Starbucks confirmed to Yahoo Finance on Wednesday it will lift the pay of all baristas, supervisors and café attendants by at least 10%. Those with at least three years of service at Starbucks will get a hike of 11%. Starting employee rates will increase by at least 5%. Yahoo Finance's Brian Sozzi weighs in.
JULIE HYMAN: Yet another company is announcing this morning it is giving a pay bump to its employees, and this is another consumer-facing company. Brian Sozzi, you have been keeping a running tally of these companies. This time, it's Starbucks.
BRIAN SOZZI: As a matter of fact, I have, Julie. The whole article is on the Yahoo Finance site under my byline, but I encourage everyone to check that out.
Yes, Starbucks, and it's coming in three different forms here. Starbucks is lifting the pay of baristas, supervisors, and cafe attendants by at least 10%. If you have three or more years of service, your pay bump is 11%, and the starting wage is being lifted by 5%.
Now, let's keep in mind what this comes before. This comes before a lot of states push towards $15 an hour minimum wage over the next three to four years. Eight states are moving closer to that $15 an hour minimum wage.
I crunched the numbers here using some data off of ZipRecruiter. Even with these raises, Starbucks's average wage will still only be $13 an hour. It's good to see this, but they have a long way to go, I think.
MYLES UDLAND: You know, it's interesting, Sozzi, to see these wage increases coming right now because I remember 2014, '15, '16, McDonald's, Target, Walmart, they were all out raising their hourly wages. And the topic then was here comes wage inflation. Here comes overall inflation. What does it mean for the Fed? and so on. At this point in the economic cycle where we have a lot of experts coming on to tell us it's early days in a new cycle, early days in a new bull market, the Fed is years away from changing its stance on interest rates. These are essentially inflationary policies, right?
I mean, I know that the reason that free-market advocates hate the minimum wage is because it can be harder for an independent business to pay these kinds of wages. Starbucks can, you know, take on the cost. But basically it sends a signal to the market what employees are actually worth, and I think we've all had kind of a gut check on who should be paid what given the positions that workers were put in during the pandemic.
And so I just feel like we all kind of-- you know, Sozzi, you and I, we kind of got into this point in life when it's like, all right, I guess we're all just screwed, right? Millennials won't have anything nice ever. But, you know, there's a generational critical mass happening here, and if you actually want the middle-class consumers that all politicians talk about, you have to pay them some kind of a wage that gets them there. And these are the baby steps that are along what's been a years' long path now, I think, towards making that slightly more real, right? Let's not kid ourselves about the state of inequality here, but it's a step in that direction.
JULIE HYMAN: I was just going to say, you know, if there's one thing that maybe to sort of speak on a warm and fuzzier note that's come out of 2020 it's that there's perhaps an increased sense of empathy, right? We've all-- because everybody has been experiencing the pandemic in different ways and had different disadvantages and advantages. But I think we've become more acutely aware of those perhaps, and maybe that feeds into this trend as well. And so maybe also people-- workers are more aware of their own worth hopefully and can ask for these types of increases where they feel that they're warranted.
BRIAN SOZZI: That's a very good point, Julie. There's going to be massive competition for workers as the economy kicks into gear. What Starbucks is doing essentially today is making sure their workers don't head to Target for $15 an hour.