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Welcome everyone. You're listening to After Hours.
I'm Felix. I'm me here, and we are delighted to have Charlotte Howard from The Economist here again.
Welcome Charlotte. Great to have you.
Thanks for having me again.
So I'm curious, have you guys run into inflation in your lives?
Oh, the scary eye words.
Well, I'm just curious if it's starting to show up.
Because I have confessed.
I went to Blue Bottle Coffee and had my pour over.
And it was already at the boundary of kind of crazy at 450, and it went to five.
And did you buy it?
I did. But I've got to say, I was thinking pretty hard about switching over to Homebrew.
When your coffee is more expensive than your sandwich, you start to reconsider your choices.
Something is not quite right.
Something's not right, exactly.
I see it in milk. A half gallon of milk is about a dollar more than it was last year for me.
And I've noticed in gas stations, I don't drive that often, but when I do, those prices are up pretty dramatically.
I was looking yesterday at some of the numbers from the Commerce Department, and they were up about 26 % in February compared with January.
The gas prices conversation is interesting to me, because it's about between three and 4 % of pre -tax income.
So, it's significant, but it's not like rent.
It's one of these prices that is much more visible, much more salient than the numbers would lead you to release.
I think it's literally visible, right?
I mean, you drive by and they have those huge numbers on a huge sign.
The other thing about gas prices that's weird is in real terms, they're not as high as people think they are.
If you kind of looked over the last 30, 40 years, it's not as if it's a peak, at least in real terms, but yet Felix, to your point, everybody loves to talk about it.
I'm curious what you guys brought to talk about today.
Charlotte, what'd you bring?
I want to talk about Starbucks for two reasons.
Because of the prices.
Coffee prices. One is that Howard Schultz, who was Starbucks founder, is becoming chief executive again for the third time.
And the other reason is that it's dealing with this big union push.
And so, it's an interesting window into how companies are thinking about labor in this market.
Really interesting.
Sounds great. What do you have for us, me here?
So, I wanted to talk a little bit about drugs.
You mean drugs other than coffee?
Yeah, exactly. There's always a theme, we just have to find the theme in the show.
In this case, it's drugs and coffee.
So, there's been a set of developments on drug testing and drug use in the workplace.
We've seen lots more acceptance of drug use in the workplace, even relative to last year.
So, I want you to get your thoughts about that.
All right, let's do it.
All right, Charlotte.
So, Starbucks. What struck you?
Starbucks. It's really interesting for two reasons.
The union push that it's facing is unlike anything in its history.
And I think it's a really interesting window into how a company can meet the demands of various stakeholders, especially for a company that has long made corporate values.
A big part of its identity.
And the second is just as a window into founder culture.
So, Howard Schultz is 68.
And you think about Bezos and Musk and Zuckerberg, are we going to have Mark Zuckerberg at 68, which would be in 2053 as interim CEO of Meta?
It's kind of an interesting question about how founders do or don't move on when their companies are in a need of help.
Yeah, so let me just pick up on the CEO transition issue.
So, that part of the story is really interesting to me because it looks terrible in many ways.
So, Kevin Johnson had been CEO for five years.
He says that he gave them notice a year ago that he wanted to go.
And then they act surprised.
And the hour before the shareholder meeting, the guy who is a founder who had been CEO twice before is called back in.
And it's a terrible look in so many ways.
Where's the talent pipeline at Starbucks?
Why are there not people who can become CEO?
What's really behind this change?
And how do you convince the next CEO to come in when Howard Schultz is like always hanging around in the background?
On the other hand, if you look at shareholders response, they were pretty happy to see it back.
They loved it, no like a 5 % gain.
Maybe the two topics, they're linked.
If you think about Starbucks not doing great at this time, the stock is down 25 % or so this year.
In part COVID related, in good part China related, that's now 15 % of profits.
China suffers, Starbucks suffers, but more central for the future of the organization is this relationship between Starbucks and its employees.
This is the company that emphasizes where people positive.
And Schultz is the original hero, that's his program.
That's how he imprinted the company.
I was looking through some things that he's said in the past about the company historically.
In his book, he says of the partners, if they had faith in me and my motives, they wouldn't need a union.
It's almost an emotional trusting relationship that he sought to cultivate between Starbucks and its many thousands of workers.
And that's not empty.
He did give health insurance for people who worked 20 hours a week or more.
