Why Are Workers Unionizing Now? What Do Unions Really Mean To Investors?

Key Takeaways

• The American labor movement has grown significantly since the beginning of the pandemic.
• Today, more than 250 Starbucks stores are unionized.
• Workers are demanding better treatment, fair scheduling practices, and freedom from unfair dismissal and discipline.

In the past few years, more than 250 Starbucks locations have unionized, and the movement has made national headlines. Labor movements are growing in the United States, and many people are wondering why unionization has grown more popular in recent years.

Background

The history of American labor is long and complicated, but organized labor in the United States can trace its origins to 1636 when a group of fishermen in Maine went on strike. Whether labor unions were legal was settled in 1842, when the Supreme Court decided in the case of Commonwealth v. Hunt – in short, labor won.

Union membership grew over the 1900s and peaked in the 1960s when nearly one-third of all American workers were unionized. Membership has been on the decline since. By 2020, union membership was roughly 10%.

Many argue that there is a clear correlation in declining union membership and declining labor incomes. As a percentage of GDP, labor income has fallen from a peak of more than 51% to less than 44% since 1970.

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There is a clear correlation between union membership and individual earnings, with union members earning 11.2% more than non-unionized workers on average.

Since the onset of the COVID-19 pandemic, many people have reevaluated their relationship with work, leading to phenomena like the Great Resignation. Many workers are simply demanding better pay and better treatment again.

The current Starbucks unionization movement began in Buffalo, New York when a store voted to unionize in late 2021. This made it the only unionized location out of Starbucks’ 9,000+ company-owned stores in the U.S. Only 1.2% of American food workers are union members, making the success of the unionization drive even more noteworthy.

The movement began to spread, with another Buffalo store voting to unionize shortly thereafter. Each month, more locations held union petitions, with more than 250 stores voting to unionize.

Every step of the way, Starbucks management has fought against unionization drives, hosting captive audience meetings with anti-union messages and closing stores. The company has even faced lawsuits for its union-busting practices. For example, New York City sued Starbucks for firing a barista who was attempting to unionize their store.

Starbucks Workers United’s proposals

Starbucks Workers United is a national collective of Starbucks Partners who help organize workplaces alongside Workers United Upstate, a union with members across many industries, including the coffee industry.

Non-economic proposals

On its website, Starbucks Workers United lays out non-economic proposals for what it wants from Starbucks. The proposals include:

• The right to organize free from fear and intimidation
• Non-discrimination
• Freedom from verbal abuse, threats, and harassment from supervisors, managers, and co-workers
• The freedom to defend against customer aggression without retaliation
• Reinstating COVID-19 benefits
• Disaster emergency pay
• Zero tolerance for sexual harassment
• A requirement of just cause for discipline or dismissal
• No dress code and company-provided or paid non-slip shoes and fresh aprons
• Guarantees of full-time status for those working 32+ hours a week and benefits for those working less than 20
• Formalization of job descriptions to prevent assignment of additional work without proper compensation
• Guaranteed schedules
• Seniority rights
• A labor management committee in each store
• No reductions in wages, benefits, or working conditions without negotiation
• A union bulletin board in each store for communications and updates
• The freedom to wear union paraphernalia while on the clock

Economic proposals

Starbucks Workers United does not have a list of economic proposals on its website, but workers are also demanding better compensation as part of their unionization efforts.

Workers desire things like a $15 per hour starting wage, better benefits regarding paid time off and sick time, and better health coverage, including coverage for mental health care.

Why unionize now?

The labor movement in the United States has been heating up over the past few years with major companies, including Amazon, Google, Trader Joe’s, Apple, and more seeing unionization drives.

Experts say that COVID-19 is the biggest factor in today’s union boom.

During the pandemic, many people found themselves in lockdown and unable to work for weeks or months. Others were forced to work as people got sick and even died around them, feeling like their employers and society really did not value them as people.

Both groups were forced to rethink their relationship with work and their employers. Many began talking about their struggles, such as poor treatment from customers, unfair management practices, and other labor issues.

At the same time, companies began to post record profits, especially as the pandemic receded. Some workers felt that they had dealt with the worst parts of the pandemic and put themselves at risk, but with no reward.

President Joe Biden’s election also helped spark unionization. During a speech, he promised to be “the most pro-union president ever.” He revamped the National Labor Relations Board and supports the PRO Act, which makes it easier to unionize.

These factors have put the idea of unionization into many people’s minds. Even people outside of the industries that are experiencing union booms have grown more supportive of them. Currently, 71% of Americans approve of unions compared to 48% in 2010.

A few major successes, such as unionizations at Amazon and Starbucks’ Buffalo store, have set off a chain reaction. As more workers see others succeed at forming a union, they get the courage to form one themselves.

What it means for investors

At the moment, it seems like the labor movement at Starbucks and other companies in the U.S. will continue to grow. More and more people join labor unions each month and pro-union sentiment is at the highest it’s been in years.

Unions generally help their members earn more and receive better benefits, which can mean less profits for the company to keep. However, history has also shown that unions don’t do much to hurt investors. In fact, they can help.

Stock prices may fall in the short term, but unionized companies are typically less risky than those without unions. The greater investment in employees means less money spent on riskier ventures, higher quality output, and higher sustained effort. Unionized companies are also typically more transparent about their investments.

Most analysts believe that Large Cap securities will be the least effected in the short term.

Final Word

With the American labor movement heating up, many investors are worried about how it could impact their portfolios. The good news is that historical evidence shows that unionization won’t hurt your portfolio and could help it in the long run.

If managing your portfolio in this chaotic economy seems difficult, you might consider working with Q.ai. Our artificial intelligence can build a portfolio for any economic situation and risk tolerance. Because our AI is strategic and always-on, you don’t need to worry about monitoring every shift in the market connected to unionization, it’s done for you, as the Investment Kits are rebalanced weekly.

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