Last week, employees at a Buffalo, New York, Starbucks voted to be represented by the Service Employees International Union (SEIU). Labor unions – and their supporters – celebrated the victory. While the vote is historic, at least for Starbucks, and could represent a wave of similar votes it poses a great risk to the labor movement. What we have in Buffalo is a real-time experiment that will yield results regarding which side is correct regarding the benefits and detriments of unionization.
To understand the experiment, we need to step back and examine what happened. Workers at one Starbucks location voted to be represented by the SEIU. (Unionization votes at two other locations were apparently unsuccessful.) This means workers currently employed or who will become employed at that one store only are represented by the SEIU.
Voting to be represented by a union does not result in a change in automatic change in benefits to the newly unionized employees. There is a myth that a vote for unionization instantly results in better wages and benefits based on a union scale. But federal law only requires that employer bargain in good faith with a union regarding terms of employment (which include wages and benefits). Sometimes that yields better wage and sometimes it does not. Meanwhile, federal labor prohibits, with limited exception, an employer from changing the terms and conditions of employment during negotiations. Generally, this means that the wages and benefits of the newly unionized workforce are frozen until the union and the employer can agree on a collective bargaining agreement.
Starbucks has over 9,000 locations. In certain places, these locations are only a few blocks apart. So, the first issue that arises is whether a potential employee would apply for a job at a location undergoing collective bargaining negotiations where wages and benefits are frozen (and there is the potential for a strike) rather than seeking work at the non-union Starbucks down the road.
Now, lets assume that the negotiations result in a collective bargaining agreement. Again, there is no requirement that the negotiations result in an agreement in a certain duration. The law only requires that the parties bargain in good faith. That agreement will transparently show what the employees receive per hour in wages, what benefits they get, and what other workplace polices they are subject to. But what happens if Starbucks offers better terms and conditions to the non-union workforce down the road? Will someone seeking employment with Starbucks work at the union store where the terms of employment are worse than the non-union store?
Therein lies the risk to labor. They must obtain a collective bargaining agreement from Starbucks that results in wages and benefits that are markedly better than what Starbucks offers non-union employees in the same town. Otherwise, Starbucks will point to the results in Buffalo in persuading employees to vote against unionization at other locations. All Starbucks would have to say is – look what happened in Buffalo, that could happen here.
Of course, Starbucks knows this and will grind the SEIU during negotiations. And then what will the employees do? Strike? Or would they quit and go work for the non-union Starbucks down the street?