Starbucks announces 100 percent gender, racial pay equity for U.S partners, sets global commitment

Starbucks has reached 100 percent pay equity for partners of all genders and races performing similar work across the United States, the company announced Wednesday. 

“Roughly 10 years ago we began serious work to ensure women and men – of all ethnicities and races – are compensated fairly at Starbucks,” said Lucy Helm, chief partner officer at Starbucks. “This accomplishment is the result of years of work and commitment.”

Helm, who will discuss the announcement on stage at the Starbucks 2018 Annual Meeting of Shareholders in Seattle, said the company will now work “with deliberate speed” toward closing the gender pay gap for all partners in company-operated markets worldwide.

In the United States, women are paid an average of 80 cents on the dollar compared to men. The gender pay gap is even greater in retail, where women make an average of 70 cents on the dollar compared to men, said Helm. It could take until 2119 for the U.S. to close the gender pay gap, and even longer worldwide, according to the American Association of University Women. In the hopes of speeding things up, Helm said Starbucks is publicly sharing the principles and tools the company used to reach this goal in the United States in the hope that other employers will join in working toward pay equity.

“We believe it is important to encourage others to join us in recognizing the importance of this issue, not just for our partners, but for women all around the world,” Helm said.

Starbucks will encourage multinational companies to achieve global gender pay equity – with the support of equal rights champion Billie Jean King and her Leadership Initiative (BJKLI) and leading national women’s organizations, the National Partnership for Women & Families (National Partnership) and the American Association of University Women (AAUW) – by sharing the principles and tools the company uses.  

King said she finds today’s pay equity news from Starbucks exciting.

“I’ve been pushing for equality for as long as I can remember, and my hope is that one day, true pay equity will be achieved,” King said. “There are a few voices who have been at the forefront of this effort and I hope many will join them to press for greater progress.”

Once the top-ranked tennis player in the world, King has used the podium of her remarkable athletic achievements (39 tennis Grand Slam titles, for starters) to advocate for gender equality and social justice. When she was 29, in 1973, she famously won a tennis match against 55-year-old Bobby Riggs billed as the “Battle of the Sexes,” a moment that inspired the 2017 Golden Globe-nominated movie of the same name.

“For companies, I think the solution is simple: equal pay for equal work. We don’t have to make it more complicated than that, and several companies have already proven that pay equity is achievable,” King said. “For those seeking jobs, I would say be your authentic self and bring all of yourself to work every day. Progress is happening, even if it is moving more slowly than some of us would like. We need to stay focused and continue to advocate for what is right.”

Kimberly Churches, chief executive officer of the AAUW, said it has been encouraging to see Starbucks take a leadership role on pay equity as well as other benefits for its partners.

“A lot of companies espouse values like fairness and pay equity, but those values end up framed on a wall and not always put into practice,” said Churches, in response to Wednesday’s announcement. “Starbucks is not only talking the talk but walking the walk, and that sets an example – not only for the retail industry, but for all employers, nationally and globally.”

Kathy Calvin, president and chief executive officer of the United Nations Foundation, said it's time to change the status quo when it comes to equal pay.

"Equal pay is critical for gender equality worldwide. Starbucks has demonstrated its leadership by sending a strong signal that it’s time for bold action," said Calvin. "The UN Foundation looks forward to engaging with Starbucks and other leaders – in the private and public sectors – to change policies, expectations and the status quo to reward the contributions of women and men equally. It is past time to end discrimination against women."

Debra L. Ness, president of the National Partnership, said being transparent and accountable in reaching and maintaining pay equity across gender and races in the U.S. is a tremendous achievement, and the fact the company is willing to expand that commitment to reaching gender pay equity across the globe is “truly extraordinary.”

“It’s really a reflection of Starbucks' leadership in creating fair, equitable and family friendly workplace policies that can be a modeled across the retail and really all industries. Starbucks is a real trailblazer in the retail industry. We couldn't be more enthusiastic,” Ness said. “It's the kind of leadership this country sorely needs in order to change our culture as well as our policies and practices in the workplace. In my mind, it shows a genuine commitment both to its own employees, and to the communities it serves.”

Ness said in her mind, equal pay is an important piece in an array of benefits she sees Starbucks using to contribute to the well-being of its workforce, things like health benefits, college education and access to paid sick days. 

