What is the Disposable Employee Model?

After Peet's Coffee & Tea in Chicago fired a dedicated employee of 5-year tenure, and threatened to fire another, baffled Peet's customers came to us asking, what is going on? Why is Peet's getting rid of our favorite baristas?

We realized that it was time to explain in detail a system that has long been obvious to those on the inside. It's called the Disposable Employee Model. 

The D.E.M. is a strategic combination of policies that guarantees short-term employment among the bottom 80-90% of a company. 

What companies use it? More each year, in particular: fast food companies, grocery stores, big box retailers, chain restaurants, and fast coffee. 

What does the D.E.M. look like for a Peet's Coffee & Tea employee?

• Different work schedule each week (days/hours generated by computer software)
• Mixtures of shifts that start as early as 4:45 a.m. and end as late as 10:00 p.m.
• Fluctuating pay: employee scheduled 10 hours one week, 30 hours the next
• Wages just above legal minumum
• Annual "raises" not even cost-of-living increases
• Benefits essentially unattainable
• Shift lengths around 4-5 hours (working 5 days/week = about 20 hours)
• Over-hiring practices that create an artificial labor hour scarcity
• Gratuitously harsh but selectively enforced policies that allow the company to quickly dispose of any employee who sticks around long enough to start complaining about any of the previous issues

Customers inevitably ask, why would an employer use such a terrible model? Because chaos, instability, stress, scarcity, and fear are important elements in preventing and combating resistance. Think for a moment about the psychological influence of the model:

• Defining a job as part-time implies that it is "transitional": Employees aren't invested enough to protest, because they are constantly looking for a new job, which often comes in the form of a lateral move to a company with similar work conditions. 
• Defining a job as part-time implies that it is "supplemental income": Employees do not complain about poverty wages, because the conditioned public response is always, "You're not suppose to be able to LIVE on what you make there!"
• Defining a job as part-time implies that it is not a "Real Job": Employees do not hold the job to "Real Job" legal standards, accepting injuries, sexual harassment, discrimination, and intimidation as simply par for the course. 
• No full-time option means an employee must get a 2nd job to survive: Employees are too exhausted juggling 2-3 jobs to come together to try to influence company policy.
• Defining a job as part-time implies that it is "unskilled labor": Working in a society that values investment over labor, employees internalize rhetoric that demeans the value of their contribution to the company and shames them into silence about the abusiveness of their work conditions.
• Harsh but selectively enforced rules keep employees in constant fear of losing their jobs: Employees know that raising any real questions with management about the dysfunction of the system is likely to make them targets for retaliation.

(Wouldn't a business be better off investing in its employees instead of ruling them through fear? We believe so. Read this blog post about healthy business models used by profitable companies.)

What do Peet's workers have to say?

"What’s the worst thing about the Disposable Employee Model? It teaches workers that they’re replaceable, and they know that if they speak up against their employer they will be gotten rid of and replaced by someone else. Will that new employee be better? Probably not. But it doesn’t matter."

-Amanda D, disposed-of employee

"Our bosses have found a way to get by without explicitly intimidating their workers--as long as we believe that we are disposable and can be easily replaced, we will take it upon ourselves to be as agreeable as possible, and never even consider standing up for what's best for us."
-Emma BB, disposed-of employee


If you learned something from reading this post, please share it on social media! Short link: bit.ly/dempost, hash tag: #notdisposable.

Reinstate Emma!

Petition To Reinstate Emma

Long-time Peet's Sheffield customers were shocked to hear that a favorite employee and highly skilled barista, Emma Bell Bern, had been fired for being late to work 3 times in 1 year. Hoping the voice of their clientele would have weight with Peet's, customers worked with Emma to write a petition asking Peet's corporate to reconsider its decision.

This cool Sunday morning, regular customers found Emma sitting outside the cafe with an off-duty coworker. Those who hadn't heard the news asked Emma why they hadn't seen her in so many days. Shocked at her response, they eagerly asked how they could help. Emma handed them the petition. 

