A Look Inside This Year’s Biggest U.S. Unionization Efforts

AFP via Getty Images

Key Takeaways:

  • Starbucks employees at a Buffalo, New York-area store voted to unionize this week, making a historic first for the company’s employees
  • Amazon

    and Activision

    Blizzard are also facing the prospect of union votes this year following labor shortages and worker unrest 
  • Investors looking to make a profit may want to stay away from stocks undergoing unionization efforts until the dust (and stock price) settles 

This week, employees at a Buffalo, New York Starbucks voted to unionize. The affirmative vote is a historic moment for Starbucks employees, one that unions herald as a “symbolic” win for the union movement. 

But Starbucks is far from the only company facing workers’ cries to unionize this year. Across the country, workers from all industries are considering similar steps to combat stagnant wages, meager benefits, and poor working conditions. 

Inside the Starbucks union vote

The Starbucks union win was announced Thursday by the National Labor Relations Board (NLRB). In August, employees filed for a union vote after their complaints about understaffing, insufficient training, and equipment problems went unaddressed. 

After months of campaigning and fighting for the vote, the tally ultimately came out 19-8 in favor of a union. If no objections are filed in the next five business days, the results could be certified as early as 16 December. The unionized employees will join Workers United, an affiliate of the much larger Service Employees International Union. 

This one location isn’t the only Starbucks store looking to go union. Two more Buffalo-area stores have already held votes to unionize this year, though both are currently in contention. (In one case, the union plans to challenge a failed vote of 12-8 against; in the other, both sides have challenged seven ballots.) 

Still, that didn’t stop three more Buffalo-area stores from filing for a vote in November. Another location in Mesa, Arizona recently filed a petition, too. And workers in the Buffalo campaign have also reported receiving inquiries from Starbucks workers around the nation, suggesting that interest in unionizing is widespread amongst company employees. 

Starbucks’ response to the union vote

This isn’t the first union campaign that Starbucks has faced in the last two decades, though it is the first successful one. (Note that some of the company’s 4,000 non-corporate-owned locations are unionized.) 

Employees at the Buffalo store pushed through the vote despite Starbucks’ insistence that its stores function best when they can work with employees directly. Management also highlighted that the company offers some of the best benefits and wages in the industry. 

Throughout the campaign, employees also reported that the company seemed like it was trying to dissuade workers from voting pro-union. Amongst other claims, workers reported:

  • Being questioned about operational challenges from a swarm of higher-ups who appeared in local stores
  • A conversation with one district manager from Arizona who said the company asked her to go to Buffalo to “help save it” from unionization
  • Temporary store closures in some areas and excessive staffing in others

Additionally, Starbucks originally asked the labor board to hold one vote for all 20 of its Buffalo stores. The board rejected the request, stating that store-by-store votes were more appropriate under current labor laws. 

Starbucks counteracted claims of impropriety by stating it dispatched management and temporarily closed locations to mitigate short-staffing and training problems. The company did affirm that it remodeled some stores and brought in additional staff to cover for callouts. 

Starbucks President and CEO Kevin Johnson sent out a letter to employees this week, reminding them of the company’s benefits. These include paid parental and sick leave and free college tuition at Arizona State University. Last month, Starbucks also announced a pay increase to $15 by hour by next summer, with wages up to $23 an hour in some areas. 

Starbucks isn’t alone.

Starbucks’ union vote comes at a time of heightened worker unrest in the United States. The pandemic gave many workers time away from their offices to rethink their work-life balance and life goals. This, as well as concerns about Covid-19, gave rise to the nationwide labor shortage that has given some employees a bargaining chip to negotiate higher wages and better benefits. 

But for some, it hasn’t been enough. Just this week, striking workers at Kellogg Co.

rejected an unsatisfactory contract offer. This last fall, thousands of workers walked out of their jobs at Deere & Co.

to strike for better conditions and wages. 

Amazon workers at a Bessemer, Alabama warehouse also voted for a union this year, albeit unsuccessfully. However, that saga is far from over: workers were recently granted a redo by a regional director of the NLRB. The decision follows an agency review that found Amazon improperly pressured warehouse staff against unionization. Accusations include:

  • Holding mandatory anti-union meetings
  • Threats of lowering wages or shutting down the facility if the vote passed
  • And telling staff that their union dues would be wasted on fancy vacations and cars

The judge also took umbrage with Amazon’s insistence on installing a new USPS mailbox to collect ballots on their private parking lot. Amazon erected a corporate-branded tent around the mailbox, leading some workers to believe the company wanted to monitor the vote. 

Activision Blizzard workers are also getting in on the drive to unionize. This week, workers set up a GoFundMe “strike fund” to support employees striking against years of sporadic layoffs, stifling working conditions, and reports of sexual harassment and gender-based discrimination. If Activision’s employees push through a vote, it will mark a first for the video game industry. 

What does unionizing mean for business?

Unionizing can bring some major changes to the way a business runs – and its balance sheet. Historically, some businesses have fought the drive to unionize because it places an undue burden on their operations. Many also protest the rise in labor costs that often occurs when unions negotiate for pay raises. 

There’s often truth beneath these claims. Typically, unions fight not only for better pay and benefits but also higher safety standards. This can slow production, jack up costs, and drag down a company’s bottom line. 

The impacts can also trickle down to investors. When revenue streams take a hit, investors may balk and reflect their displeasure by exiting their stock positions. And companies that pay dividends may have to lower per-share payments as their costs rise and profits shrink. 

At least one research paper also suggests that unionized companies have a higher chance of future stock price crashes. Researchers blame this effect on unionized companies’ practice of reporting lower accounting information to “preserve bargaining power” in negotiations. 

However, these adverse effects happen less when the firm has more institutional ownership or analyst coverage to increase external monitoring. And an opposing research paper suggests that unionization can decrease the risk of stock crashes by requiring the company to manage its resources effectively, limit over-investment and control risk-taking. 

How should investors respond when a union vote is on the table?

Investors seeking strategic investing decisions may be best off waiting for a union vote to pass before investing. 

Historically, stocks show a tendency to drop after a pro-union vote as investors expect their profits to shrink. And though companies that reject unionization may see their stock price climb, the hype is often short-lived. Many investors back out when they realize there’s no substance to the sudden price hike, leading the stock to drop again. 

In this case, if you want to make money on Starbucks, Amazon or Activision Blizzard, waiting until the vote passes and media attention dies down may be the best strategy. A cool-down period gives their stock time to stabilize so you can get in when the price is low. (And avoid a sudden loss when an anti-union stock’s price drops as investors leave.) 

But instead of selecting your next investment based on short-term union vote impacts, why not let super-smart AI think for you? With Q.ai’s AI-powered investing, you can Hack Wall Street in just moments. 

It’s quick and easy to get started – and best of all, there’s no research required!

Liked what you read? Sign up for our free Forbes AI Investor Newsletter here to get AI driven investing ideas weekly. For a limited time, subscribers can join an exclusive slack group to get these ideas before markets open.