Human Resources

Starbucks Boosts Pay, Benefits in $250M Move

The coffee chain says the federal tax overhaul "accelerated" the new compensation package, with $120 million going toward a second wage hike this y...
Matthew HellerJanuary 26, 2018

Starbucks has become the first big name in the food and beverage sector to announce new employee benefits in the wake of the new tax law, with a pay hike and an expanded sick-leave policy among the perks.

The world’s largest coffee chain said the Tax Cuts and Jobs Act had “accelerated” its decision to spend $250 million on new benefits. The money would come on top of the $800 million that Starbucks has invested in employee compensation and benefits over the past four years.

“Investing in our partners has long been our strategy,” CEO Kevin Johnson said in a memo to employees. “Due to the recent changes in U.S. tax law, we are able to accelerate some significant partner investments.”

The investments include $120 million to cover a second wage increase this year for all eligible U.S. hourly and salaried employees and more than $100 million on an additional 2018 stock grant, with every employee getting at least a $500 grant.

Starbucks is also expanding its paternal-leave policy to allow all non-birth parents to receive up to six weeks of paid leave after the birth or adoption of a child. The company had been criticized for offering unequal paternity-leave policies to corporate and in-store workers.

Additionally, starting in July, all full- and part-time workers will be able to accrue paid sick time that can be used if they need to care for sick family members in addition to when employees themselves are sick.

“Companies are trying to stand out among a crowded and increasingly competitive labor market by offering benefits that may pique the interest of workers or help retain them,” the Washington Post reported, noting that according to 2017 Bureau of Labor Statistics data, only about 35% of workers in the accommodation and food services industry have access to paid sick days.

The changes at Starbucks come after it hired Aon, a global professional services firm, to compare its benefits with those of similar companies.