With two clipboards circulating to accommodate everyone, Emma and Kristy collected 50+ signatures in under 2 hours.

Around 9:00 a.m., as Emma and Kristy sat by the door and continued to break the news to dismayed customers, a tall man got out of his car and quickly approached their table. 

"Are you Emma and Kristy?" the man demanded, pointing his finger at the two women in turn. When the startled women didn't reply, he repeated his question, but when asked for his name, he would not identify himself.

The man turned out to be recently hired Chicago District Manager Glenn Johnson. He ordered Emma to step away from her friend and speak to him alone. Unnerved by his tone, Emma suggested that they speak where they were standing, with her friend present. Glenn repeated his order that she step away from where she was. After asking Kristy to come with her, Emma walked a ways down the sidewalk, where she was berated by Glenn, who accused her of soliciting customers and disrupting business. After threatening to call the police on Emma, and fire Kristy, Glenn eventually calmed down and agreed that if Emma would stop collecting petition signatures, he would meet with her later this week to discuss her termination.

Emma's meeting is scheduled for 9:30 a.m. this Tuesday, September 10th.

Emma's petition reads:

"On August 30th, Peet’s Coffee & Tea’s corporate office directed local management to fire Chicago store Shift Lead Emma Bell Bern. Emma was fired for clocking in late on 3 occasions within a 1-year period. Emma was with Peet’s for 5 years and was recently promoted on the store manager’s strong recommendation. She was an exemplary employee and a store leader. Fellow employees and customers alike are shocked and confused by the decision.

In unilaterally firing Emma, officials at corporate headquarters hijacked local management’s discretion, a key provision of Peet’s Retail Attendance Policy. This top-down dismissal of a senior employee for a minor offense is not just detrimental to the store, the employees, and the customers, but also incredibly disrespectful to the Chicago store’s management team.

We urge Peet’s to reinstate Emma Bell Bern immediately, and to guarantee the employees of Peet’s that all such future decisions will be made in dialogue with local management."

September 13th update: you can now sign Emma's petition online at bit.ly/standwithemma. Thank you for your support.

Happy Labor Day 2013!

Labor Day is PWG’s one year coming out anniversary! Here are our favorite success stories of the last year:

September 2012

Peet's Chicago, September 18, 2012

SUPPORTERS RALLY AROUND A LIVING WAGE

PWG notified the community that we were expecting a corporate entourage to arrive in Chicago and make a statement about a living wage at Peet’s. Supporters gathered outside the store the night of the closed-door meeting and stood respectfully outside with signs, then covered the store windows with their signs to show the Lincoln Park community that Chicago wants Peet’s to pay their workers a living wage.

NERVOUS PEET’S TAKES UP DOMAIN SQUATTING

Days after PWG launched a Facebook page and blog, inspired a community support rally, and sent an internal email cheerfully announcing our organization to every corporate office employee and each of the 200 retail stores, Peet’s corporate bought up peetsworkersgroup.org and over 20 variations of this URL, vainly hoping to curtail our online presence. Peet’s also sent corporate office employees and all Peet’s stores an email referring to our email announcement as “spam” and instructing them to disregard it.

postcard to employees

MEDIA, PROFESSORS SUPPORT PWG

PWG gave interviews to multiple media sources and appeared in articles in midwest and west coast publications, including award-winning journalist Ellen Cushing’s East Bay Express article, “Chicago Peet’s Employees Are Organizing – Could the East Bay Be Next?” 8^th Day Center for Justice, Chicago’s iconic social justice nonprofit, featured PWG as a partner in their newsletter, where they highlighted us as an important campaign to support in the workers rights movement. (8^th Day has been instrumental in the ongoing actions and advocacy of our campaign.) In addition to media, professors at prominent universities came forward with statements supporting PWG’s living wage campaign. Read their quotes on PWG’s Facebook page.

