“Not Bad For Coffee” A Look Inside Different Baristas’ and Companies’ Wallets
Baristas across the nation are striking, unionizing, and demanding higher wages from their employers. Some, like the Old Louisville Coffee Cooperative, are implementing a new labor structure entirely, with no “bosses” in sight. Louisville Starbucks and Heine Bros. coffee shops have unionized and successfully negotiated for better working conditions and pay. Following suit, employees at Sunergos Workers Union have officially banded together. As these baristas continue the negotiation process with owners Brian Miller and Matthew Huested, I decided to take a closer look into just why this wave of unionization is hitting Louisville’s coffee shops en masse.
[From Roast to Dollar Signs]
According to Yahoo finance, it’s not unheard of for coffee be marked up about 300%. And Starbuck’s Billionaire CEO Howard Schultz is not the only evidence of coffee’s profitability. Here in Louisville, we can see the value that coffee brings a company simply by looking at Heine Brothers’ 16 brick and mortar stores, not including their presence in the lavish Omni Hotel on Third Street. In comparison, Sunergos currently has 5 brick and mortar locations. So, we know that the money is there. Where it ends up, and how evenly the profits are distributed however, is uncertain.
Despite both of these local company’s successes, their employees’ calls for fair wages and push towards unionization point to the idea that the wealth created in store may not be trickle down enough for employees to make ends meet. This idea makes more sense in light of PYMNTS' study in February 2022, which found“65% of Gen-Z, and 70% of millennials were living paycheck to paycheck, and 65% of Gen-Z would be unable to pay an emergency expense of $400.”
This was before “the largest 12-month increase in the consumer price index (CPI) since 1981”. In March 2022, the cost of everything from everyday goods to even automobiles went up a whopping 8.5%. Due to this and other factors, $1,293, the average bi-weekly pay check in Jefferson County as of March 2022 had the same buying power as $1,367 in May, 2023. This devaluation of the dollar indicates that the average worker in Jefferson County would now require $74 extra dollars every paycheck to ensure they were receiving the same value as their paychecks just a year and two months prior.
Relatedly, nearly three out of four millennials and more than half of gen-z citizens have less set aside for an emergency fund than the average monthly cost of rent. In the city we call home, that adds up to $1350 for an average two-bedroom apartment.
Part of the reason baristas unionize so frequently today is due to stagnating minimum wage laws. From 1979 to 2021, Worker productivity has grown 3.7 times more than worker compensation.
1: Graph depicting the gap between worker productivity rates and compensation today.
The Center for Economic and Policy Research’s findings illuminate “if the minimum wage did rise in step with productivity growth since 1968[,] it would be almost $21.50 an hour in January of 2020.” After adjusting for inflation, Louisville coffee shops would have to pay their employees an hourly of at least $25.16 to keep up with a minimum wage that was directly connected to worker productivity rates as of March 2023.
In our economy today, a job consistently paying $25.16 an hour would be considered a good, or even amazing opportunity. This was corroborated when I spoke to an unnamed Sunergos Manager. After asking their wage, they relayed that manger pay fluctuates around $20 an hour. When asked their opinion on this rate, they seemed surprised, stating that it’s “not bad for coffee”.
Whether or not these hourly wages are considered fair, does not change the fact that worker’s compensation is miles behind the value workers produce. It does however, imply that many employers could pay their workforce a higher hourly wage than they are currently receiving.
[A Look Behind the Bar ]
To get a better look at whether or not local coffee shops were up to par with a minimum wage that matched the productivity rates of today’s workers, I decided to ask three different baristas from Sunergos, Heine Brothers and the Old Louisville Coffee Cooperative on Friday, April 7th what their hourly came out to after adjusting for tips. Before we look at the chart, it is important to remember that Fridays in a coffee shop tend to house more chaos and business than Monday to Thursday, so keep in mind that these results are likely a bit higher than the other weekday’s compensation.
2: Hourly wage comparison for different coffee shops and labor models in Louisville, Kentucky on April 7th.
While interviewing Cricket, he informed me the current pre-tipped hourly wage for all co-owners at the Old Louisville Coffee Cooperative is $18. Following them down the ladder, Ellie English, a Heine Brothers barista and union member reported an hourly pre-tipped range of $11.00 to $13.50, depending on length of service. Comparatively, Sunergos baristas still make a pre-tipped hourly wage between 8.25 and $12.50, as they are still undergoing contract negotiations as of June 27th. When I asked if I could use their name to quote the reported hourly rate, the Sunergos barista met me with a quick “don’t quote me” and got back to pouring their lattes.
At the time this confused me, as the worker was, and still is protected by their union, SEIU 32BJ. I began to understand the situation a bit more once Ashley Ray, a manager and “fixture” at Sunergos on Preston who “stood up for” her workers was fired.
After issuing a statement expressing how “blindsided” the Sunergos Workers Union were at her firing, they made good on their promise to take direct action if “any member were to face retaliation for supporting [their] union” on Jully 17through a joint strike with their fellow Starbucks baristas on Central Avenue. Although she was a part of the team, Ashley was still a manager, and notably, was not eligible for unionization or protection through SEIU 32BJ.
[Understanding Different Labor Models]
Aside from the glaring wage disparity noted between At-Will, Union, and Cooperative labor models, it is important to understand how the different models presented function, and why union and at-will workers receive such lower pay rates compared to their counterparts at the Old Louisville Coffee Cooperative.
One explanation of this is how business itself operates today. The name of the game in business is making the largest profit margin possible. Once you cover your baseline operational expenditures, you break even on your investment. The rest of the value produced is often referred to as one’s profit. A simple enough definition, profit can also be referred to as surplus value. While similar to profit, surplus value focuses on how much worth a labor force -in this case baristas- produce after this threshold of investment is reached.