He did provide a range of different types of benefits that other companies weren't.
But I think what you see now happening at Starbucks is just companies being held to a different standard.
That's in part because of this really tight labor market we're in.
And then also just this new generation of workers.
If you look at polling, they have much higher shares of young people who are supportive of unionization.
And so it's just a really different time than it was when he was first starting out and any kind of benefits offered to workers felt like a huge act of benevolence for which he should be rewarded.
There are two things that really surprised me about the success of the unionization efforts, Charlotte.
The first is that the companies that get targeted are among the most generous companies with their workers.
So if you look at what Starbucks did during the pandemic, they had catastrophe pay, they extended childcare, they had extended mental health benefits.
And their starting wages vary quite a bit, but they're anywhere between 15 and $23.
As you rightly pointed out, this is not a company where everything is just talked.
And then the second thing that I find very interesting is the timing.
I would have thought if you live through really difficult times, then unionization is super valuable.
But if you can get much better pay just by hopping from one job to the next, I would have expected that that's actually not great for unionization efforts.
Why is it that unionization efforts seem to be more common and more successful now?
I think there are a few things at work.
And actually in January, I went up to Buffalo in a snowstorm and met with some of the organizers out there.
So I asked them about this.
A few things are happening.
One is that in the age of social media, it's just easier to organize.
It's easier to get your word out than these young people are really used to doing that.
And frankly, it's less expensive.
Another thing is that a lot of what they talk about is not just pay or health insurance, but working conditions.
Feeling like you're under too much pressure to produce incredibly quickly without the right support.
That they feel like the way that they get feedback, the way that they're managed is incredibly impersonal.
And it makes them feel like an automaton who's not valued.
So those are some of the complaints that are made.
And I think that when you add up both that nature of complaint, as well as the ease with which you can communicate your grievances and talk to other staff about why a union might help to remedy these problems, then those add up into giving some of these drives more success.
I think there are so many things about this story that are compelling to me.
The first is it has been successful, but just to be clear, the numbers are still relatively small.
So maybe six stores have unionized, there's another hundred that are in the process, but this is in the scope of thousands and thousands of stores, but they're reacting in this really immediate way.
And the reason why this is happening now, Felix, I think it's the right question.
One is labor market power.
And then the second is I do think this broad corporate purpose movement is something that is now kind of the rubber is hitting the road, as it were.
As you put it, Charlotte Schultz used to be able to say, I'm not anti -union, I'm pro Starbucks, like that was his shtick.
But if your espoused values all are about employee empowerment, then it is very hard to say we're not that positive about unions.
And similarly, you now have investors at Starbucks, including Trillium most notably, who are advocating as investors for a more neutral stance for Starbucks vis -a -vis unions.
So now you have investors, now they're not necessarily terribly large, but they're vocal, who are saying, actually, I want you to be neutral.
So the entire purpose movement is moving in a direction, which is really pushing companies into choices that I don't think they realized they were gonna be facing when they signed up for the movement.
Howard Schultz gives these great speeches.
It's one of his specialties.
Heartwarming, right?
Yeah, they are. I mean, I've never interviewed him directly.
I heard him speak when he was thinking about running for president.
And he talks about his origin story and growing up in the projects in Brooklyn and how he wanted to build a company with good values and that he offered partners health insurance, not because the government or a union was demanding it, but because it was the right thing to do.
And this was the kind of company that he wanted to build.
And when I talked to some of these organizers in Buffalo back in January, their response was basically, big whoop.
He had come to Buffalo and given this speech and it did not go well, it's almost like they're speaking a totally different language.
And this type of speech that a decade ago might have really helped set him apart from other CEOs doesn't really land in the same way anymore.
I think one other element that has really changed is who the organizers are organizationally speaking.
So if you look at the Starbucks Works United, the group that had success in Buffalo, and now also what's called Amazon Labor Union, the group that had success with unionizing the warehouse on Staten Island, these are not the main labor unions.
These are independent startups, typically run and organized by people inside.
And I think that is a huge advantage because one of the key things that you can always say, in particular in the context of a company that has been trying to do well by the workers to say, well, we can talk it out directly.
Why do we need a third party in between workers and management?
We find better solutions if we speak to one another.
And the moment of course, it's people inside the organization.
That argument falls flat because to your earlier point, Charlotte, they really know the working conditions, they know the ins and outs in a way that an outside organizer would not typically know.
