Starbucks: "Hey Partner, Remember That 401K Match? You Believed Us?"

[Omaha Steve]

I've had dozens of posts about Starbucks. Many DUers still believe they are a good place to work.

http://wallstnation.com/SBUX_12242008.html

Submitted by Todd Sullivan

Isn't that what Starbucks (NASDAQ:SBUX) calls it's employees, "partners"? With partners like this, who needs enemies...

Starbucks (SBUX) has informed employees it won't guarantee matching contributions to their 401(k) retirement plans next year. In a memo sent to workers last week, Starbucks said it will switch to a "fully discretionary match" program from a fixed employer match as of Jan. 1. "This means that at the end of calendar year 2009 and future years, Starbucks will make a decision whether or not to make matching contributions to plan participants," said the memo.

"If a matching contribution is made, Starbucks may do so using a rate that is different than the tenure-based fixed rate currently in place for the 2008 plan year," the letter added.

As if that was not bad enough for employee moral, An administrative law judge found Starbucks engaged in unfair labor practices at several of its New York coffee shops. The ruling by Judge Mindy E. Landow, dated Friday, states that work rules were unfairly imposed on Starbucks workers who supported a union that has been attempting to gain a foothold at the gourmet coffee retailer.

Can Starbucks sink any lower? Time for Howard Schultz to go. This thing has gotten out of control and he clearly cannot get his arm around it.

Not for nothing but can anyone imagine the outcry from the mainstream media if either McDonalds (NYSE:MCD) or Wal-Mart (NYSE:WMT) had done either of these things, much less both? Other than a few articles on the internet today, the silence was deafening. But hey, the CBS Nightly News did a hard hitting piece on a commuter train that carries 5 people in Baghdad running again...

[Horse with no Name]

1. My company isn't doing that either

I am thinking this is going to be a lot more common than you think in the coming months.

[Warpy]

2. A lot of companies are hanging on by their fingernails

Starbucks would be one of the major ones since it expanded so quickly at the end of the bubble economy.

I would expect a lot of corporations to do this over the next several years. They're fighting for survival and can't be concerned with yours.

[DJ13]

3. Charbuck$ are what happens when a company goes on a growth binge

.... that was solely designed to keep pumping the stock valuations to make their own executives rich.

They overbuilt by about 5x what the actual demand would support with even the slightest bit of competition.

Its sad that its always the workers who have to pay for the poor decisions of management.

[tammywammy]

4. The company suspended 401k matching starting Jan 1.

We're trying to survive the recession without layoffs, if that means I have to forgo the match for a while, then so be it.

[RobinA]

36. My Company

suspended 401(k) matches in 1989, one month after I became eligible. I was laid off in 2001, having received exactly one match. I have never received a match anywhere I have worked since, government or private. Matches are history, because it is slowly dawning on them that they can get away without it. I have a very bad outlook on givebacks to employers, because somehow the company either ends up belly up anyway, or you never manage to get the give back back when the economy looks up again.

I'm Union now and my vote on givebacks is a resounding NO! So lay me off. Won't be the first time, or the second time. I won't OK companies to put their hands in my pocket to help themselves out when their stupid decisions come home to roost.

Hope your situation works out better than mine, there are a few good employers left. Somewhere. I hear.

[roamer65]

5. A lot of companies are killing the match.

GM and Motorola, for example.

I would still contribute even if I didn't get a match. It makes "tax sense".

As far as Starbucks, I can't stand their coffee. LOL.

[CoffeeCat]

6. As unfortunate and as sad as this is...

...I think people need to buck up.

We're just starting a complete, paradigm-shifting crisis in our economy. This is not a game, nor is this
some "downturn" from which we'll soon recover.

Companies have to cut costs, because people are not buying their products. Starbucks DID match 401k funds
when they had the soaring sales. They're letting people know now--that they probably won't match this year,
due to plummeting sales. They're being straight up and forthright about the reality. They're allowing
employees to accept it or find other work.

I sometimes feel that people don't get it. We are in for so much hurt. So many lay offs. So many business
failures. Pretty soon--people with a full-time job with healthcare, dental and matching 401k will feel lucky
as hell.

