Starbucks to raise wages for U.S. workers in October

By Lisa Baertlein and Sruthi Ramakrishnan

REUTERS - 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.

CEO 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. Schultz did not directly reference the petition or employee concerns about labor hour cuts in his letter on Monday.

"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 on Oct. 1.

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 like McDonald's, as well as minimum wage increases in major cities and states.

Starbucks shares were down 33 cents, or 0.6 percent, at $56.19 in midday trading on the Nasdaq.

(Reporting by Sruthi Ramakrishnan in Bengaluru and Lisa Baertlein in Los Angeles; Editing by Sriraj Kalluvila and Jonathan Oatis)