Starbucks, the world’s biggest coffee-shop operator, is raising its average pay to nearly $17 an hour in a bid to attract and keep baristas amid a stubborn U.S. labor crunch.
The new wages will go into effect next summer, with hourly rates planned to rise to a range of $15 to $23 across the country. The Seattle-based coffee chain is currently paying about $14 an hour on average for its U.S. hourly staff. Starbucks says it has spent more than $1 billion on higher wages and benefits in the last two years.
Restaurants of all sizes are fighting through a stubborn labor shortage across the U.S. Rivals including Chipotle Mexican Grill and Domino’s Pizza have said a lack of employees is starting to weigh on sales, with Chipotle also announcing a wage increase earlier this year. McDonald’s on Wednesday said that the labor crunch was causing slower service times in its restaurants.
Starbucks, which is scheduled to report earnings on Thursday, has added recruiting and training positions in the U.S. and is using a $200 referral bonus to attract more help.
The company is also testing an app that would make it easier for baristas to swap work shifts. Additionally, it’s trying to improve store layout and brewing equipment for cold beverages to ease the workload on employees, Rossann Williams, Starbucks president of North America, said in a letter to workers.
The pledge to increase pay follows a push to unionize in Buffalo, New York. Earlier this year, workers at three Starbucks locations petitioned to join Workers United, an affiliate of the Service Employees International Union.
In late September, the Starbucks workers from Buffalo appealed to the National Labor Relations Board to authorize the right for the three shops to hold a union election. During a hearing with the NLRB, Starbucks’ lawyers argued the entire region should hold a labor vote, since there are many similarities between its 20 locations.
A decision from the NLRB could come as early as mid-November. If the NLRB sides with the company, the union would need support from a majority of workers in the Buffalo area to organize.