Starbucks to Boost Wages Starting Next Year

​Starbucks is raising wages for most of its hourly employees by at least 3 percent and enhancing other benefits in a bid to stay competitive, the coffee giant announced Nov. 6.

Starting Jan. 1, eligible U.S. retail hourly workers will see an incremental pay increase of at least 3 percent, with differentiated pay for eligible tenured partners. Eligible employees who have worked at Starbucks for two to five years will get at least a 4 percent increase, and those with five or more years of service will get at least 5 percent.

Starbucks said in a press release detailing the changes that its U.S. hourly retail workers earn an average wage of roughly $17.50 per hour, while barista wages range between $15 and $24 per hour. Total compensation, with benefits, on average totals approximately $27 per hour.

The company's expanded benefits will include new financial well-being initiatives and a reduction in the time hourly employees must work before accruing vacation days to 90 days from one year. Unionized employees will not be eligible for some of the changes.

Starbucks made the moves to stay competitive in a tight job market, as well as to address key priorities and concerns for workers, said Sara Trilling, executive vice president and president of Starbucks North America, adding that company leaders listen to employees when making changes.

"Investing in our partners is what drives our success," Trilling said. "It's what makes us all partners. An important way we do this is by investing in our partners' journey, to bridge to a better future at Starbucks and beyond. This entails engaging with, and listening to, their ideas and feedback while continuing to raise the bar by offering competitive pay and the best benefits package in the industry."

Part of a Larger Trend

Starbucks follows other large employers in beefing up compensation and benefits to attract and retain employees: Amazon in July rolled out a slew of new benefits for its employees, including an emergency savings fund, a mental health app and financial counseling. Also over the summer, Chobani, the Norwich, N.Y.-based food company, boosted its minimum starting wage for all full-time employees in manufacturing and corporate hourly positions to $20 per hour, from $18.50, and announced it was raising its 401(k) match and adding a child care and elder care benefit later this year. More recently, Bank of America in October raised the minimum wage for its U.S. employees to $23 an hour, up from $22 an hour.

Although some sectors, such as tech, have experienced significant layoffs, the job market in other sectors remains highly competitive, and organizations are considering ways to sweeten the pot.

Compensation moves continue to be in the spotlight, especially as employers plan for 2024 budgets. Several surveys have forecasted competitive pay increases for next year, although some analysts say raises will be less than in 2023 given some companies' financial concerns.

A June report by consulting firm WTW, which surveyed more than 2,000 U.S. organizations, found that employers are budgeting an average salary increase of 4 percent in 2024. Research from Seattle-based compensation software firm Payscale found that U.S. employers are budgeting for 3.8 percent pay increases next year—down slightly from this year's average 4 percent bump. Mercer in October predicted the smallest increase, finding that employers in the U.S. plan to raise their compensation budgets for merit increases by 3.5 percent for 2024, compared to the 3.8 percent they awarded in 2023.

Lauren Mason, senior principal for career at Mercer, said last month that while preliminary data shows that compensation increases are declining slightly, they are still "well above pre-pandemic levels." That reflects the ongoing tightness of the labor market and low levels of unemployment, she said.