October 2012

CHICAGO STARTING PAY GOES UP 50 CENTS

Effective immediately after PWG publicized Peet’s embarrassing starting wage of $8.50/hour, management quietly raised the starting wage for Chicago retail associates to $9/hour.

November 2012

PEET’S SCRAMBLES TO LOCK DOWN MEDIA SITUATION

In response to continued media calls to Peet’s stores concerning PWG, Peet’s instructed retail stores to post memos in the back-of-house instructing store management to avoid making any statements to the media.

December 2012

PWG SENDS HOLIDAY GREETING TO EMPLOYEES NATIONWIDE

Peet’s employees across the country working the retail holiday rush received a much-appreciated postcard in the mail at their stores letting them know that PWG was advocating on their behalf to bring a living wage and paid sick days to Peet’s.

January 2013

“INTERNAL MEMO” SHOCKS AND AMUSES EMPLOYEES, BAFFLES CORPORATE

Clearly inspired by PWG’s sustainable employment campaign, anonymous activists in California mailed a letter to Peet’s stores, printed on the company letterhead and apparently sent from Peet’s corporate headquarters. The letter read as an internal memo from recently retired CEO Pat O’Dea, and promised the implementation of a living wage, paid sick days, and regularly scheduled hours for all employees. Only at the end did the author reveal the letter to be a hoax. Quick-acting employees made copies of the letter before all original copies were intercepted or confiscated from each store. The author has yet come forward to take credit for the letter, but employees across the country got a good chuckle, while Peet’s corporate scrambled to find the culprits internally for several days before giving up. Read a copy of the Fake CEO Letter here.

SUPPORT ACTIONS CROP UP IN MULTIPLE U.S. CITIES

PWG supporters, taking a cue from the September 2012 Chicago store rally, decorated Peet’s stores in various cities in a similar theme and sent photos to PWG.

March 2013

SHEFFIELD STORE ACHIEVES $9 MINIMUM WAGE

Aware that a number of senior employees were still making less the new starting rate of $9/hour, PWG launched a successful campaign to bring all employees up to or above $9/hour. The living wage in Chicago for one person with no dependents is calculated by MIT as $10.48/hour. It's a start!

April 2013

Boston, MA, January 2012

RETAIL ASSOCIATE BRIEFS NEW CEO ON LABOR ISSUES

PWG member Joshua Van Cleef followed Peet’s Open Door Policy all the way to the top, initiating a frank, hour-long phone conversation with Peet’s new CEO David Burwick. Joshua detailed various Peet’s labor problems for David: 80% of employees not making a living wage, the unsustainability of 4-hour-long shifts, and the inaccessibility of Peet’s much-touted health care coverage. David acknowledged these concerns and promised to address the issue of 4-hour shifts, which he quickly agreed were unreasonably short. He also assured Joshua that there is a substantial amount of support for a living wage within the new Peet’s HR department. Read the Progress Illinois article on Joshua and David’s discussion here.

PEET’S ADDRESSES PWG WITH MANAGEMENT TRAINING SESSIONS

Shortly thereafter, Peet’s newly hired anti-union lawyer conducted emergency union-busting training sessions for store management in Boston, MA.

May 2013

PWG SECURES HUNDREDS OF CARIBOU EMPLOYEES’ JOBS

PWG aggressively publicized Peet’s plan to require all employees of recently acquired Caribou Coffee to reapply for their own jobs when their stores were rebranded as Peet’s stores in the upcoming year, despite the virtually identical nature of the two jobs, and the common ownership of the two companies. PWG advocated for these employees via social media and in discussion with management. Peet’s promptly acknowledged the misguidedness of its plan, and exempted all non-management Caribou employees from the reapplication process.

Fight For 15 rally, Chicago, IL, August 29, 2013 

June 2013

HR INVITES COLLECTIVE PETITIONING

Peet’s new HR team changed course from the company’s stance last September, assuring PWG that it does acknowledge the existence of “group concerns,” and that it will no longer force employees to address concerns only in one-on-one meetings with management. Our HR Senior Manager has assured PWG that employees are free to choose a group representative to bring any group issue to management, and even suggested using the submission of a letter signed by multiple employees as a way of bringing concerns to the company’s attention. HR assures us that, moving forward, group concerns will be addressed in a thorough and timely manner, per the Open Door Policy.

