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When Starbucks workers decided to unionize in Fort Union, it was driven by Covid, but it also started a union boom in Utah.

The pandemic caused a union boom in Utah

The pandemic caused a union boom in Utah

Will it help employees or hurt them?

BY JUDD BAGLEY

The pandemic caused a union boom in Utah

Will it help employees or hurt them?

BY JUDD BAGLEY

It feels straight out of an episode of Seinfeld: In 2019, someone in Wuhan, China, caught a virus from a bat. One thing led to another, and in 2022, workers at a Starbucks in Cottonwood Heights, Utah voted to unionize. 

While quite a few things had to happen to get from a virus in China to a union on Fort Union, the story of 2022’s resurgence in interest, approval, and affiliation with labor unions—following decades of steady declines on all three fronts—cannot be told without acknowledging multiple profound impacts of the pandemic.

“Covid is the reason this movement is happening nationwide,” says Jacob Lawson, a Starbucks shift supervisor at the coffee giant’s Cottonwood Heights location. “When Covid hit, Starbucks raised everyone’s pay by three dollars an hour, calling it ‘catastrophe pay.’ If you didn’t want to work, they paid you to stay home. In Starbucks’ own words, they doubled what they spent on labor but saw their profit margins decrease by five cents.”

As the initial waves of the pandemic subsided and consumerism strongly rebounded, Starbucks eliminated across-the-board catastrophe pay and the company saw profits soar. At the same time, in many markets, the return to pre-Covid wages failed to keep pace with a rapidly increasing cost of living. Lawson says this, combined with the sudden loss of their previously elevated status as “essential workers,” left many Starbucks employees feeling like the victims of a rug pull. This was made more acute by the sense that the company’s 2020 financial disclosures seemed to reveal it could absorb significant wage hikes without excessively upsetting the balance sheet.

Then, in December 2021, Covid further highlighted the perceived contrast between Starbucks management and front-line workers. Lawson learned that his Cottonwood Heights store was the only Starbucks location on Salt Lake Valley’s east side with full lobby service and seating. Concerned for their health, given the high transmissibility of the then-raging Omicron variant, the site’s 19 employees unanimously voted to close the lobby and return to grab-and-go. Lawson presented the poll results to company leadership, and perhaps unsurprisingly, the vote was overruled.

“My district manager said, ‘This is not a dictatorship, but you don’t get a vote,’” Lawson recounts. “Then, lo and behold, we very quickly got Covid. It went through all of us, and the lobby closed anyway.”

Just days before this particular abortive effort, a more successful attempt was made when Starbucks workers in Buffalo, New York—also motivated in part by Covid safety concerns—made history as the first to vote to unionize.

For Lawson, the next step was obvious. “That was a very clear instance to me and my team why we also needed to unionize.”

A Starbucks representative declined to comment on the version of events recounted by Lawson, who, just 23 at the time, was already an active progressive political organizer and the leading pro-union voice at work. Six months later, he led the successful vote to make Cottonwood Heights Utah’s first unionized Starbucks. More Utah locations soon followed, turning an anomaly into a phenomenon. 

Where most might see a compelling set of coincidences at work, University of Utah Economist Peter Philips sees a pattern. “The pattern of unionization in the United States over the last hundred years has been one in which things go bad, and then they start to get better,” Philips says. “And it’s that upswing from a deep downswing that stimulates union movements.”

Indeed, the birth of the modern labor movement coincided with the economic expansion that heralded the end of the Great Depression, with each subsequent surge occurring on the heels of economic contraction.

Philips explains that these downturns foment a sense of dissatisfaction at work but are not sufficient to risk one’s paycheck when jobs are scarce. Most recently, the so-called Covid recession—with its abruptness and intensity more than making up for what it lacked in longevity—provided the downturn.

“When there is a moment of low unemployment, where workers’ bargaining power is enhanced, that dissatisfaction leads to action,” Philips says, pointing to the record low unemployment of 2021 that followed the record-breaking high unemployment of 2020.

For now, unions are experiencing an undeniable moment. It’s all the more compelling that it’s manifesting itself in Utah, historically one of the states least hospitable to organized labor. The reasons behind unions’ struggle to gain traction in Utah are manifold and go beyond the state’s prohibition on mandatory union membership, which allows workers to benefit from collective bargaining without having to join and pay union dues. A primary factor is the composition of Utah’s economy, with its lack of dependence on dock work, farming, manufacturing, and the kinds of labor-intensive industries that dominated when the modern movement was born.

As with so many things coming out of the pandemic, the current surge in union activity in Utah is more complicated than it appears. Indeed, from 2020 to 2021, Utah added 65,000 jobs with a negligible change in union membership. As a result, the percentage of union members in Utah dropped from 3.7 percent to a historic low of 3.5 percent—about a third of the national average—while the number of Utahns covered by union representation went up from 5.4 percent to 6.5 percent over the same period. 

