Starbucks CEO Howard Schultz takes on U.S. jobs woes with loans, braceletsStarbucks, a company that has long been criticized for putting small local coffee shops out of business, on Tuesday launched "Create Jobs for USA," a program to raise funds for American small businesses. In an interview with AOL/Huffington Post, CEO Howard Schultz cited his concerns about government gridlock and the unemployment crisis as his reasons for creating the program. Schultz also called on corporate leaders to help solve the jobs crisis.

The campaign relies on a marketing tactic first made popular by Lance Armstrong -- colorful wristbands. Starting today, Starbucks (SBUX) customers will be able to buy $5 bracelets along with their lattes, woven in red, white, and blue, inscribed with the word "indivisible" etched on a metal charm. Schultz emphasized that the bracelets were made in America.

Proceeds will go to the Opportunity Finance Network, a nonprofit umbrella organization that supports hundreds of Community Development Financial Institutions, local organizations that lend money at low interest rates to small business owners in underserved areas. The Seattle-based coffee brewer has already given $5 million to the cause.

Washington is already in campaign mode, and so for the next 13 months is "not going to do squat," Schultz said, adding that it's now the responsibility of business leaders to take constructive steps towards solving the jobs crisis.

"We've lost something," Schultz said. "We've either lost our conscience, or lost our soul." He noted the country's recent economic woes have made him concerned about societal upheaval. "I thought there would be social unrest in America," he said. "I mean violence."

Supplying the Demand for Small Business Loans


Schultz's recent and noisy foray into politics have led to some speculation that the recently certified billionaire may enter the game himself. But when asked if he plans to run for office, Schultz said no.

Though Schultz said Washington is largely gridlocked on jobs, the federal government is already providing a sizable amount to Community Development Financial Institutions. The Treasury has awarded $1.4 billion to these institutions since it began funding micro-lenders in 1994. And an initiative approved by Congress, part of the Small Business Jobs Act of 2010, guarantees to raise an addition $1 billion in funding.

Schultz said he hopes to raise "tens of millions of dollars." In 2008, the Opportunity Finance Network estimates that these financial institutions loaned out $5.53 billion to small businesses.

While banks claim the demand for small business loans has fallen significantly, Schultz said the numbers on the ground disagree: Demand for Opportunity Network micro-loans has been increasing for 13 consecutive quarters, he said.

While access to credit is certainly an issue for small business owners, many point to a lack of demand for their products and services as the crucial reason they aren't creating more jobs. According to an annual Bureau of Labor Statistics survey of small businesses, since 2007 "lack of demand" has been by far the most significant cause of mass lay-offs.

The current Starbucks campaign, Schultz acknowledged, is more about spreading the word that these loans are available. Most small business owners and Americans are largely unaware that there's money available.

According to some small-business advocates, however, increased access to capital may not address the full problem. "From the research we've conducted, we haven't found a great appetite among our membership for business loans," said Cynthia Magnuson, spokeswoman for the National Federation of Independent Business, a Nashville-based advocacy group.

"That's not to say that the credit market hasn't tightened and that some owners are struggling to secure credit. However, the general sentiment we have found in the sector is that small firm owners are not seeking loans need while sales remain so poor. According to our latest small-business optimism index, in September, only 3% of owners reported financing as their No. 1 business problem. The No. 1 business problem for more than a quarter of our membership is weak sales."

Promoting a Sense of Solidarity


Schultz caused a stir in the political and business communities back in August, when he called on corporate leaders to halt their political campaign contributions until the government solved the debt crisis. Although Schultz is a registered Democrat, and admits he "drank the Kool-Aid as much as anyone about Obama," he feels the whole political system is now jammed up by ideology.

"Create Jobs for USA" employs a marketing tactic -- the bracelet -- that is usually used by charities, to fund a micro-loan program, a concept that was pioneered in the developing world. But as the choice of inscription indicates, Schultz hopes the idea will energize a sense of the national solidarity, as every American can feel that they are doing their own small part to heal the country in a way the government, Schulz believes, has failed to do.

"People want human connection," he said. Starbucks, despite selling what most would consider a luxury good, has been doing very well since the recession, Schultz claims. He believes a large part of that is the sense of community fostered in its stores, some of which he claims have become informal job centers.

