But why exactly has the company been doing this? Since when do executives at publicly traded companies worry about low-skilled workers’ holistic well-being? In speeches worldwide, Starbucks CEO Howard Schultz has been using the word “humanity” almost as often as “coffee,” and he insists it is in the company’s business interests to do right by its workers. When he announced the college initiative in America, Schultz explained that he was trying to build a “company with a conscience.” In China, as he told more than 1,300 employees and their family members in January, “We will do everything we can to continue to build a great and enduring company that you and your parents can be proud of.”
Some, though, accuse Starbucks of scoring cheap PR points with token gestures. If Schultz really wants to do the right thing, why not just double baristas’ wages? “I’d honestly rather have them cancel the college program, and I’d give up my stock options, for a few more dollars per hour,” wrote a self-identified Starbucks employee in a comment on Reddit last year. “At the end of the day, that’s what really ends up mattering the most.”
So far, both narratives appear to ring true. Starbucks is indeed doing well by doing good; it’s not a hoax. The business case for these perks is compelling. But the cynics are also right; these good deeds, unusual as they are, remain fairly modest. They will make Starbucks the company stronger and healthier, but they will not transform the economic opportunities of most baristas worldwide.
China, for example, now has one of the world’s highest levels of income inequality, according to a recent report from Peking University—higher even than the U.S. The average Starbucks employee in China is a single 25-year-old who has recently moved to one of the 70 cities in which the company operates. Unlike their American counterparts, most Chinese Starbucks workers already have a college degree. They don’t need tuition money; they need an apartment.
Starbucks employees in China spend 20 to 50 percent of their paycheck on rental costs, according to the company’s internal estimates. Almost three-quarters are migrant workers who have come to the cities for jobs and are struggling to start lives away from their families. Many are marginalized, legally and socially, living a life apart from the more affluent, permanent residents to whom they serve coffee.
Under Chinese law, companies like Starbucks must contribute to a benefits system, known as the housing provident fund, that should, in theory, help employees afford apartments. But many cities do not allow withdrawals to be put toward rental costs. The money is meant to be used for purchasing a place, something the average barista in Shanghai has no hope of affording.
In the past, large companies, including Foxconn, which manufactures iPhones for Apple, have lured migrant workers by paying for employee dormitories. In the case of Starbucks, the company cannot house workers centrally because its stores are spread out all over China. Besides, the overcrowded, degrading conditions of some dormitories have led to worker protests and even riots, making them increasingly unattractive to image-conscious employers.