The coffee retailer disclosed the move in a memo distributed to employees Nov. 2, Business Insider reported. The report was confirmed by CNBC, Reuters and Bloomberg. The pay hikes are slated to take effect by mid-December.
Retailers have had difficulty keeping staff because potential employees are afraid of contracting the coronavirus, Bloomberg reported. Even though unemployment remains high due to the coronavirus pandemic, the increased exposure that service sector workers face is making it harder for companies to attract and maintain staff. Starbucks also plans to boost its starting pay by 5%, according to the reports.
In addition to the higher pay pressure from service sector jobs, more states are boosting their minimum wages. Florida recently moved to gradually raise the minimum wage there to $15 an hour. President-elect Joe Biden has indicated support for higher minimum wages as well.
Starbucks shares fell $0.69, or 0.7%, to $97.91 in regular trading Wednesday.
The stock has risen more than 10% so far this month as apparent succuss in developing vaccines against the coronavirus has boosted optimism on Wall Street that the economy will be able to re-open more in the first half of 2021. However, the enthusiasm has been checked in the past two days by realization that the virus is spreading out of control in much of the U.S.
On Wednesday, New York City announced it was returning the largest school district in the country to remote learning because coronavirus test positivity has topped 3% there.
Starbucks is a holding in Jim Cramer's Action Alerts PLUS member club.