Starbucks wasn't totally immune to the recession, however. The chain closed 600 U.S. stores in 2008 and laid off 12,000 employees.

However, in the ensuing years, people have kept buying coffee. While the overall economy is still soft in the wake of the recession, Starbucks has been performing well. In the third quarter, profit was up 34% -- fourth quarter earnings are due out this week. Schultz said customers are still buying the same expensive drinks that there were gulping before the downturn started.

And the reality, of course, is that Starbucks is a big competitor for many small businesses -- notably, local coffee shops. Ike Escava, co-owner of The Bean in New York, recently lost one of his shop's leases, forcing him to relocate after 10 years, and mounted a public campaign describing Starbucks as the cause. "We at The Bean admire Starbucks' community spirit," he said. "So who do we call to receive our share of Starbucks generosity?"

Schultz has no illusions that this campaign will make any real dent in America's unemployment numbers -- but he hopes it will transform the way corporate leaders and the American people approach these kinds of national problems. "We'd like this to be emblematic," he said.

That may just happen. "How many proposals have the potential to have a large impact that cost relatively little?" asked Mike Roach, co-owner of Paloma Clothing in Portland, Ore., who has pledged to match any contributions each of his 10 employees make to the Starbucks initiative. "We can't afford not to try. For our company, it's $50 -- $50 to have the possibility of having a big impact on the economy. That's about the best $50 we'll be able to spend."


-- Alice Hines and Rod Kurtz contributed reporting to this article.

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MLF

The only thing that I find odd is that Starbucks is promoting creating jobs while it has yet to hire back the 12,000 people it laid off (presumably, since the article doesn't include anything about that).
If they are not able to create jobs and/or reopen locations then who do they think will?

November 25 2011 at 5:27 PM Report abuse rate up rate down Reply
Yvonne

Last week I went into Starbucks with my mom who upon seeing she could help people get back to work for five dollars instantly acquiesced. I on the other hand was a bit more apprehensive. I wanted to know where exactly my five dollars was going and vowed to look into this. This is where it gets interesting.
I went online and learned that Starbucks was partnered with OPN for its Create Jobs USA campaign. OPN is an acronym for Opportunity Finance Network which according to their website is a national network of community development finance institutions investing in opportunity that benefits low income, low wealth, and other disadvantaged communities across America. Okay that didn’t sound to bad but how was this creating American jobs and I was a little weary upon hearing the word finance institutions- all I have to do is look around the country to see the handy work of some financial institutions. And some of OPN partners include Goldman Sachs, Wells Fargo, and HSBC. I thought there must be more to this! And, of course there is. Most members loan money, they are not giving grants.. There is also a new market tax credit of 39 percent over 7 years. A 39 percent tax credit, are you kidding me? It’s only on their initial investment. Can my mother qualify? After all she did give the money to Starbucks. Of course she doesn’t qualify. She couldn’t even get a donation receipt for her purchase.
To be fair, I did learn that Starbucks is not giving loans. They are giving grants. According to the OPN Starbucks partner page, grants must be used to lend to community businesses that create and retain jobs. They are giving grants to organizations that loan money? Is Starbucks also getting a new market tax credit of 39 percent? I think what I would appreciate most is clarity and transparency. Starbucks can you clear this up for us? Perhaps a note on the package of the bracelets you are selling letting us know where the money is going and how you are creating American jobs! And, are you getting a new market credit? If so, is that being reinvested because I know my mother who paid five dollars for the bracelet would say, “It better be!”

