What is Starbucks’s Create Jobs for USA initiative, and why does the coffee chain’s entry into the jobs debate matter for cities across the U.S.? In Forefront this week, journalist Mark Bergen provides a critical appraisal of CEO Howard Schultz’s effort to create his own brand of crowd-funded economic stimulus, examining its impacts on Capitol Hill, in Starbucks’ Seattle headquarters and in the communities this program intends to benefit.
On August 15, 2011, Howard Schultz penned an angry letter. His audience was Congress and the president, his demands twofold: They needed to create “a transparent, comprehensive, bipartisan debt-and-deficit package,” and they needed to speed up job creation efforts. Until then, the 331st wealthiest person in the country was not going to give another cent in donations.
Schultz’s boycott hits one party particularly hard. According to numbers compiled by the Center for Responsive Politics, Schultz and his wife, Sheri, have donated more than $183,000 to federal campaigns since 1994. The lion’s share, 95 percent, has gone to Democrats.
His assessment of our economic malaise sounds much like that of his party. “The more we stimulate demand and increase the purchasing power of middle-class consumers,” he said last November, “the faster we will recover.” Eight months later, the latest payroll data revealed we are not recovering. Three years after the recession formally ended, nearly 13 million people remain unemployed.
In his letter, Schultz plugged No Labels, a centrist coalition of business and political bigwigs that casts itself as the practical alternative to a Congress paralyzed by partisanship. The Starbucks program pitches itself the same way. Donations are met with larger gifts from the company’s philanthropic arm, which then go to support projects — like an affordable housing development in Baltimore — that are mostly agreeable to people of all political stripes.
Yet no matter how benign the program’s intent, its mission hurtles the man who brought the latte to Middle America smack dab in the middle of the decade’s trickiest political conundrum.
Since the recession struck, community lending has been on the menu of several job creation proposals pushed by economists and advocates. It was just far down on the list, below the main fiscal recommendations bought to Capital Hill — the wider-reaching policies to fund infrastructure projects, restore the housing market, slice the trade deficit and spur public hiring.
But then Congress reached its stalemate, clogging nearly every avenue. “The problem,” explained Dave Johnson, a fellow with Campaign for America’s Future, a liberal group that promotes job creation policies, “is that everything is being blocked.”
Advocates have had to get creative, often scaling down their proposals. James Hairston, an economic policy associate with the Center for American Progress, explained how his group began supporting the CDFI Bond Guarantee, an initiative to extend capital to lenders, in part because it didn’t require significant political action. “If we’re looking for new ways to spur job creation in communities that are underserved,” he said, “we have the infrastructure already.” But he did stress that support for community lending “wasn’t in lieu of a larger package.” Compared to wider fiscal stimulus, the effect of the Starbucks approach is minimal and uncertain. “It’s like a tiny stab in the dark,” said Johnson.