July/August 2014

Whole Foods Strike, July 31, 2013

PWG LAUNCHES COMMUNITY NETWORK

2013 has marked the burgeoning of a new, creative, and energetic U.S. labor movement, as organizing initiatives gain momentum across the nation. PWG rallied in support at recent worker actions coordinated by the Restaurant Opportunities Center United and the Workers Organizing Committee of Chicago. We are in talks with these and other leading justice organizations about partnerships in future campaigns to benefit Peet's workers and other low-wage workers across the nation. We are incredibly inspired by the energy and bravery of our fellow retail and fast-food workers, and look forward to a bright future of solidarity and further community-building.

Labor Day 2013

Capital Grille protest, July 24, 2013

Over the past year, all Chicago PWG members have been offered promotions, including fast tracks to management. We have spoken frankly to management all the way up to the CEO concerning PWG’s values and goals, and we have been personally thanked by district management (and Caribou employees) for convincing Peet’s to guarantee Caribou retail jobs during the Caribou-to-Peet’s transition.

Most importantly, we have broken the oppressive silence that plagues the U.S. low-wage workforce. We have created a respectful voice of dissent within Peet’s. We speak openly about our wages, our rights, and our vision for the company, and we empower our fellow workers to do the same. Creating sustainable employment begins with dialogue, leads to education, and results in action. We are committed to this process, and to our community. Thank you all for your support.

Happy Labor Day!

So This Letter Just Arrived At Our Store...

Internal memo from Peet's headquarters:

So thank you, anonymous activist who sent this. (And thank you to the Peet's employees who made a copy before it got confiscated.) It arrived in an envelope with Peet's corporate headquarters as the return address! Nicely done.

Peet's Coffee & A Living Wage Pt. 3: Why should Peet's be different?

We have established that Peet's is financially able to pay every employee a living wage. It is clear to us that it would ultimately benefit the company's bottom line to invest in its people. But if the retail/service industry in general is slow to recognize the financial benefits of such investment, why should Peet's be any different from Walmart, or McDonald's?

Two words: Peet's' values. CEO Pat O'Dea once said that what makes Peet's great is that we continue to "challenge the status quo through the lens of our values."

What is the status quo for the Peet's workforce? For 80% of us, it is less than a living wage, fluctuating weekly hours, no sick days, no option to work full time, and unpaid promotions.

So how do Peet's values fit with the status quo? Peet's speaks of its mandatory-part-time minimum-wage retail workforce (80% of its total employee base) using these words: most knowledgeable in the industry, valued members, coffee and tea experts, committed to continuous learning and professional growth, the face of our business, ambassadors for the brand, skilled baristas...and the list goes on and on.

Peet's speaks in no uncertain terms of its fundamental business values: sustainability, community, prosperity, health, integrity, social responsibility, etc. At the Peet's website you can read about initiatives to build essential infrastructure in coffee-growing communities, U.S. partners growing mushrooms on recycled Peet's coffee grounds, and the annual holiday charity fundraising drive at retail stores. One quick glance and you will believe, as many of us did before we worked here, that Peet's is the most socially responsible billion dollar corporation around.

Of course we support every positive outgrowth of Peet's values. But Peet's fails to pay a living wage to those who serve daily as the face of the business. There is nothing sustainable, healthy, or socially responsible about denying 80% of your workforce even a modest living as a result of their hard work.

There is evidence that Peet's did once embrace a more sustainable labor model. Long-term employees speak nostalgically of a Peet's much more closely aligned with its values. For example, just ten years ago retail employees received paid sick leave, as evidenced by this illuminating quote directly from the current Peet's payroll manual:

"Peet's provides Retail staff hired on or before January 31, 2003 and all SMs and ASMs sick time to encourage rest and to recuperate when they are ill, without losing pay."

