Earlier this week, Starbucks (NASDAQ:SBUX) prepared for an important day as employers of several locations in Buffalo, New York, prepared for a historic vote on whether they should unionize. Yesterday the votes were tallied, and it was confirmed that the company is about to witness history. However, in the wake of this historic vote, investors are equally interested in the unionization efforts at Amazon (NASDAQ:AMZN) and how it might affect AMZN stock. Let’s take a look at what’s going on with both companies.
According to the National Labor Relations Board (NLRB), workers at the Elmwood Avenue Starbucks location in Buffalo voted 19-8 in favor of the union. Meanwhile, another location voted 12-8. The third location has not officially been tallied yet due to some complications, but the overall result is clear. The leading coffee chain is about to see its first stores receive union representation.
SBUX stock hasn’t reacted poorly to the news. But at a different end of the country, another industry giant is combating union efforts. Amazon has dealt with these types of campaigns before. However, the company isn’t exactly known for employing union-friendly tactics, leaving investors with questions about AMZN stock.
What’s Happening With AMZN Stock
Currently, we are witnessing the second go-around for the unionization efforts of Amazon’s Bessemer, Alabama, warehouse workers. After the NLRB ruled that the first union vote, won by Amazon, had been done decisively, it ordered a new vote to be conducted. This news didn’t do much to affect AMZN stock, which continued mostly rising. Although shares are down almost 2% today, it’s more likely due to the fact that Amazon’s reported losses have dragged down both the Nasdaq and S&P 500 indexes today.
SBUX stock, on the other hand, has been rising all morning and is currently up by 0.76%. The past five days have seen it rise by more than 4%, as talk of the Buffalo vote has increased, indicating that the unionization efforts haven’t done much to affect share prices. Furthermore, they aren’t likely to as the company moves forward.
For Amazon, though, the situation may be slightly more complicated.
What It Means
Amazon’s history of employing anti-union tactics to keep control of its workers has been well documented. These techniques are exactly what has led to the company running afoul of NLRB in the first place. At first glance, it seems unlikely that Amazon would seriously try to meet its workers halfway on union matters. When workers tried to unionize in Staten Island, New York, earlier this year, it failed to garner the type of momentum we’ve seen in Buffalo.
However, there are two things to consider when assessing Amazon’s situation in Bessemer. First, we are currently in the midst of the great resignation. Second, Amazon is going to be dependent on its workers as the holiday season approaches. This is a time that promises to be particularly busy as the omicron variant poses complications for holiday shopping.
Additionally, it doesn’t make the company look great to be caught engaging in questionable activity by the NLRB. Simply allowing workers to unionize would likely not be enough to send AMZN stock down. However, the type of negative press that it would attract by interfering in another union election wouldn’t make the company look good. That could actually pose a threat to share prices, though it’s unclear to what extent.
The Road Ahead
As we know from history, some companies have benefitted from engaging with unions positively. That seems to have better results than employing the type of tactics we’ve seen from Amazon.
The unionization success of Starbucks’ workers will likely only inspire other labor groups across the country to do the same. Companies dependent on this type of labor would be wise to find ways to start adapting. Indeed, it makes sense to prepare to work with unions rather than fight them. The team behind Amazon would do particularly well to remember this as it considers the future of AMZN stock while tensions rise in Bessemer.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
