Smart Business: Reviving the American Dream

By HOWARD SCHULTZ, chairman, president, and CEO of Starbucks, who says his goal has been to serve a great cup of coffee and build a company with a conscience.

My mother was always a strong woman and a fierce believer in the American Dream. She taught me that if I worked hard, I could achieve anything I set my heart on. But I also learned firsthand that sometimes, despite our best efforts, survival itself becomes the challenge. I experienced that harsh reality growing up in New York.

I was 7 years old when I walked into our small apartment in a Brooklyn public housing project and was surprised to find my father stretched out on the couch. It was winter, and he had slipped on the ice and broken his leg and hip. He was a driver for a diaper delivery service, and when he couldn’t work, they fired him. We immediately had more bills but no more paychecks—not to mention no health care coverage, no workers compensation, no severance, and no insurance. What’s more, my mother was pregnant. Unrelenting stress weighed on my parents as they struggled to care for their kids.

The memory of that experience impelled me years later to build the kind of company my dad never had a chance to work for—a company that values its employees and shows them respect. It is why, after I became head of Starbucks Coffee Company in the late 1980s, we began offering some key benefits not just to our full-time partners—which is what we call our employees—but also to our part-timers who work as few as 20 hours per week. For more than two decades, these benefits have enhanced and even saved the lives of countless Starbucks partners, more than 60 percent of whom are women working full time or part time in our stores.¹

Back in the 1980s, few part-time workers had access to health care coverage, and in fact, soaring health care costs had forced many corporations to cut benefits for all employees.² But instead of looking at health coverage as an extravagant expense, I saw it as a core strategy: Treat people like family, and they’ll be loyal and give you their all. I was right.

Our partners’ stories speak volumes. Take Kara Reuter, a 35-year-old barista who became a store manager in Auburn, Washington. In 2013, she underwent a double mastectomy in her battle against breast cancer. Her hospital bill for the surgery alone hit $117,000—a mind-boggling amount that could have plunged her family of three into economic peril. But with her health insurance from Starbucks, Kara only had to pay $1,000. The relief she received from this “financial and emotional safety net”—as she described her coverage—allowed her to focus on her recovery and her family.

Later, in the early 1990s, we became one of the first corporations to give both full-time and part-time employees a stake in the financial success of the company in the form of Starbucks equity. We call it “Bean Stock,” and it has made a big difference in many lives.³

Maritza Aubourg, for instance, began working as a barista in New York City when she was 24 years old. She initially used her Bean Stock to help pay for her associate’s degree. In 2006, after rising to store manager, this wife and mother of two cashed in $50,000 worth of her accumulated Bean Stock for a down payment on a four-bedroom house. The child of a single mother, Maritza became the first homeowner in her family. “I wanted something better for my own two daughters just like my mom wanted something better for me,” she said.

Every year, hundreds of our partners share similar stories.

I have learned that granting hallmark benefits such as health care and company stock is much more than doing the right thing for our people. These are smart business moves and corporate investments that bring huge returns—increased partner loyalty, engagement, productivity, brand value, and ultimately, top- and bottom-line growth.

It goes even further than that. As our country goes through unprecedented social and political pressures and upheaval, these types of employer-provided benefits have become, to my mind, mandatory. That’s because the prioritization of partisanship over citizenship in Washington, D.C., is resulting in a historic fracturing of the programs that have long lifted people out of poverty, sustained the middle class, and served as safety nets for those unable to help themselves. The results are evident: high unemployment and reductions in social services for women and families. Our country is experiencing dwindling contributions to charitable organizations and seeing retirement become an elusive goal for many. These are just some of the problems putting millions of Americans—women and single mothers in particular, as this report makes clear—at exceptional risk.

It is clear to me that part of the solution must come from the private sector. Today’s companies, with their deep fiscal and intellectual resources, can step in and provide their employees with softer landings when their lives take unfortunate turns, helping ensure that their people have opportunities to achieve their full potential during good times and bad. In addition to staples such as health care, competitive wages, profit sharing, skills training, and educational support, businesses should also find meaningful ways to serve our communities with the same vigor that we serve our customers.

Starbucks is not perfect on this front, but we continue to work on it. In 2013, despite anticipated changes resulting from the nation’s new health care law, we have refused to cut benefits for our partners. We are also helping those outside our own corporate family. In response to the country’s high unemployment rate, we started Create Jobs for USA with a $5 million seed grant in 2011. This campaign transforms every $5 customer donation into job-creating and job-sustaining financing for America’s disadvantaged small businesses and community-development organizations.⁴ The goal is to stimulate economic growth in local communities, and the success stories are pouring in.

Cynthia Duprey in recession-devastated Barre, Vermont, is an example. Massive flooding destroyed her house along with her home-based businesses, washing away Cynthia’s contribution to the family’s income. Jobs in Barre were scarce, and banks were unwilling to lend. But she was able to secure a $40,000 loan from a community-based lender funded in part by Create Jobs for USA. Today, Cynthia’s business—Next Chapter Bookstore—is hiring. All told, Create Jobs has raised $15 million, which translates into approximately 5,000 U.S. jobs either saved or created.⁵

In addition, our own partners started the Cup Fund in 1999. Administered by Starbucks and supported with partner contributions and fundraising, it provides a safety net for employees who need help through periods of extreme financial need.⁶

The private sector can also instigate change by doing what we already do within our own organizations: develop great leaders. Our country needs more people working in our communities on the brink, as volunteers or leaders of community-focused organizations with the skills, the knowledge, the confidence, and the ideas to equip citizens—from hourly workers to business owners—with the tools they need to further help themselves.

The Los Angeles Urban League’s Business Institute is one example of how trained leaders can benefit underserved communities. Their youth entrepreneurship program teaches business skills to kids ages 11 through 18 to help unlock their entrepreneurial creativity. Program graduates have started companies that employ local residents and funnel earnings back into neighborhood not-for-profit organizations.⁷ The institute is one of several youth-leadership initiatives that Starbucks supports. When we provide our communities with the quality of leadership we demand for ourselves, we all win.

My mother was right: The American Dream is not dead. It just needs a lifeline. As business leaders, we have the power and the responsibility to revive the American Dream by giving hard working people such as Cynthia, Maritza, and Kara first and second chances. We cannot be bystanders. We owe it to America to lead our businesses through the lens of humanity with intelligence, creativity, and, above all, compassion.