And then I think it reflects the change in direction of the large organized labor unions.
If you look at the budget of the AFL -CIO, about 10 years ago, they spent 30 % of their budget on organizing.
That is now down to a little less than 10%.
So organizing just is not so important for them and all that money went into politics.
There was some idea that money spent on politics is in the end spent better because we can change things in a more meaningful way.
I think this is so interesting, Felix.
I didn't know those numbers about AFL -CIO, but it's so striking because of course in the last 30 years, union membership has just fallen through the floor.
And so if they give up on organizing and they move towards politics, that's effectively saying, we're not gonna try to expand the base.
We're just gonna try to apply pressure.
And so then it's an entrepreneurial movement of sorts.
And so maybe the real story here is the rebirth of labor power in much more entrepreneurial ways and via the technological story that Charlotte tells, which is actually, you don't need to sign up with the AFL -CIO to organize because the employees at Starbucks are gonna do it all on social media.
If you think about union labor organizing as a field, if it becomes really entrepreneurial, then that opens up all kinds of interesting possibilities and problems conceivably for companies.
I really agree with that.
There's been this democratization of action against big companies.
If you look at the people who are filing shareholder proposals in proxy season, it's a whole new cast of characters.
Big, small. That's very interesting.
It's not just the big guys anymore.
Companies are dealing with this assault on different fronts from a whole different array of actors.
They could be a 22 year old Starbucks organizer.
It could be a small fund that no one really has ever heard of.
Engine number one at Exxon last year.
It was really small.
They do not own a lot of Exxon shares, and they were hugely successful.
So I think you see this playing out in different forums and that companies are still a little bit on the back foot.
I don't feel like they've really figured out how to deal with it.
Generally speaking, I'm not super sure how optimistic I should be about the long -run success of these entrepreneurial efforts.
You unionize successfully, but that doesn't mean anything changes.
It often takes years from the unionization effort to sitting down and talking about improvements.
If you're an entrepreneurial startup, do you really have to stamina?
Do you have to capital?
Can you maintain the enthusiasm to do this?
I just wanna say one more thing about the political activities of the big unions is that they did internalize these lessons from the past 30 or so years.
And some of their political activities have been really successful.
If you look for the Fight for 15, the $15 minimum wage, there's been a lot of success on the part of labor unions in blue states to get legislatures and city governments to raise the minimum wage, which is a big target for them.
So that is happening, and I think that they can rightly point to that as a successful effort.
And then these other initiatives are complimentary, and I agree with you both.
What happens next? After these union campaigns are successful, do you see fundamentally different practices or a big hike in wages at Starbucks?
I don't know. Yeah, and I think in a way, it ties back to the first part of the conversation, which is how we see how Howard Schultz navigates this.
If he can navigate this, who comes next will tell us a lot about how this will end up shaking out.
Super interesting. So we hear from bucks to drugs.
Indeed. What do you have for us?
Another drug of choice, which is marijuana.
And what is happening in the workplace with marijuana?
What is happening? Don't scare me.
Oh, don't pretend like you don't know.
So just over the last year, we've seen 8 % increases in positivity tests when employees are being tested for THC.
During that same period, we've seen seven to 8 % declines in the actual amount of testing that goes on.
So we're seeing a lot less testing and we're seeing a lot more positivity.
And the question of course is why and how long will this persist?
So I'm curious what you make of this.
Is this just another step in the acceptance of marijuana in our society in a way that it should be accepted?
I think that there have been a lot of problems with regular drug testing.
It's not that effective.
If you used a drug in the past that doesn't necessarily impair your ability to do a job now.
And so you can imagine different types of tests to make sure a worker is fit for their shift, including some kind of performance test that measures hand -eye coordination, that kind of thing.
It's not a good idea for someone who's high to operate heavy machinery.
Nor by the way, is a good idea for someone who's really sleep deprived to do so.
There's both a shift away from feeling like drug tests are necessarily the most effective way to get the employees that you want in the jobs that they want.
And with marijuana in particular, there is this broader acceptance with legalization that has happened really, really quickly.
And you're seeing that show up.
Amazon said it wouldn't test for marijuana.
And the VP of Amazon said it was also about equity that drug tests disproportionately affected racial minorities.
So there's a lot of stuff going on that points to drug testing just being on the way out.
As long as you have a long line of people clamoring for every job, companies are not always that careful thinking through, are we really asking for the right kind of requirements?
