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Starbucks' Crackpot Solution to Jobs Crisis

The program will no doubt boost Starbucks' image--and the density of red, white, and blue wristbands across America. But jobs? Not so much.

The following article first appeared at Working In These Times, the labor blog of In These Times magazine. For more news and analysis like this, sign up to receive  In These Times weekly updates.

This month Starbucks launched its Create Jobs for USA initiative, the coffee chain's official response to America's unemployment crisis. In a press release, CEO Howard Schultz says the program gives customers the chance to "take meaningful action to help create and sustain American jobs." "We hope this a galvanizing moment as Americans come together to be catalysts for change," Schultz continues.

The program will no doubt boost Starbucks' image--and the density of red, white, and blue wristbands across America. But jobs? Not so much.

Starbucks' plan to tackle the nation's massive jobs crisis is for you to donate money to a loan fund for "community businesses." The fund, managed by a nonprofit called the Opportunity Finance Network, will make loans to small businesses, nonprofits and commercial real estate companies with the hope that the extra credit will free them up to hire more people. Starbucks is chipping in $5 million to "seed the project," not quite one two-thousandth of its record-setting revenue from the past year.

The rest is up to you--though a $5 donation earns you that tri-color wristband. And, in the words of Starbucks' promotional pamphlet, "when you wear it you are stating that you have done your part, a big part, to help get this country back on its feet." Starbucks employees are especially encouraged to donate--though a wristband will cost them most of an hour's pay. "Nice work America," adds the pamphlet, "getting ourselves back to work again and again." (A Starbucks spokesperson declined to comment for this article.)

But don't expect to see economist Dean Baker sporting Starbucks' flag-colored "Indivisible" wristband. Baker isn't buying what Starbucks is selling, starting with its diagnosis of the jobs problem: Starbucks' literature pins U.S. unemployment on a lack of financing for small businesses.

"I just don't think there's any evidence to support that," retorts Baker, the co-director of the Center for Economic and Policy Research. If the problem were really a lack of credit for small businesses, he observes, larger companies would be competing to get into the market, and a huge company like Starbucks itself "should be expanding like crazy." Instead, "none of the things you would expect to see if it were the case that businesses were credit-constrained seem to be happening."

Starbucks attributes its focus on credit to a survey in which "community businesses" said they need more financing. But "to get a good survey," responds Baker, "you have to put it in the context of alternatives." He says Starbucks' survey results sound equivalent to, "Do you want an ice cream cone? Sure."

Baker puts more stock in the National Federation of Independent Business' annual survey of the biggest obstacles facing its membership. "Overwhelmingly, they say lack of demand. So the idea that this is a major factor impeding businesses is just bizarre." If Starbucks was serious about creating jobs and setting a good example, observes Baker, it would declare a policy of neutrality toward union organizing in its stores. (The company says it plans "to add 200 new stores and remodel more than 1,700 stores in the United States" during the next fiscal year, which "may create approximately 2,000 full and part-time jobs across the country.")

But rather than a neutral stance toward unions, says Starbucks employee Erik Forman, Starbucks "fired many organizers, and they've waged a pretty relentless campaign against the union." Forman was fired from his Minneapolis store in 2008 just before he and co-workers planned to go public with their union campaign.

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