There are plenty of evil, greedy companies out there, but this is about Starbucks trying to avoid layoffs
and totally collapsing--due to significant falls in their sales.like a lottery
win.

Starbucks may not be perfect either, but this move--however unfortunate for these employees--is about
Starbucks spiralling earnings.

[Missy Vixen]

9. I know they don't get it

>I sometimes feel that people don't get it.

My husband lost his job mid-November. He's looking for another one. In the meantime, those who haven't experienced this yet (specifically those over 40,) seem to have no idea what's going on.

Right now, in the grand scheme of things, it's not great to lose the 401K match, but it's a hell of a lot better than wholesale layoffs.

Julie

[CoffeeCat]

10. We all know people who are going through...

...very hard times--and I'm so sorry about your husband. It must be very difficult and I hope your
situation improves. It could be any one of us, and this will affect so many.

I have heard so many stories from people who are not only unemployed--they are in dire straights. A neighbor
lost a six-figure job, and he has to look for jobs in other cities and states because he works in a specialized
field. However, he can't sell his house. So, he can't move.

It's not just about being unemployed. There are other factors that complicate matters when unemployment
happens to you now.

Julie, I hope your husband is able to find a job he wants. It's hard to lose a job during this time of
year. Hiring always freezes up during the holidays. I hope the new year brings good things for you
and your family.

:hug:

[Missy Vixen]

13. TwoSparkles, I hope everything is wonderful for you and your family, too

We're hearing about people who are commuting to find jobs, too, and can't unload their houses. There are three houses on the market in our neighborhood; two of them have been for sale for over a year now. I can't even imagine how these people are paying a double mortgage. Even just two years ago, any house for sale here would have multiple offers. Our next door neighbors sold their house two years ago; it sold to the first couple who toured it for over asking price and never even hit the MLS.

Things have changed. A LOT.

I am crossing my fingers that things will go well. So far, we're fed, we're inside, we're clothed, and I still have Web access. ;-) We are better off than a lot of people.

Thank you again for your kind thoughts, and seriously, I hope everything remains great for you and your family.

:hug:
Julie

p.s. I wait to see what happens after PE Obama takes office; he's going to have to act very, very quickly for people who have been on an extended unemployment and STILL can't find work at a living wage. We won't even talk about the health insurance.

[CoffeeCat]

19. I agree about Obama...

...he is going to have a lot on his plate--and acting quickly is going to be key. So many need those extended
employment benefits.

Thanks for asking about our family. You are so sweet. We are scared, just like everyone else. I don't
think anyone is immune. My husband works for a broadband Internet-service provider--a small, high-tech start-up
that is funded solely by venture capital.

On one hand, that's just about as scary as it gets! High-tech start ups can be volatile. One good thing is
that Internet service is essential for any business. Even during downturns, people will need their Internet service.

They've revised their business model to position themselves as a cheaper alternative to the larger business
ISPs--and they provide bandwidth up to 1 Gbps, at lower cost.

However, if the economy tanks further and there are more business failures--then, that is bad news.

I'm a stay-at-home mom who is currently brushing up her resume...

You seem to have a very positive attitude and it sounds like you and your husband are holding your own
in difficult circumstances. You'll be in my thoughts as we all wade through these rough waters.

Thanks for your kind thoughts, and I hope the best for you and your family! :hug:

[Omaha Steve]

14. JulieRB IOU an apology

I skipped over your husbands job loss to post about other things. Job losses helped elect Obama. I HOPE he can deliver fast enough to get America (and your husband) working again.

OS

[Missy Vixen]

16. OmahaSteve, not at all!

No apology needed. If you think of us, though, I'd appreciate all the good thoughts you could muster up.

>Job losses helped elect Obama. I HOPE he can deliver fast enough to get America (and your husband) working again.

From your lips to God's ear. There are sooooo many people out of work right now, and it's really going to sink in after January 1.

