The Death of Starbucks

Starbucks was once a company to emulate; from their meteoric rise out of Seattle to their apex with stores on almost as many corners as Dunkin Donuts, they've mastered the elitist coffee drinker angle. You have to give credit to anyone who can get Americans to pony up $5 for thirty cents worth of crushed beans and some cream.

They've hit a rough patch of late and sales started to slip some but they've slimmed down and have managed to maintain corporate stability.

That may change if they decide to go in this direction:

Starbucks Corp. and other companies are discussing a potential compromise on union-backed “card- check” legislation that U.S. business groups are spending millions of dollars to defeat.

Starbucks, the world’s largest coffee-shop chain, has had “conversations with like-minded companies” and is “open to exploring alternative solutions” to the measure, said Deb Trevino, director of corporate communications for the Seattle- based company in an e-mail yesterday.

The bill, backed by President Barack Obama and Democratic leaders in Congress, would make it easier for unions to organize. It would let workers form a union when a majority of company employees sign a card requesting one, rather than permitting their employer to require a secret-ballot election run by the National Labor Relations Board. The proposal is organized labor’s top legislative goal this year.

If Starbucks goes the union route, they will effectively die as a company. Big Labor will demand a "living wage" that will exceed roughly $13 to start and will raise steadily every year. They will demand full health benefits and some type of pension plan plus the percentage that goes to the union local. The stabilized labor rate--actual cost paid per hour--will be somewhere in the area of $21 when all the above-mentioned benefits are added in. That means that they will make increasingly less profit unless they raise their prices even more and will end up pricing themselves out of the market.

Most people don't realize how unions work so here's a primer: Say you're doing construction work in New Jersey. You have to do the work using union labor. You call the local hall and ask for a heavy equipment operator and they send him to the site. Let's say he's going to operate an excavator for you. His hourly rate is, at current, $41. Add to that the ancillary disability and other taxes that are required. Then add in the union costs: healthcare, vacation, union fees and a few others. His actual cost per hour to the construction company is over $70 per hour, paid weekly to the employee and the union hall.

This is one of the many battles that has to be fought, not just for big and small business but for the American consumer. Big Labor needs just a crack in the door to send their goons in and unionize everything from the local hardware store to the electronics dealers. Wages will rocket upward and prices will surely follow affecting us, the consumer, in ways we can't even fathom.

If Starbucks, or any other large firm breaks ranks and allows unions to organize in their stores, they will be bankrupt within five years and we'll have more people out of work. Thinks I'm making this up? Just take a look at GM, Ford and Chrysler and tell me what good unions have done for them.