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The Economics of Starbucks

Joseph Warren, Editor

Still paying five or six bucks for a cup of Starbucks? $26,695 is the current median wage in America. That equates to about $12.80 per hour, gross. Net? Somewhere around $10. So the median American worker will work for 30 to 40 minutes of every workday to buy a cup of Starbucks. (And we complain about working for the first few months to pay our taxes for the year!) Even Starbucks employees would have to work about half-an-hour if they worked elsewhere.

A while ago, Starbucks locked-in their price of coffee beans as a hedge against a likely increase: a common Commodities practice. So, they bought beans for the next year-and-a-half. How are they celebrating their fiscal prowess? By increasing the price of a cup of coffee - beyond the absurd threshold of today - to $5 or $6, or more, depending upon which Starbucks you elect to frequent.

Here’s some additional math: Folger's - a very tasty coffee - sells for less than $7 per 29 ounce plastic can at our local supermarket. 29 ounces of Folger’s, following the fill-it-yourself K-Cup recipe for our Keurig coffee maker, equates to .42 ounce per 12 ounce cup of brewed coffee, or about 69 cups of 12 ounces each. Splash in some Italian Sweet Cream from Carnation, and the sum total per very, very good cup of coffee - much better than Starbucks’ rancid “We-fried-the-crap-out-of-the-beans” taste, is about Thirteen Cents, compared to $4 or more.

In other words, for every cup of Starbucks, notwithstanding the very hip nature of sitting around a crowded coffee shop so you can access your email and read the latest imperative missive by an associate, friend, or Tweet from Bruce Jenner - or whomever he is now - you could be adequately caffeinated 30 times over every day. Imagine your productivity!

Plainly, Starbucks doesn’t make economic sense in a world of stagnant wages where “Full Employment,” as we’ve come to know it, is barely a simple majority of our Labor Pool.