Starbucks CEO: We spend more on health care than coffee

Posted by Dave and Dennis on September 15th, 2005 at 10:56pm

By MATTHEW DALY
Associated Press writer

WASHINGTON — Starbucks will spend more on health insurance for its employees this year than on raw materials needed to brew its coffee, Chairman Howard Schultz said Wednesday as he decried a health care crisis that could soon overwhelm U.S. businesses.

Schultz, whose Seattle-based company provides health care coverage to employees who work at least 20 hours a week, said Starbucks has faced double-digit increases in insurance costs each of the last four years.

“It’s completely non-sustainable,” he said, even for companies such as his that “want to do the right thing.”

Schultz made the comments Wednesday at a meeting with Sen. Patty Murray, D-Wash. and Rep. Adam Smith, D-Wash. The event was one of several organized by Schultz and other executives to call attention to health insurance costs.

“I would hope congressional leaders put this at the front of their agenda,” said Schultz, noting that most of the estimated 45 million uninsured Americans have jobs.

Later, Schultz and other executives, including Costco CEO Jim Sinegal, Dawn Lepore, president and CEO of Drugstore.com, and Ivan Seidenberg, chairman and CEO of Verizon Communications Inc., attended a health care “summit” at a Senate office building.

Schultz said his passion about health care dates to his youth in Brooklyn, when he watched his father struggle to hold down several low-wage jobs — none of which included health insurance.

“I wanted to try and build the company that my father never got a chance to work for,” Schultz said.

The rising cost of health care has made that dream increasingly difficult, he said. The company expects to spend about $200 million this year for health care for its 80,000 U.S. employees — more than the total amount it spends on green coffee from Africa, Indonesia and other sites.

Starbucks has about 100,000 employees worldwide, Schultz said, including about 65 percent who work part-time. Increasingly, the company is hiring older workers, who are attracted in large part by the company’s generous benefits, he said.

Lest anyone get the idea the company is altruistic, Schultz said its benefits policy is a key reason Starbucks has low employee turnover and high productivity — facts he said were reflected in the company’s increased stock price, which has more than doubled in the past five years.

Schultz declined to endorse any specific legislation, saying his goal was to raise awareness of the problem in a bipartisan fashion. But whatever solution is adopted, he added: “Every single American needs to have access to health insurance — full-stop.”

Murray, an old friend, called Schultz’s passion on health care refreshing, and said she hoped it would spur congressional action.

“I was here for the health care war” in the early 1990s, Murray said. “The problem hasn’t gone away.”

Murray and Smith also praised Issaquah, Wash,-based Costco and Bellevue, Wash,-based Drugstore.com for employee-friendly policies.

Under General