Somehow around January of 2003 Peet's decided that retail staff are no longer in need of rest and recuperation when ill, or perhaps that they are no longer in need of protection from lost pay.

This fall, Peet's transfers to private ownership under German conglomerate Joh. A. Benckiser Group. Will Peet's' management use this significant transition to revisit Peet's' values, reinstate abandoned employee benefits, begin paying a living wage, and set an example as industry leaders?


Peet's Coffee & A Living Wage 5-part series:
1. Can they afford it?
2. What about the bottom line?
3. Why should Peet's be different than any other retailer?
4. Whatever happened to the dignity of work?
5. Living wage Q&A

Peet's Coffee & A Living Wage Pt. 2: What about the bottom line?

Now that we've established that Peet's can pay a living wage, we ask, why would Peet's want to?

Let's set ethics and values aside and explore the most obvious incentive: profit.

What if Peet's, in many other ways an industry leader, is merely following the dictates of a dead-end, unsustainable model of labor management already being cast aside by savvier companies?

We believe that it is. In the last decade, Peet's has bought more and more into the "labor as an expense" business model. Relegating labor to an expense to be minimized is the short-sighted approach of a management team blatantly ignoring the crucial variable of human decision-making at all levels of a company. Peet's is not alone in this; it has fallen prey to the same fallacy as much of the American retail sector.

M.I.T. Professor Zeynep Ton explains in the Harvard Business Review:

Even in low-cost retail, it takes a lot of human effort and judgment to get the right product to the right location at the right time and to make an efficient transaction. It's the low-paid employee, not the inventory-management software, who notices that a shelf looks messy or that some of the products are in the wrong place. It's the low-paid employee who notices that some of the lettuce has gone bad or that there are still signs up for last week's promotion. It's the low-paid cashier who can tell the difference between serrano peppers and jalapeno peppers during checkout. It's the low-paid employee who notices that there are too many customers waiting in the checkout and offers to open an additional cash register. 

When retailers don't invest in human capital, operational execution suffers and the company pays with lower sales and lower profits than it could have had.

'Why "Good Jobs" Are Good For Retailers.' Harvard Business Review

Professor Ton's extensive research in the field of operations management includes an in-depth study of four highly successful retailers (including Costco and Trader Joe's), all of whom budget labor as a significantly higher percentage of operating costs than do their less successful competitors. Ton shows in great detail how labor-as-investment is good business practice.  

Read Zeynep Ton's fascinating study in the Harvard Business Review. You will have to sign in (free) to read the full article, but it's well worth it.


To those of us who work in the retail and service sector, this is no surprise. Depressed wages and utter lack of performance incentives create high employee turnover, as frustrated employees move laterally to jobs that pay just slightly more, or even just offer any change of pace. High turnover rates cost the company in training hours, as well as expensive errors, unnecessary waste, and missed sales due to inexperienced workers. Long-term, high-performing employees find themselves on an understaffed sales floor training new employees while simultaneously performing all their normal job functions. All of the above exacerbates stress levels and compromises customer service. Morale weakens, turnover increases, and what Zeynep Ton calls "Retailing's Vicious Cycle" ensues (see graphic above). And it's terrible for business.

Which begs this question from James Surowiecki, in his New Yorker article "The More the Merrier":

If investing in employees yields such big dividends, why don’t more retailers do it? Partly, it’s a matter of incentives: store managers are typically evaluated on their payroll costs. Moreover, the benefits of keeping payroll costs low are immediate and easy to see, whereas the benefits of hiring more people are long-term and harder to track.

Essentially, there is no profit-based excuse for under-investing in your people. But publicly-traded corporate America is evaluated by its shareholders four times a year, and management from top to bottom is incentivized to boost quarterly profits at all costs, even at the expense of long-term gains. Short-term, easily quantifiable advances are too tempting, so short-sighted managerial decisions abound. Genuinely motivating and empowering every employee in the company to contribute the best they have? Absolutely common sense, but also such an integrated part of success that it's difficult to isolate and measure, except through an extensive independent research study like the one mentioned above.

