The CEO of Starbucks abandons a merit system and gives all employee staff a flat salary increase of 2% instead

Under the supervision of Niccol, Starbucks forced distance workers to move to its head office and to strengthen return to the office for business employees. The flat increase of 2% is a passage compared to the previous remuneration model of the company which allowed managers to weigh on the amount of an increase in their direct salaried reports received.

The wage hike, reported for the first time this week Bloomberg and confirmed by Fortunewill apply to all employee employees, including business employees, manufacturing and distribution workers, and store managers. The uniform increase will not apply to baristas, which are hourly employees.

Starbucks hopes to reverse its activities with Niccol at the bar, who had previously helped to improve the financial results of Chipotle. The coffee chain asked managers to limit costs to help pay for efforts to create better service, improve waiting times and make stores more inviting, according to Bloomberg.

“While we make these important investments, we must carefully manage all our other costs,” said the company in an internal email examined by The Wall Street Journal.

How the Starbucks wage hike accumulates

The increase in remuneration of 2% is late on the American inflation rate of 2.7% and the average salary increases measured by different surveys.

A recent Payscale survey revealed that US employers have increased wage budgets on average by 3.6% this year and expect this average to be lowered to 3.5% in 2026.

Ruth Thomas, Chief Stratège of Payscale’s remuneration, said Fortune The decision to reduce remuneration budgets is not surprising, because economic concerns such as the prices and the uncertainty of policies have prompted businesses to be more conservative.

“Economic concerns have now exceeded work competition as the main engine of compensation decisions,” said Thomas. “Sixty-six percent of employers quote this as a reason to retreat, up 17 percentage points compared to last year.”

A recent Korn Ferry survey revealed that in the United States, an average increase of 3.6% salary is scheduled in 2025. This explains management positions, junior time roles and everything else. Six percent of the survey respondents were retail companies.

However, the survey also revealed that despite 88% of respondents anticipate income growth, a third has already reduced wage budgets due to economic uncertainty, creating tensions between talent retention and cost management.

The head of the Korn Ferry North America Ron Seifert Korn Ferry Ferry North Fortune A modest salary increase of 2% can be thwarted by remuneration greater than the market. In mid-August 2025, the average hourly wage for a Starbucks employee in the United States is $ 15.23 per hour.

With regard to a strict increase for all employees, Seifert said that senior interpreters may be compensated in other ways outside their salary increase.

“We know that most employers try to make sure they take care of their performance and are aware of the impact of the messages they send when they do something different,” said Seifert. “I suppose that (employers) also have other mechanisms to reward people who simply did not become public.”