“It means more people in Utah were covered by a collective bargaining agreement, but more people were opting out of union membership,” says Sean Redmond, VP of labor policy at the US Chamber of Commerce. “Because Utah is a right-to-work state, you don’t have to join the union, but you may still be represented by it.”

A recent Deseret News/Hinckley Institute of Politics poll found that 54 percent of Utahns approve of labor unions, compared to 68 percent nationally, as determined by Gallup. That disparity is likely accounted for by Utah’s political landscape and the fact that despite early leaders insisting on political neutrality, organized labor and the Democratic Party have maintained a tight alliance since 1936. 

That alliance was strengthened by 1947’s GOP-backed Taft Hartley Act, the federal legislation allowing states to ban mandatory union membership. This considerably weakened the disproportionate strength unions had accumulated since the passage of 1935’s Wagner Act, which created the National Labor Relations Board and affirmed workers’ rights to collective bargaining via union representation.

Starbucks isn’t the only recent addition to Utah’s union landscape. Most of the Utah workplaces to organize in 2022 represent the kinds of heavy lifting, potentially hazardous jobs one traditionally associates with unions, such as 100 ice cream production and warehouse workers at DFA Dairy Brands, 65 private IRS security guards employed by Paragon, or 18 metal workers at Innovative Precision—all in Ogden.

In July, workers at two less obvious organizations voted to unionize, the first being 10 employees at Salt Lake’s nonprofit crafting supply thrift store The Clever Octopus, where the majority identify as LGBTQ. The primary points of contention include a disagreement over the extent to which the store will pronounce itself as “queer-friendly” and a request that management offers a formal apology for repeated misgendering.

The following week, 11 employees of the Utah Democratic Party filed their own petition to organize—something Party Chair Diane Lewis gives the impression is the least adversarial act of organizing ever.

“As a former union representative who spent my career helping workers fight for good wages, secure benefits, and better working conditions, I recognize the importance of all workers being able to unionize if they so choose,” Lewis says. “As such, the Utah Democratic Party is pleased to voluntarily recognize the Utah Democratic Party Staff Union…and we look forward to contract negotiations proceeding.”

Still, the traditionally adversarial atmosphere that unions introduce into the workplace is what many cite as one of their main drawbacks. “American labor law is inherently adversarial. It makes the whole relationship tense just from the beginning,” Redmond says. 

A Starbucks spokesperson agreed, saying, “From the beginning, we’ve also been clear in our belief that we are better together as partners, without a union between us.”

Setting aside the questions of tension at the bargaining table, do unions really improve the lots of those they represent? That depends on whom one asks, and even then, the answer isn’t always clear. 

Redmond points out that there is a rough correlation between a state’s average wage and rates of union participation, with wages being higher in more unionized states. “But if you take a look at the states with the highest union density rate, their costs of living also tend to be higher. So in a relative sense, I don’t know that they’re actually achieving what they say they’re achieving.”

Others see the main benefit of unions as less about money and more about working conditions. “Primarily, what unions provide is a voice in the workplace in a dispute with your employer. Without that, you have to hope that your employer has the kindness to treat you well. But with a union, you don’t have to rely strictly on kindness,” Philips says.

In sectors such as food service where labor often accounts for up to 40 percent of overhead, improved wages and benefits negotiated across the board by unions will likely manifest as higher prices—or maybe not. “It could be that the result of those increased wages is increased productivity, as workers stick around for a year or two, which offsets that increased wage and leads to a better experience for the consumer,” Philips says.

One constituency that has shown to fare poorly when a company sees union participation rise is shareholders. An authoritative study on the impact of increases in union membership on the share price of public companies shows that, in 1998 dollars, each additional union member erases $40,500 (about $74,000 today) from a company’s equity value over the 15 to 18 months following a successful unionization vote.

The 5,700 Starbucks union members added to the rolls in the 12 months following the August 2021 announcement that the first Starbucks store intended to organize would be predicted to account for a loss of $420 million in shareholder value. That’s plenty, but not much compared to the roughly $50 billion in market cap Starbucks lost over the same period. At least one analyst has blamed the tumble in SBUX shares in part on the company’s handling of the unionization push.

Lawson, who has grown disillusioned with what he sees as the decidedly regressive labor policies of seemingly progressive companies such as Starbucks and Amazon, has a more personal explanation that calls out soon-to-be-former Starbucks CEO Howard Schultz. 

“Every time Howard opens his mouth, the stock hurts,” Lawson says. “It’s a problem for these companies that pretend to be progressive and then union bust because all it does is flush their image down the drain.”

What does the future hold for this moment in the sun being enjoyed by organized labor? According to Philips, that depends on something which, on its surface, would seem to have as little to do with unions as a new virus-jumping species in a far-off land.

“The question is, will the Federal Reserve raise interest rates that slow the economy down and raise unemployment that then turns the table on who has the upper hand in the labor market? If that happens, you won’t be hearing much more about union drives.”