C'mon, PE Obama. There are so many who need a lot of help right now.
Julie

[Democrats_win]

7. Kool-aid for Everybody! Do you believe this Bull? Poor starbucks!

All capitalist pigs are using this crisis to screw the workers. Wake UP!

Do you see any of these companies demanding better lease terms? Or are they going to their increasingly risky banks demanding better terms? What about the suppliers? They're going after the workers because they are weak. Just look at the posts on this thread.

[tammywammy]

8. What if you own the building?

And doing business with a stable bank? And the suppliers can't give discounts. And they're already cutting costs visibly elsewhere within the company?

That's what's going on where I am. Cutting 401k match is helping prevent a layoff.

[Omaha Steve]

11. What about the stores that just closed? 600 of them & more on the way

Bottom line: http://www.galesburg.com/news/x1720693441/Starbucks-light-fades-as-store-closes

Starbucks expects to save $200 million to $210 million in fiscal 2009 by closing stores and another estimated $200 million that could come from cutting labor costs or streamlining distribution. The company has not ruled out closing more stores but likely not on the same scale as the 600 announced last summer.


My gosh, we need to bail out Starbucks too.

Like to cut your hours in 1/2 to help somebody else? Where does it stop.

Starbucks uses Cintas while pushing the myth it is a BLUE company. It was just found in violation of labor laws again. Another labor hearing next month. Had stores closed for sanitary reasons in NY. Three states have charged Starbucks for sharing tips with management illegally. It is a long list.

Several socially responsible mutual fund companies dropped them in the last year. Starbucks is blamed for putting the Blue Fund out of business: http://www.blueinvestmentmanagement.com/

Link on the Blue Fund I posted on DU awhile back: http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=132x3239868

[tammywammy]

18. I don't work at Starbucks

And I understand they closed a bunch of stores already. I feel for the employees at Starbucks though. It sucks to have the stores closing and the matching going to the wayside.

I was discussing my personal experience in the workplace. They're making cuts with everything and then cut 401k matching, in order to prevent layoffs.

[Omaha Steve]

20. Two I'm sorries in one post

I misunderstood. I know what it means to be an employee in denial. I thought that was where you were at.

Some people never admit being wrong on the DU. Not me. :-)

OS

[tammywammy]

22. Oh, don't worry, that's what I assumed happened

It helps that I work for a family owned company, that has around 80 employees, so I see what's being cut, etc.

[quakerboy]

12. Who is putting money in a 401k anyway?

You pay in a buck today, and in a month its worth fiddy cent.

[RobinA]

38. Yeah, There is That

I was a diligent saver and where did it get me? Had I been more of a spendthrift I coulda ended up with the same amount of money AND a better car.

[Sanctified]

15. I highly doubt 401k matching is going to be the major concern of Starbuck Employees for 2009.

When they start closing doors on Starbuck coffee shops and these employees are unemployed I think that is going to be a more serious issue.

[Gwendolyn]

17. People still go to Starbucks to spend $3.50 for a cup of coffee?

Most people I know have gone back on the basic 'communal department coffee maker and everyone takes turns buying the coffee' plan.

As more and more people are finding it hard to put food on the table, they'll be spending less time at starbucks and more at McDonald's. I agree that starbucks employees have more to worry about than matching 401ks.

[Sanctified]

21. With todays economy I am betting many people stop buying Starbucks.

In my house we are down to drinking folgers, it tasted like crap for about 2 weeks but at it's price it's tasting pretty good right now.

[Gwendolyn]

25. Lol... I hear ya!

We've compromised in the same way on our austerity program. To mitigate the unaccustomed taste, I started adding a weeny dollop of chocolate syrup, whip up hot milk froth in a little pot with a whisk, sprinkle with a little cocoa powder... and voila, hot pauper moccachino for two. We're kind of addicted to it now. :D

[Statistical]

30. $3.50? I wish it was $3.50. My wife is an addict. I think they cut the coffee with crack (n/t)

[Gwendolyn]

33. I never got the whole Starbucks phenomenon.

Ten angst-filled minutes to decide what you want from the myriad of choices, then another ten to verbalize it to the serving person. Zillions of styrofoam cups loading up the garbage every day. Not sure what your wife drinks, but when I used to buy coffee every day (it's been a few years) it added up to $1000.00 per year. After taxes, and I looked at it as a non-deductible business expense. (Staying awake at the office :)) I'd rather buy something tangible with that cash. Guess more people feel the same these days.