Peet's knows better than to follow Retailing's Vicious Cycle. Its management team needs only to revisit its own definition of the value of "Prosperity" to realize that Peet's already believes in a living wage:

We believe in the principle of abundance; as we grow, we create exciting careers for our people, thriving local communities, and healthy, fulfilling lives for our global partners.
-Peet's Coffee & Tea

Which introduces our next post: "Why should Peet's be any different than any other retailer?" 



Peet's Coffee & A Living Wage 5-part series:
1. Can they afford it?
2. What about the bottom line?
3. Why should Peet's be different than any other retailer?
4. Whatever happened to the dignity of work?
5. Living wage Q&A

Peet's Coffee & A Living Wage Pt. 1: Can they afford it?

This begins the five-part series "Peet's Coffee & A Living Wage."

"Can the company afford to pay you a living wage?"

This is a common question among small business owners in particular. Struggling in an economy evolved to favor and protect large corporations, small business owners nevertheless tend to extend much misplaced empathy toward their gigantic competitors. For a small business owner, especially in the first few years of her company's existence, it can be a very real challenge to pay even highly contributing employees a living wage. Independent coffee shop owners, in particular, may see the Peet's Workers Group living wage campaign as an indictment of their own minimum wage pay scale.

It is crucial to differentiate immediately between Peet's Coffee & Tea and the mom-and-pop coffee shop around the corner. We in PWG are intimately acquainted with small business owners, and most of us have worked for or participated in running small businesses ourselves. We know the story. You pay your employees minimum wage, treat them like family, let them eat free meals at the shop, and at the end of the year you're lucky to break even. You employ high school students, college students, people without dependents, people who live with their parents, people whose partners earn a "real" income, people who receive government assistance. People who are otherwise subsidized, so they can manage to scrape by on less than a living wage. You wish you could pay them more, that you could pay yourself more, but you can't. Yet.

When your company is traded at $70/share, has 3700 employees, 200 stores, 175 licensed partners, a booming grocery business, executive officers paid in the millions, and a market cap around $1,000,000,000, you will be able to pay each of your employees a living wage.


When PWG asked our friends further up the corporate ladder the question, "can Peet's afford to pay us a living wage?" they just laughed. A quick glance at the numbers was more than enough to say, of course they can afford it.

The problem with asking "can they?" is that for those of us with limited corporate accounting knowledge, the question precipitates an overly simplistic "bottom line" analysis: figure out the total cost per year of increasing each employee's salary to a living wage. Then take the company's net profit, subtract the added labor cost, and see what's left.

We did this, and yes, the company could give every retail worker in the country a $3/hour raise and still net $8 million a year in pure profit. The equation looked like this: 3000 retail level employees x 1000 hours/year average due to part timers x $3/hour = $9,000,000 subtracted from about $17,000,000 net profit each of the last couple years = $8,000,000 net profit left.

Peet's' stock more than doubled in the last 5 years.

Corporate accountants will tell you that increasing labor spending is not a simple subtraction of money from the bottom line. The answer to "can Peet's?" is, there is no question they can. But in order to do so they must first recognize the dignity of their employees as a clear priority, revisiting their own value of "prosperity." They must then reallocate money within the company to accommodate this prioritization. New store openings may slow. Equity may not accrue at a rate that facilitates stocks doubling in value every five years (see chart). Expansion and shareholder profits, in other words, could potentially be less dramatic than they have been.

At least at first.

Because actually our math is still too simplistic. It is based on the short-sighted business philosophy that labor is an expense, rather than an investment. Which leads us to our second post in this series: What about the bottom line?

Peet's Coffee & A Living Wage 5-part series:
1. Can they afford it?
2. What about the bottom line?
3. Why should Peet's be different than any other retailer?
4. Whatever happened to the dignity of work?
5. Living wage Q&A