Starbucks in the Ownership Society

Starbucks is a great Ownership Society case study highlighted with its announcement this week of a new college tuition assistance program that allows roughly 100,000 US Starbucks employees without college degrees to enroll at Arizona State University on-line and receive 50% of first two year tuition ($6,500 value/year) and 100% of second two year tuition ($13,000/year).  No strings attached upon graduation.  (Bloomberg: Starbucks tuition assistance story).   The annual present value benefit for this four year program is $9,169, or 46% of a $20,000 annual in-store employee salary.

In 1991, a year before its initial public offering, Starbucks establish a ‘Bean Stock’ employee stock purchase program.  Today according to Starbucks’ 2013 10-K financial report (2013 10-K filing), the stock value of this employee only stock program is $1.5 billion, or $8,165/full-time employee.  In addition, Starbucks matched employee 2013 401(k) contribution at $54 million, or $300/FTE, for total stock value/FTE of $8,465 or 42% of average in-store annual salary.  Starbucks’ college tuition program double-downed on employee development valued now at 88% of average in-store employee salary!

In the evolutionary dynamics axiom of direct reciprocity (I scratch your back, you scratch my back- OS Post: Evolution of an Ownership Society), Starbucks understands in enlightened economic self-interest that happy, educated, and secure front-line team members will best serve customers that can generate customer store loyalty and create competitive advantage.  Employee turnover should also decrease as employees realize emotional and financial fulfillment at Starbucks over competing sources of employment.  Capital and labor both win in a virtuous evolutionarily stable socio economic strategy (“ESS”) based on cooperation, not win-lose competition.  Capital wins in the historical competitive model until labor incites revolution (eg Communism model) or takes control of political power through democratic processes and implements remedy policies (eg Socialism or New Deal progressivism).

My thesis is an Ownership Society that empowers everyone with our two core natural rights, 1) exercise of free choice in all life’s domains, and 2) ownership in the fruits of your labor, is a socio-economic ESS that will reduce income inequality by having more asset owners on Team USA Inc; strengthen personal freedom and independence from government; and solve the fiscal crisis by generating more taxable wealth from work and investment.

Many employers around the country understand the company and shareholder benefits to enfranchising their employees with a vested ownership interest in their labor.

Here are some recent OS posts on the subject:
1.  Facebook employee stock reward program that the power of employee stock ownership as well as the need to fix tax treatment on employee stock options.  We need to reward employees to invest in their futures and places of work, and reduce corporate income tax rates to make America more competitive for business.
2. Power of Employee Stock Ownership Programs
3. Fixing the student debt program ($26,000 avg debt/student borrower). OS Post: Repaying Student Debt

The Ownership Society solution is to empower all workers to own more of the fruits of their labor.  This means dramatically expanded 401(k) matching and employee stock ownership programs including special incentives for lower to minimum wage income workers.

Related Ownership Society posts on Employee Rewards:

1. Proposed Solution: Work
2. Solving Minimum Wage Debate