, the Huffington Post, and Business Week, among others, jumped on the story. A day or so after the announcement, Starbucks CEO, Howard Schultz, appeared on the Daily Show with Jon Stewart, winning mad praise from the host for having “venti balls” to make such a bold move.

As Starbucks officials explained it, the deal offered to reimburse employees for a portion, not all, of their tuition, but only for online classes hosted by Arizona State University’s Web server. Starbucks publicists talked about the company’s “unique” and forward-looking mission to build a people-based corporation that valued individuals and communities as much as profit. They identified their new benefit as an investment in the future, for corporate America and for the nation. That’s when it hit me — again — that Starbucks wasn’t looking ahead, it was looking backward, mimicking an older model of labor-management relations.

Labor historians like myself are very familiar with corporate efforts to appear as benevolent employers. Each year between World War I and the Great Depression, for example, a denim manufacturer in Greensboro, North Carolina owned by the Jewish Cone family gave their workers Christmas hams. Throughout the year, they sponsored company baseball teams and marching bands, health clinics and adult education classes. They paid their employees a little more than their competitors across town and built sturdier houses than the mill owners down the road. From the Cones’ day down to our own, labor historians — have called these kinds of actions welfare capitalism.

Employers ranging from auto titan Henry Ford to the humbler Cones invested in the welfare of their employees to encourage their workers to identify with the firm, and not with each other. Even more, they wanted the men and women on the line to stay on the job. Training new employees was a costly expense that cut into profits and they sought to discourage employees from seeking another job.

Welfare capitalism acted, then as now, as the carrot that accompanied the stick of hard-nosed anti-unionism. Companies spent heavily so that workers would feel grateful and appreciative — and deferential — towards management. Welfare capitalism’s goal has always been to create a stable and tractable labor force.

This same goal animates Starbucks’ new tuition policy. Much like the Christmas ham of yore, Starbucks portrays college support as a gift and not a benefit. “Everyone … of our partners (as Starbucks’ calls its employees),” proclaimed Schultz, “should have an opportunity to complete college.” He promised to do what he could to make that happen. In return, he hoped to gain the loyalty of his workforce, admitting to the New York Times, that he believed that the college plan would “lower attrition, … increase performance, … [and] … attract and retain better people.”

But he couldn’t simply trust that his employees would see him as a generous man at the helm of a generous company and then behave according to Starbucks’ wishes. So the college plan that Schultz helped to create featured its own subtle forms of coercion. Under the program, Starbucks workers must pay a large chunk of their first and second years of college, and then, and only then, does the company’s support kick in. Under this plan, Starbucks’ student-employees now have so much more to lose if they depart, experience a reduction in their hours, or find themselves laid off. They’ll lose their pay and they’ll find their academic progress forestalled.

One thing they won’t lose is their student debts. Starbucks will foot the bill for the last two years of school, and as it announced to the press, it won’t require employees to work at Starbucks after they receive their degrees. (As if allowing them to reenter the job market at a higher skill level was some sort of magnanimous act). While ASU will offer Starbucks workers a discounted rate, the cost of those first couple of years would still be somewhere between $6,500 and $10,000. That’s not much for college, but it is a lot for a barista earning between $8 and $10 per hour and typically working less than 30 hours a week. Many would have to take out loans to pay for the classes. That, in turn, would make it harder to leave Starbucks and to leave ASU where the student-workers would already have accumulated numerous credits, credits that might not easily transfer to other colleges and universities. For Starbucks, a dependable labor force is an indebted one.

The new Starbucks program replaced an older company plan that gave employees $1,000 to attend any college of their choice. Now they don’t have a choice; it is Arizona State University online or nothing. This might generate new opportunities to attend college, but it also narrows baristas’ education options. ASU offers 40 online undergraduate programs, leading to degrees in Organizational Leadership, Justice Studies, and Global Health. But if a Starbucks student wanted to major in Women’s Studies, Math, or Asian-American Studies, they would have go somewhere else and pay for it themselves.

Online education fits Starbucks (and McDonald’s and WalMart’s) “flexible” labor model. Classes and meetings with professors aren’t held at a fixed times. They need not interfere with baristas’ wildly varying and unpredictable schedules which Starbucks managers create to match the hours the company needs. Most of the classes, moreover, will be taught, no doubt, by non-tenured adjunct professors, themselves forced into flexible work by budget cuts, austerity regimes, and the erosion of academic work. Who knows? Now perhaps underemployed history and philosophy Ph.D.s will find it convenient to apply for a barista position so that they can re-tool through degree programs in Food Industry Management or Nursing. No matter their class, race, gender, or level of educational attainment, increasing numbers of precariously-employed Americans confront for-profit, online education and high levels of student debt.

“There’s no doubt,” Howard Schultz said when he rolled out the college program, “that inequality within the country has created a situation where many Americans are left behind.” Schultz clearly implied that his online initiative, in which his company will receive tax breaks in exchange for tuition payments, would address the problem. But it won’t. The history of labor in the mid-twentieth century — in the United States and across the industrialized world — demonstrates that only rising real wages and a strong union movement can address these pressing issues. But Schultz isn’t interested in that past or its possible lessons for our future. No, he wants to return the country to another past, the one before the New Deal. The one before the postwar years of rising real median wages and high rates of unionization, when working people bought houses and went on vacations and sent their kids with their own money (and state support) to college.

Schultz seeks to return us instead to the age of welfare capitalism, where companies tried to buy off their workers, with limited options, gilded gifts, and sugary — or should I say venti — pronouncements.

Bryant Simon

  • Julia

    I’m wondering if there is anyway to estimate how many people might plausibly even avail themselves of this option? What percentage of baristas work 20 hours … every week … for enough time to qualify for the benefit?

  • Julia

    After reading this wonderful piece, it strikes me that Starbucks new ‘benefit’ positions it as something akin to a modern day company store. They ‘provide’ worker-customers with only one option on the education shelf and they benefit from ensnaring their workers in a web of debt. But unlike the company-store operators of yore, they aren’t actually extending the credit. Clever. Although maybe that will be their next move! Will Starbucks (and other service corporations) figure out a way to financialize as so many other non-financial corporations in the United States have done in the last 30-40 years?

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