Starbucks to raise wages in October

Starbucks Corp. will raise the wages of all workers in its U.S. stores this autumn, after being accused by employees of 'extreme” cutbacks in work hours at its American cafes.

The world's biggest coffee chain will increase base pay for all U.S. workers and store managers at company-operated stores by at least 5 percent starting Oct. 3, Chief Executive Howard Schultz said in a letter to employees on Monday.

Starbucks, which recently announced price increases for some drinks, also will double the annual stock reward to hourly employees who have worked at company-operated stores for at least two years.

Combined, the steps will result in a wage hike of 5 percent to 15 percent for all employees at company-operated stores, Starbucks said.

More than 12,800 people, including many self-identified Starbucks workers, have signed an online petition alleging that staffing hour reductions are battering employee morale and hurting service. Starbucks recently introduced potentially labor-saving technology that allows customers to order and pay for drinks and other products via mobile phones and other devices.

Beyond worries about customer service and morale, commenters on the online petition said they were not getting enough hours to make ends meet or to afford Starbucks benefits, including healthcare and college tuition reimbursement.

Schultz said the company would address scheduling concerns.

'You have my personal commitment that we will work with every partner (employee) to ensure you have the hours you need,” he said.

The company, which has been grappling with cooling sales growth at its popular cafes, has repeatedly said there is no nationwide reduction in labor hours at the chain.

'Howard Schultz did not acknowledge or validate the labor crisis in the stores,” said petition author Jaime Prater, a Los Angeles-area Starbucks barista. 'Until that is addressed, or simply acknowledged, my job isn't finished.”

The Seattle-based company, which has a reputation for offering better pay and benefits than many other chains, said that about 150,000 workers in roughly 7,600 U.S. company-operated cafes will be affected by the change.

Starbucks' new fiscal year begins Oct. 1. It was not immediately clear whether the raises announced on Monday are part the chain's annual pay adjustments or if the increases are larger than normal.

Unlike rival McDonald's Corp, Starbucks has been largely unaffected by a union-supported multiyear restaurant worker campaign that seeks a minimum wage of $15 per hour and the right to unionize. That effort has helped spur pay raises at companies such as McDonald's, as well as minimum wage increases in major cities and states.

As a result, competition for the best workers has been heating up and many restaurants are raising pay to retain their best employees.

'Restaurants have to step up and pay people more,” said BTIG restaurant analyst Peter Saleh.