20 % of jobs today have some sort of occupational licensing regime attached to it.
When in fact the evidence says, if you look at safety, if you look at reliability, it's not clear that the requirements made a lot of sense.
Our colleague Joe Fuller talks about how a college degree became a shorthand that often didn't really make it all that clear what you actually wanted.
In a move that he calls the big degree reset, you see that many companies actually do away with these college requirements.
What I find particularly interesting is if you look at these job ads, so there's no more requirement for a degree, but then companies are much more specific about what they actually want.
So for instance, I want someone with great communication skills.
And the college degree was sort of a shorthand for that, thinking that probably everyone with a college degree will have okay communication skills.
But of course it excludes a lot of people.
It's painful, I'm sure, if you run a company and now there's this different set of competitive forces.
But it ends up, I think, allocating people in a better way to the jobs that they can really do.
I hadn't really thought about this in the way you both have thought about it, which is that we've been relying on lots of short hands and those short hands have structural problems associated with them, which may include equity as well as bad allocations in the labor market.
And so once you look past the shorthand, and I think, Charlotte, your example's right, which is you can do a performance test instead of doing a drug test.
And so you're getting closer to the actual underlying trait that you're interested in as opposed to a proxy for the trait.
And I think that makes sense.
Let me just try to counter it.
And this is now much more anecdotal.
People are suggesting that it's more likely to have young employees showing up smelling of marijuana.
And it's more and more likely to have marijuana happening in the workplace.
Then the question becomes, is that sustainable?
And is that the way the world is going to look in five or 10 years?
Or is it aberrational?
I think the question of norms is such a fascinating one.
I mean, it used to be that people would go out in the middle of the day in Midtown Manhattan and get totally sloshed and then returned to their desks.
And somehow that was kind of acceptable, right?
Right. The reference to alcohol at an earlier point and it was totally fascinating to me, Charlotte, because I remember as a kid, my dad had this gigantic bar in his office.
Even before they went out for lunch, they would assemble in his office and they would have a pre -lunch drink.
And then of course there was a glass of wine during lunch.
To me, the real question is not so much about what's the right testing regime is more what are the kinds of jobs where you can really tell just looking at performance.
I can imagine some jobs, if you're a little high, you can probably do as good a job.
If it's maybe very stressful, maybe you do an even better job because you're a little more relaxed.
Podcasting, for instance.
Yes, might be an example.
Actually, Charlotte, I think I have your test results right here, I think we need to have a conversation.
So I give you one stats that just totally blew me away.
The state of Illinois gets more tax revenue from Mariana than from alcohol.
So now imagine any sort of policy change that significantly undermines that flow of revenue, that'll be super problematic, I think.
My sense is the tight labor market and the decentralized nature of production lock us into a Mariana industry that then even if we decide it's not ideal, we will have big trouble getting rid of it.
Right, but just to tie back to both your points, first, I think you're right, this is a one way street and it's out and we're going down this path.
The second is, I too think by analogy to alcohol and I think that's gotta be right.
Having said that, you both evoked this madman era where alcohol was common in the workplace.
I don't think that was a great time.
I think for a lot of people that led to behaviors that were really bad and I think it was on net probably a good thing to get alcohol out of the workplace in the last 50 years.
And especially because it affected certain populations worse than others.
I think the alcohol analogy is very important.
For many jobs we don't test for alcohol, but we do on drugs and then the question is, well, how are they different?
And many people who argue for marijuana say they're no different, but it's not as if I'm super excited about a lot of alcohol use in the workplace or drug use in the workplace.
So I'm not sure if I completely agree with you.
I see the point, but don't you think the kinds of behaviors that we associate with that time, in that respect too, the norms have just completely changed.
The kind of behavior that we now find objectionable will remain objectionable and drug use will not be an excuse to go back.
Right, let me raise one last issue that I think is kind of fascinating about this, which is my niece Avne is going to college in the fall.
And she was asked for her preferences on residential life.
And one of the preferences now is I want to be in a, I don't know how they term it, but it is a non -substance dorm.
So you commit or even in the dorm you can't drink, but that you don't drink or use substance.
You don't drink ever, even you can't go to a restaurant and have a drink.
The reason I raise this is, yes, marijuana is increasingly acceptable.
And you know what, there's some people who don't want to be around it.