The main difference between these two terms lies in how much money a worker receives on their paycheck. Although all hourly workers receive a profit from the work they do, none of them receive all the surplus value they create from their own labor. This surplus value workers created, yet do not see on their paycheck is typically given to the company’s business owner, its shareholders, or invested back into the company itself to increase its value.
This practice is not set in stone, however. As shown in the image below, different labor models allow worker’s paychecks to come closer to the full amount of the surplus value, or profit they create, as a worker.
3: Colorful graphic defining surplus value and explaining the differences between at-will, union, and cooperative labor models
One can definitively say that a business owner will make more than the workers who create a company’s value. An hourly worker will never make more than their boss.
However, those who are in a union will make more than their At-will counterparts. According to the Bureau of Labor statistics, union members make an average of $748 more per month more than an at-will worker in the same profession.
While a near $800 dollars is nothing to sneeze at, the fact that “CEOs were paid 399 times as much as a typical worker in 2021” is.
Although I cannot say whether or not the typical CEO is working 399 times harder than the average worker, I can state that baristas in Louisville Kentucky in a worker’s cooperative make more than their union and at-will counterparts. On April 7th, 2023, the Old Louisville Coffee Cooperative was the only shop I spoke to in which all of the workers made a wage that exceeded the minimum wage as adjusted for today’s worker productivity rates.
How is it possible that, of all the baristas representing different companies, the employees who made the largest hourly wage did not have a CEO, or distinct line between worker and owner?
Jonathan Preminger, a sociologist, answers this question in stating that: “workers in employee-owned firms…display a greater willingness to work hard, which generally leads to reduced employee turnover, improved productivity, better pay, and increased job security.”
Cricket, and his other 9 co-owners at the Old Louisville Coffee Cooperative echo this sentiment, describing all co-owners having an “equal share in the business, and equal decision making power” alongside another.
One of the most important take-aways from the data laid out above is the reasoning behind it. These baristas coming together to organize for higher wages act not out of greed, but from a place of necessity and survival. Many workers across America receive much less than the value they produce, and still live paycheck to paycheck. As of January 2023, that included “60% percent of United States adults”.
I think it’s time for that to change.
[Next Steps]
Although the illustrations above show that Worker-Cooperatives receive a significantly higher percentage of the surplus value created than their Union and At-Will counterparts, not everyone can simply wake up and create a workers cooperative like the Old Louisville Coffee Cooperative has.
Changing At-will workplaces to a union shop is no cake walk either. Throughout my time bartending and serving, many of my past bosses have repeatedly told or demonstrated that the very idea of a “union” is a dirty word. Even typing this now feels like I am begging to be fired.
To alleviate these very real and established fears, Louisville’s Restaurant Worker’s United (RWU) is ready and willing to protect those actively organizing their workplace as early as day one of joining their team fighting for a more democratic and equitable workplaces.
The best part about this opportunity is RWU’s willingness to train new organizers. You don’t have to be a professional, or an academic to enact positive change for yourself and your coworkers. RWU’s promise is simple: “If you’re a worker who’s ready to change this industry, we will stand with you and help you organize” your workplace.
Workers at Pizza Lupo demonstrated RWU’s power last year when the shop’s owner voluntarily recognized the union. Alongside Louisville’s Restaurant Workers union, Pizza Lupo’s front and back of house staff established their voice at the iconic pizza shop’s bargaining table.
No matter how new or established you are in the restaurant scene, studies show that those with union representation in the service industry make more than their non-union counterparts, full stop. The time to join the fight for higher wages and a better life for workers is now.
For organizing help, click here to connect with your local RWU representative, and establish the voice you and your coworkers deserve today.
References
Yahoo! (n.d.). 20 products with Giant markups. Yahoo! Finance. https://finance.yahoo.com/news/20-products-giant-markups-115730856.html
PYMNTS.com. (2022, February 8). New reality check: The paycheck-to-paycheck report - february 2022. Pymnts.com.https://www.pymnts.com/study/reality-check-paycheck-to-paycheck-consumer-planning-financial-emergency/?cache=skip#wpcf7-f1239851-o1?download=true
U.S. Bureau of Labor Statistics. (n.d.-a). Consumer prices up 8.5 percent for year ended March 2022. U.S. Bureau of Labor Statistics. https://www.bls.gov/opub/ted/2022/consumer-prices-up-8-5-percent-for-year-ended-march-2022.htm
U.S. Bureau of Labor Statistics. (2022, October 5). County employment and wages in Kentucky - first quarter 2022 : Southeast Information Office. U.S. Bureau of Labor Statistics. https://www.bls.gov/regions/southeast/news-release/countyemploymentandwages_kentucky.htm
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Sunergos Workers Union on Instagram: “Today we took a big step towards winning our seat at the table! #UnionsForAll #1U #respectbaristaswork.” Instagram. (n.d.-b). https://www.instagram.com/p/CiyAJViu3Y4/
Harkins, M. (2023, July 26). Sunergos and Starbucks employees in Louisville go “on strike,” close down stores. WDRB. https://www.wdrb.com/news/business/sunergos-and-starbucks-employees-in-louisville-go-on-strike-close-down-stores/article_273a6b4e-248f-11ee-92ef-b34b34911aa4.html
4, P. R. • O. (n.d.). CEO pay rose more than 11% in 2021: CEOS were paid 399 times as much as a typical worker in 2021-an all-time record. Economic Policy Institute. https://www.epi.org/press/ceo-pay-rose-more-than-11-in-2021-ceos-were-paid-399-times-as-much-as-a-typical-worker-in-2021-an-all-time-record/
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