Bathrooms are About Stakeholders

Recently, the New York Times reported that Howard Schultz wants to rescind the open bathroom policy that Starbucks adopted in 2018.   The backstory, as some may remember, is that two black men in Philadelphia were waiting to meet someone in a Starbucks and they sought to use the bathroom without buying anything.  A store employee ended up calling the cops; they were arrested; protests ensued; and the company announced that anyone would be permitted to use Starbucks bathrooms going forward.

Now, however, Schultz is reconsidering that policy.  Here’s what he said about it:

We serve 100 million people at Starbucks, and there is an issue of just safety in our stores in terms of people coming in who use our stores as a public bathroom, and we have to provide a safe environment for our people and our customers. And the mental health crisis in the country is severe, acute and getting worse.

Today, we went to a Starbucks community store in Anacostia, five miles from here, which is a community that unfortunately is emblematic of communities all across the country that are disenfranchised, left behind. And here’s Starbucks building a store for the community. Now, we had a round-table discussion with the manager and other people, and we were told that from 12 to 6 p.m. today — every day — there’s no one on the street. Why? Because people are afraid that their children are going to get shot — five miles from the White House.

I think we’ve got to provide better training for our people. We have to harden our stores and provide safety for our people. I don’t know if we can keep our bathrooms open.

Starbucks is trying to solve a problem and face a problem that is the government’s responsibility.

Let’s remember why the open-bathroom policy was adopted in the first place.  I, for one, used Starbucks bathrooms for years without buying anything, well before 2018.  That’s because a customer-only bathroom policy doesn’t actually mean that only customers can use the bathroom; it is, in practical effect, a policy of employee discretion, via selective enforcement.  Some people who are not customers can use the bathroom, and some cannot.  In general, we can surmise it will be black non-customers who are asked to leave; white non-customers will be permitted to go.  Perhaps some degree of employee training may mitigate the racial impact of a closed-bathroom policy, but it’s unlikely to eliminate it entirely.  So, Starbucks opened up its bathrooms.

Still, let’s assume Schultz is right, and the open-bathroom policy does, in fact, attract some people who are actual threats to Starbucks employees. 

That means Starbucks has to balance stakeholder interests.  Does it favor the employees and their safety?  Or does it recognize the disparate racial impact of a closed-bathroom policy, and favor the public interest of keeping them available?  

Right now, Starbucks is fighting off a union campaign; very likely, the profit-maximizing strategy is to favor the employees.  This article, for example, reports safety as a key issue surrounding union organization. 

This illustrates a couple of things.  First, despite occasional rhetoric to the contrary, it may very well be profit-maximizing to bow to employee demands; it doesn’t mean the CEO is pursuing a personal political agenda, it simply means that restive employees make a company difficult to run.  Second, as is often mentioned when stakeholder-governance is discussed, not all stakeholders have the same interests, and favoring some groups may wind up disfavoring others (which is one of the reasons shareholder primacists argue stakeholder governance is impractical; absent that profit-maximization decision rule, there’s no obvious way to choose among stakeholders).

But now, let’s complicate the narrative.

Is employee safety really Schultz’s motivation here?  Starbucks does not have a janitorial staff; part of the job of being a barista is cleaning, including cleaning the bathrooms.  I assume an open-bathroom policy means there is simply more work, and more unpleasant work, for the baristas.  It wouldn’t at all surprise me if the union organizing campaign does not just include safety discussions, but also the question whether baristas should receive more pay, or more benefits, or whether stores should simply hire more staff, to deal with that extra work.  Schultz, by closing the bathrooms, placates the employees on this point but also avoids additional expenditures by the company.

If that’s the real story here – and I don’t know that it is, I’m speculating – then what essentially is going on is that Starbucks’s original policy had a disparate racial impact, and remedying that problem is expensive.  Schultz would rather just leave the racism in place; it’s cheaper.

That’s definitely a shareholder primacist approach, but it’s one where the company profits by externalizing the costs of doing business on to the public.  And in particular, black members of the public.