Starbucks CEO Schultz bucks Obamacare cuts

He vows to maintain workers' hours and benefits, saying some companies are using the law as an excuse.

By Aimee Picchi Aug 27, 2013 10:55AM

A pedestrian walks past a Starbucks Corp. store in Toronto, Ontario, Canada, on Tuesday, July 23, 2013. (© Brent Lewin/Bloomberg via Getty Images)If you like your coffee with a shot of support for Obamacare, look no further than Starbucks (SBUX).

While the Affordable Care Act has been vilified by some business leaders who worry about the law's impact on the bottom line, Starbucks chief executive Howard Schultz said his company will maintain workers' hours and benefits as portions of the law goes into effect next year. The provisions covering employer-provided health insurance have been delayed to 2015.

Schultz also implied that businesses cutting benefits are using the law as a pretense to reduce expenses. 

"Other companies have announced that they won't provide coverage for spouses; others are lobbying for the cut-off to be at 40 hours," he told Reuters. "But Starbucks will continue maintaining benefits for partners and won't use the new law as excuse to cut benefits or lower benefits for its workers."

Starbucks rival Dunkin' Brands (DNKN) has been lobbying the government to narrow its definition of a full-time worker, which would ease its requirement to provide health insurance to workers. Under the Affordable Care Act, a full-time employee is defined as working at least 30 hours a week, but Dunkin' Brands and other companies are pushing to get that changed to 40 hours a week. 

With the ACA set to go into effect next year, some businesses are cutting workers' hours to just under 30 hours per week as a way to sidestep that requirement. 

Clothing retailer Forever 21 recently stepped into an Obamacare minefield when consumers accused the chain of slashing worker hours as a way to avoid providing benefits under the health care insurance overhaul. The clothing company denied that was its motivation.

But other companies are openly citing Obamacare as the reason they're cutting benefits. UPS (UPS), for example, is trimming health care coverage to 15,000 spouses who are eligible for insurance through their own jobs. UPS said the move, which will save about $60 million annually, is tied to higher costs associated with the ACA and rising medical costs in general. 

Larger companies are less likely than small businesses to cut health care benefits under the ACA, according to survey earlier this year from the International Foundation of Employee Benefit Plans. 

Starbucks delivered strong fiscal third-quarter results in July and boosted its full-year profit outlook. It's also busy expanding. Its latest plan involves on rolling out its own line of snack bars and fruit pouches.

The bottom line might be that it's easier to swallow potentially higher health care costs if your core business is growing.

Follow Aimee Picchi on Twitter at @aimeepicchi. 

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Aug 27, 2013 2:16PM
Even Henry Ford, not exactly a liberal, understood that you can't expect workers to buy the products you make unless you pay them a living wage.  It's up to consumers to decide whether to support companies such as Walmart and Forever 21, which apparently don't value their employees, or to support companies such as Starbucks and Costco, which do.  It's unfortunate that all of us who pay taxes are indirectly subsidizing these low paying companies through SNAP, Medicaid, and other government programs that help their poorly paid employees.
Aug 27, 2013 2:28PM
I will continue to buy Starbucks coffee. I've already given up Papa John's Pizza.
Aug 27, 2013 1:49PM
Good for Starbux.  I hope it works out for them.  Rather than sticking it to the little guy like Walmart does...
Aug 27, 2013 2:26PM
The ACA is the mess it is because of Republicans who did everything they could to make it as unworkable as possible so it wouldn't get support for passage to begin with. They knew if they made it what it has become because it would be easier to repeal in the future. The big shocker is the people, that is, 90% of the rest of us WANT affordable healthcare. Yes, those of us who aren't bums laying about Washington DC, living off the public dole and doing nothing but arguing and stirring up trouble for the rest of us are actually smarter than they give us credit for. Money and power cannot buy intelligence, you can't fix stupid.

What we need is a single payer plan that is a hybrid of what is in practice in the UK and Japan. Won't work! You say? We have two working single payer plans already implemented in the US for many decades. The first pays for the health care of active duty military. If you get sick in the military it gets taken care of and it doesn't cost you anything. The second plan pays all the medical expenses for the life long care of millionaire politicians fortunate enough to be elected to congress. If it's good enough for them it's fine for us. 
Aug 28, 2013 8:29AM
If your product is so overpriced, you can afford it, and SHAREHOLDERS don't mind, more power too them.   The typical Healthcare Insurer operates at 5% margin.   Starbucks is 135% margin, which is why their coffee costs so much.  

If healthcare insurers had those margins you would see prices 20 times what they are today...

Typical Picchi-

"Clothing retailer Forever 21 recently stepped into an when consumers accused the chain of slashing worker hours as a way to avoid providing benefits under the health care insurance overhaul."


Anything to go against the great messiah is stepping into a minefield, God forbid free thinkers and independant minds operate against the great one's obamacare.


No Picchi, the bottom line is that Starbucks was granted a year to not have to pay up anything, and then there's the fact that NO ONE knows what will happen come 01-01-14 yet.

Aug 27, 2013 8:28PM
Funny how Shultz has thrown other companies under the bus for taking advantage of the laws to reduce expenses when Starbucks themselves chose not to pay income taxe in the UK until called onto the rug by government and others to pay their fair share.
Aug 27, 2013 1:20PM

Republicans don`t want to see this story.They dream up 100 new lies every day

about Obamacare.

Aug 27, 2013 2:52PM

Any smart businessmen who face competition when selling goods and services to consumers, know that they should never mix partisan politics with business. Still there are plenty of dumb ones out there like people at Forever 21, Dunkin, etc who won't keep their mouth shut, would try to score a political point just to find they had alienated an important part of their customer base and are now watching how revenue slips away to the competition. Good thing is that "true" free Market still rules in America.

Aug 28, 2013 1:55PM
And yet it was this past Saturday that the same liberals were organizing a protest of Starbucks for allowing armed customers in their stores. What a liberal conundrum!!!


Aug 27, 2013 2:34PM

in 1 year, when starbucks raises their prices to pay for the healthcare, these same liberals on here will be crying how greedy starbucks just wants to screw the little guy and make even bigger profits.


lol hey libbies, dont be surprised when the prices go up.  it will be YOU who pays for the healthcare of starbucks employees.  lol enjoy that

Aug 27, 2013 7:58PM
Now I will buy my coffee at Starbucks.  True patriots support American workers and their health needs are essential.
Aug 27, 2013 1:31PM
Not surprising considering they over charge about 200% for a cup of coffee.
Aug 27, 2013 2:24PM
They have already had two rounds of layoffs.  Wow, he lies just like obamy and idiotcare!
Aug 27, 2013 12:10PM

congrats aimee, after years of looking you finally found one company out of thousands that is pro obamacare.


in related news starbucks stock is down today.


Aug 27, 2013 11:12AM

Let's see how that works for them.

Now may be a good time to sell any Starbucks shares you may have lying around.

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