Starbucks (SBUX) - Get Free Report plans to raise average pay at its stores to $17 an hour amid a labor shortage, rising compensation plans from other retailers, and a unionization push at some of its stores.
All hourly-pay workers at the Seattle coffee-bar giant will now make at least $15 an hour and will average nearly $17 an hour by summer 2022. Some pay increases will take effect before then.
Baristas who have worked at the company for at least two years will get raises of up to 5% in late January. Employees with at least five years of experience could receive a pay hike of up to 10%.
Currently, Starbucks' average hourly pay is $14, but by summer 2022 the company's pay floor will be $15 an hour, with employees in some markets making as much as $23 per hour.
The Associated Press and other outlets reported that the announcement of the wage increases came in a letter to Starbucks employees from the company's president for North America, Rossann Williams.
The company previously raised wages in December, with Chief Executive Kevin Johnson promising to increase wages to $15 an hour over the next three years.
A recent bearish note from analysts at Atlantic Equities estimated that 70% of Starbucks's U.S. employees have been hired in the past 18 months at a starting wage of $12 an hour. Starbucks has 220,000 employees in the U.S.
Atlantic Equities downgraded the stock to neutral with a $105 price target.
The coronavirus pandemic has created a difficult employment situation for retailers. Many employees haven't returned to their jobs because they fear getting sick. Others have switched to higher paying service jobs or to different fields.
Starbucks also has been resisting unionization efforts in the New York region according to media reports.
A report in The Wall Street Journal said 70 employees at three company-owned cafes in Buffalo, N.Y., are trying to form the first worker union at the coffee-bar chain in the U.S.
Starbucks told TheStreet it has unions in both Canada and South America.
At last check Starbucks shares slipped 0.6% to $112.82.