November 22 2011 at 1:32 PM Report abuse +1 rate up rate down Reply
Yvonne

Last week I went into Starbucks with my mom who upon seeing she could help people get back to work for five dollars instantly acquiesced. I on the other hand was a bit more apprehensive. I wanted to know where exactly my five dollars was going and vowed to look into this. This is where it gets interesting.
I went online and learned that Starbucks was partnered with OPN for its Create Jobs USA campaign. OPN is an acronym for Opportunity Finance Network which according to their website is a national network of community development finance institutions investing in opportunity that benefits low income, low wealth, and other disadvantaged communities across America. Okay that didn’t sound to bad but how was this creating American jobs and I was a little weary upon hearing the word finance institutions- all I have to do is look around the country to see the handy work of some financial institutions. And some of OPN partners include Goldman Sachs, Wells Fargo, and HSBC. I thought there must be more to this! And, of course there is. Most members loan money, they are not giving grants.. There is also a new market tax credit of 39 percent over 7 years. A 39 percent tax credit, are you kidding me? It’s only on their initial investment. Can my mother qualify? After all she did give the money to Starbucks. Of course she doesn’t qualify. She couldn’t even get a donation receipt for her purchase.
To be fair, I did learn that Starbucks is not giving loans. They are giving grants. According to the OPN Starbucks partner page, grants must be used to lend to community businesses that create and retain jobs. They are giving grants to organizations that loan money? Is Starbucks also getting a new market tax credit of 39 percent? I think what I would appreciate most is clarity and transparency. Starbucks can you clear this up for us? Perhaps a note on the package of the bracelets you are selling letting us know where the money is going and how you are creating American jobs! And, are you getting a new market credit? If so, is that being reinvested because I know my mother who paid five dollars for the bracelet would say, “It better be!”


http://nyceducationmom.wordpress.com/

November 22 2011 at 1:32 PM Report abuse rate up rate down Reply
Craig Smith

Nate below has fallen into the trap. He's allowing the vocal loud bullhorn minority who are the people who always go to websites or town halls, to make noise and try to act as if they speak for the vast majority of Americans. Well; they don't. 0 They are a small minority, but a vocal one. That is what people forget about these things when issues that benefit america and the regular smaller guy. The Cons dont want that. They want Obamas economy to Fail! They want him out. That's why they flock to whatever comments or web forum they can to perpetuate their myths.

November 06 2011 at 7:51 AM Report abuse rate up rate down Reply
Nate

Wow, why all the vitriol here? Seems like it's worth a shot to me. If you don't like Starbucks (which apparently no other comment on here does) just do the capitalist thing and vote with your dollar by not going there. It doesn't mean that this whole "donating to help finance micro-loans" idea is bad. I'm also pretty sure that there's no race discrimination involved either way with these loans. Good grief, people.

November 03 2011 at 12:41 PM Report abuse rate up rate down Reply
Cristina Roman

Pingback: http://cmroman.com/2011/10/25/dear-starbucks/

November 03 2011 at 9:33 AM Report abuse rate up rate down Reply
Setanta

starbuk$ can go ""to blazes"" them,their overpriced crap and their barrista_s--what's with that bs anyway ? a barrista ?

November 02 2011 at 12:07 PM Report abuse rate up rate down Reply
Master Tad

Indeed another attempt by the ruling monopolies here in the USA to exploit the woes of the needy and destitute Americans while putting out another big profit scheme or scam to fill their already overflowing coffers. If Starbucks really wanted to help any one they would adjust their exhorbitant cost of their products and visually correct the sad slave wages they pay to their workers who have been taking out their frustrations on the Starbucks customers (as have been reported many times previously) because they need the job and can't complain to the bosses. Shame on you.

November 02 2011 at 9:28 AM Report abuse rate up rate down Reply
2 replies to Master Tad's comment
Setanta

no one is forced to serve the yuptardia and associate there.

November 02 2011 at 12:07 PM Report abuse rate up rate down Reply
Craig Smith

You dont like Starbucks? Dont spend there. Jeesus. This CEO is honestly trying to help a segment of this down economy. That scares the Cons like you. It might mean that next year, a thousand more businesses might hire MILLIONS more workers. And THAT screws your rhetoric on Obama and the economy. We get it.
Now go away. Drink your walmart coffee.

November 06 2011 at 7:54 AM Report abuse rate up rate down Reply
napomoishee

really? why don't you lower the prices on your store so we can buy more coffee for less. all this is because they are losing money, the loans are to built more starbucks. what an itelligent move.

November 02 2011 at 8:15 AM Report abuse rate up rate down Reply
Justin Van Allen

If you think that is something check out the economy equalizer and the worlds best coffee at http://www.mycoffeesite,com

November 02 2011 at 1:25 AM Report abuse rate up rate down Reply