The Starbucks Controversy: Economics and Psychology Are Sorta the Same Thing

The recent coverage of Starbucks’ work-scheduling policies — the original New York Times story from Jodi Kantor, her followup article reporting that Starbucks had changed those policies as a result of the spotlight that had been shone on them, and Annie Lowrey’s Intelligencer piece on how the policies fit into the currently asymmetric relationship between workers and management in the United States — all highlight an important point: when it comes to companies’ labor policies, it’s impossible to talk about economics without talking about psychology.

Kantor followed the effects of Starbucks’ scheduling technology — which basically allows Starbucks franchises to react dynamically, in an automated manner, to changes in staffing demands sparked by weather patterns, big deliveries, or whatever else — on a 22-year-old single mother named Jannette Navarro. Navarro rarely knew what her work schedule for a week would be more than three days before that week begins, and often had to deal with erratic hours as a result (sometimes closing her store at 11 at night and waking up at 4 in the morning to open it the next morning) — all while trying to raise a 5-year-old boy.

The scheduling software reflects the pinnacle of a certain classical view of economic efficiency: Companies are most productive when they have exactly the right amount of labor on hand at all times. Why should you pay five workers if only three of them are needed at a given moment? There’s no doubt that this sort of technology makes Starbucks and other companies more profitable.

The problem is that pretty frequently, at least in the U.S.(which has fewer protections for workers than most wealthy industrialized countries), that’s where the conversation ends. What’s powerful about the Times article is the way it traces the damaging effects of this one policy as they percolate outward, affecting not just Navarro, but her son, her boyfriend, and the friends she has to rely on for help with housing and child care.

There are clear moral reasons why you should make sure workers are treated decently, but you can ignore them completely and still see the problem with policies like Starbucks’. Even if you don’t have a bleeding-heart bone in your body, you could, if you wanted, attempt to put a dollar amount on all this: We know what chronic stress can do to people, so the stress endured by Navarro alone could lead her to be less productive in the long run, robbing society of potential tax dollars, purchases she would have made, and so on, and potentially forcing society to pay for mental health care for her.

And her son could feel the effects even more: What will it do to him to have such an erratic life at such a formative period of his development? Will it affect how he learns? His temper when he’s older? Suffice it to say that it won’t be Starbucks paying for any of these problems if and when they arise.

Navarro and her son certainly come across as resilient in Kantor’s story, and hopefully they’ll be fine. But the point is that for every dollar we see on a company’s earnings reports, there may be several invisible dollars lost as a result of the underdiscussed psychological distress that comes from workers not making enough money, not having a regular enough work schedule, having insufficient health care, of whatever else. When companies make labor decisions, they’re not purely economic ones; they have a psychological component, and we should recognize that.

Starbucks, Economics, and Psychology