So I wonder if the way this plays out is more segregation in the workplace or more sorting in the workplace on these preferences.
You know, what comes to mind is sorting in restaurants is always what I expected would happen.
Because there are clearly, lots of people didn't want to be in smoke -filled restaurants and lots of people wanted to smoke while they were eating.
And I always had a sense that where we would end up is just a mix of places.
And that didn't happen.
We needed a rule that was a good public policy reason to do it, to have the rule.
The externalities there are clear.
But the market didn't really create the kind of separation that I always expected to happen.
Interesting. Yeah, that's a good point.
Well, to your point Felix earlier about the questionable connection between drug use and performance, I think this segment went pretty well.
Yeah. So recommendations, me here.
Yeah, so I have one, but it's a big one, which is we recently went back to the theater in a big way.
Excited. And so we saw a bunch of stuff altogether.
So we saw And Juliet, which is this new take on Romeo and Juliet.
We saw Witness for the Prosecution.
We saw Life of Pi and we saw Dear Evan Hansen and it was crazy.
Oh my God. And we have not seen anything in the theater for three years.
And I got to tell you going back into a theater is magical.
It's great. It is just so good.
And I just recommend to everyone to get to a theater and to see a performance because it enlivens you and then you talk about it and it enlivens the conversation in a way that a movie doesn't.
And some of us, including me may have forgotten that, but getting back into it was really fantastic.
I have to say I've been going to the theater, I guess, a little longer than you guys have in my pandemic journey.
But during the start of the pandemic, I love going to see dance performances.
I try to go to the ballet or see modern dance performances.
And I watched online a lot of these extraordinary dancers posting videos because you think about how all of us are stuck.
Their careers are so short.
And there was something about watching them moving through space as we were all in lockdown in our little cubicles of our homes, our apartments.
I love doing that during the pandemic.
And then when I was finally able to see dance live again, it was so great.
And I took my kids, New York City, ballet.
If people in New York don't know this, they have a great children's program that they do from time to time on Saturday mornings where they perform segments of the ballet and then explain the ballet to children.
Oh, that's great. So that their children can get up in the aisle and mimic some of what they're doing on stage.
So I guess that's my recommendation.
That wasn't what I was gonna recommend, but I highly recommend that.
That's great. And the one I did have in mind actually is I have a colleague who's been listening to the Rest Is History podcast.
Look at this, she's sneaking in the second record.
Yeah, exactly. I am.
Well, this one is just so good.
So the Rest Is History podcast, this made my colleague who's sitting on Nemetro North, it made him laugh so loudly in spite of himself that the person sitting next to him moved to a different part of the carriage.
So I think that that was a high recommendation as one can get.
Tell us a little more, what is the Rest Is History?
It's two historians who are in a given episode will dive into a really big subject.
So the one that made my colleague laugh was one on Russian history.
Yeah, there's a lot to laugh at in Russian history.
It's a little unexpected.
It's perfect material for comedy.
It's really good. Fabulous.
Fantastic, and what do you have, Felix?
I have a question actually.
How do you feel about revival albums?
Like old bands that you haven't heard in a long time, and then out of the blue, they come out with a new album.
Are you excited? Are you skeptical?
I'm leaning toward skeptical, yeah.
I always feel bad when you go to a concert for somebody and they want to play all their new material and everyone is kind of suffering along until they finally go back to their hits from 30 years ago, which they're so sick of playing.
I have a lot of empathy for these musicians, but I also don't really want to hear their new stuff.
That sounds so right.
It must be so difficult because on the one hand, you want exactly what the band is known for, and then at the same time, of course, if it's exactly the same, then what's the point of having a new album?
So in any case, I wanted to recommend a revival album, Red Hot Chili Peppers, Unlimited Love.
I love the Red Hot Chili Peppers.
I think it's about as good a balance as I can remember.
You definitely hear the hooks.
You hear the kinds of things that you want to hear if you listen to Red Hot Chili Peppers, and then it has a freshness to it that I really loved that I thought was very interesting.
Well, God, I got to tell you, Felix, of all the bands, you might have asked me, who is not going to age well?
I would have said the Red Hot Chili Peppers.
And so I have to say, I didn't watch the videos because I was afraid they would still take their shirts off, which I didn't want to see for the very reasons that you allude to.
All right, fantastic.
So this is it. Thank you for listening.
This was After Hours from the TED Audio Collective.