Maybe you should get your wife to look at this. :D

http://www.hughchou.org/calc/coffee.cgi

[DainBramaged]

24. Maybe Starfucks needs to lower their profit margins a wee bit, and make pricing concessions to the

public to survive, just like the Autoworkers are being asked too.

[Sanctified]

31. Unfortunately they can't lower their profit margins, they are already hemorrhaging money

that's why they are closing shops. Selling cheaper coffee won't solve their problems considering they are now competing with McDonalds for customers.

[DainBramaged]

23. Eliminating matching contributions, another way to screw the workers.

[Hannah Bell]

29. yes. remember the transfer from pensions to 401ks? "we'll put the $ here instead,

you can manage it yourself, you'll all be rich!"

"oops, we don't have the money to pay WHAT WE PROMISED"

but we have the money to expand internationally - yep, we're using yours, suckers.

[galileoreloaded]

26. Very interesting post and replies.

This microcosm of class warfare.
Self described(relatively) poor people arguing over who is poorer. Toss in some ideological purity, and viola, division amongst the ranks of people that have much more in common than not.

Our impending serfdom will be quite easy to accelerate and exploit, I think.

Don't fall for it folks.

[Hannah Bell]

27. Starbucks: 672.6 million in profit in 2007. 411 BILLION in revenue. 5.3 BILLION in assets.

172,000 employees total, including management.


i.e. $3700 in profit per employee.

and i bet some of that 411 BILLION in income gets raked off into some nice little tax shelters &
construction boondoggles before they calculate the skimpy 642 million in profit.

Because according to them their profit margin is less than 1%, & i for one don't believe it.

[Sanctified]

32. 672.6 million equals 87 cents a share and for 2008 they made $314.5 million or

or 43 cents a share. But the telling part is for the 4th quarter of 2008 they made a profit of 5.4 million or 1 penny a share. The company is on a downward spiral, they are fucked and next year they will be lucky to make 10 cents a share even after killing their 401k matching plan.

[WillowTree]

34. You obviously don't know what "revenue" means.

The "revenue" figure represents their gross income, not the net. That means before taxes, office and store rental, equipment, electricity, insurance, paying their suppliers, wages and salaries etc etc etc.

Starbucks is hemorrhaging cash like most all purveyors of luxury products and services are these days and it's going to get worse before it gets better. And like employees of so many such companies, Starbucks "partners" will face benefit cuts in an attempt to keep as many employees as possible on the payroll at all. It's a fact of the current situation that many of us will have no alternative but to accept, at least for awhile.

[Hannah Bell]

28. dupe

[HeraldSquare212]

35. The 401K match was supposed to be in place of a traditional pension from companies.

But apparently now that's gone, too. I'm sure the same model will be used for healthcare, too - first it's something you buy directly with financial support from the company, then the company finds a reason to stop that financial support.

Since wages haven't risen in a long time, companies have had to get creative in how to take money from their employees.

[Lance_Boyle]

37. the match is just gravy

the real benefit is being able to set aside your retirement dollars pre-tax.

That said, I have a few gripes about the matching programs, too. My employer recently sent out a postcard detailing its match rates for 2009. They'll contribute 8% of salary up to $50K, and 16% of salary above that amount*. The rich get richer, indeed.

* numbers are made-up, but the ratio is right.

[RobinA]

39. That's Interesting

Because the 401(k) was originally set up to specifically not be a tax shelter for rich guys.

[HeraldSquare212]

40. for those companies that discontinued pensions (like Verizon, where I worked)

the match was supposed to replace the lost pension benefit. I don't whether Verizon specifically has stopped matching, but as more and more companies do so it will become the norm and they will adopt the norm. I agree that the provision of the tax code didn't rely on matching. But my argument is, there's a long, slow continual erosion, first in real wages, now in benefits.