“If you look at Starbucks policies’ and ongoing commitment in the last few years and going forward, you see a real dedication to helping its workers achieve economic opportunity, promoting the well-being and economic security of families, and ensuring women in this country are able to operate as equal members of workforce and full members of society,” Ness said.

The milestone and the muscle

Sara Bowen, an attorney who leads Starbucks Inclusion, Diversity, Equity and Accessibility (IDEA) team, has been working on pay equity for years – in some ways, her quest for equality began in childhood. Bowen grew up in northeastern Wisconsin, where some viewed her Asian features as unacceptably different. At school and summer camps, it wasn’t uncommon for her to endure racial slurs, taunting and bullying.

“Those were formative experiences. I developed a really urgent sense of the need for justice and equality,” Bowen said.

In high school, she found mock trial, and her team competed nationally. She started to see that a career in law could mean righting wrongs and changing the systems that continued to hold certain populations back. She knew by her second year at Stanford Law School that she wanted to be an employment lawyer to practice anti-discrimination law in the places people find economic empowerment.

At Starbucks, she and her team have been working for years to develop the practices and tools that help to close the wage gap – a big milestone for any company, but especially a retailer. Bowen compared achieving pay equity to making exercise a long-term habit.

“It’s a huge muscle to build. And even when you reach a pay equity milestone, you have to keep working at it. That’s why we said our goal is to achieve and maintain pay equity,” she said. “Our real focus, though, is not on the number, but on the behaviors and systems that drive equity.”

Today’s announcement is the result of years of analysis, innovation and commitment. Beginning with a company-wide compensation study in 2008, Starbucks has run regular checks on partner compensation to identify and address any gaps.

During this time, the company has created a host of tools and best practices for preventing disparities – such as a calculator to objectively determine target starting pay ranges based on a candidate’s experience. Raises and bonuses are also statistically analyzed before they are finalized to ensure systemic bias doesn’t creep into the process.

“We tried to create tools to help us approach pay in a consistent and objective way, and remove the kind of subjectivity that can lead to pay bias,” Bowen said. “These tools affect hundreds if not thousands of pay decisions every year. This work has always been about our partners – and our commitment to create an equitable environment where everyone can flourish and be valued. This is a complicated issue, and it is not about one single moment, but about the ongoing work to make equity a reality.”

Bowen said Starbucks has also stopped asking job candidates for a salary history to avoid “importing” pay inequities.

“One of the most important things to get right is starting pay,” Bowen said. “If a woman comes into a company low, she tends to stay low. If a job candidate comes to Starbucks making 70 or 80 cents on the dollar, and we use that as the basis for her pay at Starbucks, we simply import gender inequality into our own system. Prior salary can be tainted and should not dictate how we pay our partners.”

In addition to not asking candidates for a salary history, the company will now provide the pay range of any given role to U.S. job candidates who ask. Bowen said Starbucks is trying to make sure there’s a culture of transparency, one in which partners can ask about or discuss wages without fear of discrimination or retaliation. “I want our partners to know what we’re committing to so they can hold us accountable,” Bowen said.

In a large company where compensation and hiring decisions are made by many people in many places each day, maintaining pay equity requires ongoing work – educating managers, empowering job seekers and performing regular analyses of compensation and rewards data. The company can be at 100 percent but lose ground when hiring someone who comes in at a higher salary than a female counterpart.

“This work is complex and requires constant vigilance and innovation. We’re fighting against centuries of systemic bias that we can’t solve alone.  We must continue to break down the barriers that have created the current pay gap, and partner with others to drive the same change in their organizations so together we create a cultural shift.”

The ripple effect of fairness

Pay equity is a complex issue that requires analysis and investment to achieve and vigilance to maintain, said Helm, but it has far-reaching benefits, and not just for employer and employee.

“It’s not simply taking what one individual person makes and making them whole. It’s more systemic than that,” she said. “[The wage gap] can feel insurmountable, but it’s immensely solvable.”

The AAUW is excited to be working for pay equity for that very reason, Churches said – the potentially immense ripple effect pay equity can have, strengthening families, communities, the tax base and the economy as a whole.

“Achieving parity for gender, race and ethnicity is an opportunity for us as a nation to become stronger,” Churches said. 

Helm used to assume that when companies remained silent on pay equity that meant they were already doing the right thing. That assumption has since changed, which is why it’s important for Starbucks to make today’s announcement committing to equal pay for equal work.

“When people are paid equally, it speaks to status and how they feel about themselves,” she said. “They don’t feel less than. That’s the ripple effect.”